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Core 1..156 Hansard CANADA House of Commons Debates VOLUME 145 Ï NUMBER 009 Ï 3rd SESSION Ï 40th PARLIAMENT OFFICIAL REPORT (HANSARD) Monday, March 15, 2010 Speaker: The Honourable Peter Milliken CONTENTS (Table of Contents appears at back of this issue.) 419 HOUSE OF COMMONS Monday, March 15, 2010 The House met at 11 a.m. charitable organization which loses its official registration under the act. [Translation] Prayers He further characterized the effect of the bill as follows in the House of Commons Debates of December 1, 2009, at pages 7410 and 7411: PRIVATE MEMBERS' BUSINESS Upon deregistration of an entity in the circumstances proposed by Bill C-470, that entity loses its tax exempt status as a registered charity and, assuming it remains a Ï (1105) charity, it will not be able to benefit from the other exemptions from tax provided for [Translation] in subsection 149.1. In other words, Bill C-470 would result in an extension of the incidence of a tax INCOME TAX ACT by including entities that are not already paying the revocation tax, or potentially, a tax on their income. Hon. Albina Guarnieri (Mississauga East—Cooksville, Lib.) moved that Bill C-470, An Act to amend the Income Tax Act [English] (revocation of registration), be read the second time and referred to a Finally, the parliamentary secretary noted that the issue of ways committee. and means is one which the Chair takes very seriously. He referred to a November 28, 2007, Speaker's ruling regarding the case of Bill The Deputy Speaker: I am now prepared to rule on the point of C-418, An Act to amend the Income Tax Act (deductibility of order raised by the hon. Parliamentary Secretary to the Leader of the remuneration), introduced in the second session of the 39th Government in the House of Commons, concerning the requirement Parliament. That bill had the effect of removing an existing for a ways and means motion for Bill C-470, An Act to amend the deduction, and hence of increasing the amount of tax payable by Income Tax Act (revocation of registration), standing in the name of certain corporations. It was clear that the bill, in removing a tax the hon. member for Mississauga East—Cooksville. exemption, effectively increased the tax payable and therefore [English] required that it be preceded by a notice of ways and means. I would like to thank the hon. parliamentary secretary for having In her submission, the member for Mississauga East—Cooksville, raised this matter, as well as the hon. member for Mississauga East— in Debates of December 1, 2009, page 7,458, contended that the Cooksville, the hon. member for Mississauga South, the hon. purpose of Bill C-470 is simply to add another reason that would member for Scarborough—Rouge River, the hon. Parliamentary allow the minister to revoke the registration of a charitable Secretary to the Minister of International Cooperation, the hon. organization. member for Algoma—Manitoulin—Kapuskasing, the hon. member [Translation] for Eglinton—Lawrence, and the hon. member for Brampton West for their comments. Bills involving provisions of the Income Tax Act can be complex and confusing. However, after careful examination of Bill C-470, as The parliamentary secretary pointed out in his remarks that the well as the authorities cited and the provisions of the Income Tax Act purpose of Bill C-470 is to allow for the revocation of the referred to by the parliamentary secretary, I have found the following registration of a charitable organization, public foundation or private reference from House of Commons Procedure and Practice, 2nd foundation, if it provides annual compensation in excess of $250,000 edition, page 900, particularly relevant. It states: to any of its executives or employees. On this point, he and the The House must first adopt a ways and means motion before a bill which imposes member for Mississauga East—Cooksville agreed. a tax or other charge on the taxpayer can be introduced. Charges on the people, in this context, refer to new taxes, the continuation of an expiring tax, an increase in the Beyond that, however, the parliamentary secretary contended that rate of an existing tax, or an extension of a tax to a new class of taxpayers. such a revocation would extend the incidence of a tax to [English] organizations which are not currently subject to it. Specifically, he noted that such organizations, on losing their registration, would be It seems clear to the Chair that Bill C-470 does not propose a new subject to the revocation tax imposed by subsection 188(1.1) of the tax, nor does it seek the continuation of an expiring tax, nor does it Income Tax Act, since the revocation tax is a tax imposed on a attempt to increase the rate of an existing tax. 420 COMMONS DEBATES March 15, 2010 Private Members' Business The question which remains to be asked is the following: Does the and this charity was registered in the United States as well as in bill extend a tax to a new class of taxpayer? Canada. Canadian laws keep donors in the dark about where their money is going. We know that 2,147 individuals earn more than A close examination of the provisions of Bill C-470 indicates that $120,000 a year at charities. We do not know how much more. We the bill targets all registered charitable organizations, public can suspect that it might be a lot. We can suspect that because the foundations and private foundations, and seeks to introduce average salary at charities is $71,000 compared to only $51,000 in consequences for those within that class which pay to a single private business. executive or employee annual compensation that exceeds $250,000. I have difficulty in regarding organizations finding themselves in that situation as constituting unto themselves a “class of taxpayer”. It might be that people working in call centres are making $70,000 In the Chair's view, class of taxpayer refers in this case to a year. However, it is more likely that they are making near- registered charitable organizations, public foundations and private minimum wage while executives are earning many hundreds of foundations, and Bill C-470 does not seek to alter that class. thousands and driving up the average. Why should we not know? Why should donors not know? Why should taxpayers not know? It seems to me that the bill instead seeks to provide a new criterion that would allow the minister to determine into which existing class of taxpayer an organization falls. The existing tax regimes and the existing tax rates are not affected. Six years ago, the United States recognized that it too had a significant problem with salaries at charities. At that time, the Accordingly, I rule that Bill C-470 does not extend the incidence internal revenue service announced a new enforcement effort to of a tax to a new class of taxpayer and therefore need not be identify and halt abuses by tax-exempt organizations that pay preceded by a ways and means motion. excessive compensation and benefits to their officers and other [Translation] insiders. At the time, the IRS said: I thank the House for its attention. [English] We are concerned that some charities and private foundations are abusing their Hon. Albina Guarnieri: Mr. Speaker, I would like to begin by tax-exempt status by paying exorbitant compensation to their officers and others. thanking the Speaker for his charitable ruling. I would also like to thank the member for Newton—North Delta for seconding Bill C-470, an act to bring more transparency and charity to our nation's That was 2004. Where are we in Canada? The Library of charities. Parliament has to scrape together bits and pieces to get any picture at Every year, Canadians dig deep into their pockets to contribute all as to how executives at charities are spending money and, billions of dollars to some 85,000 registered charities. That is one particularly, how much they take home for themselves. charity for every 300 Canadians. Most of the donors are far from millionaire philanthropists. They choose to make a financial sacrifice for what they hope is a worthy cause. They choose to save less for Ï (1110) their retirement, their own children's education or some other personal investment or expenditure because they believe their dollars will be put to a higher purpose: helping sick children, aiding the poor and curing disease. I will read to the House some of what little we know. Some of our charities spend money on dining club memberships, golf member- It is the goodwill and trust of these donors that must be a priority ships, fitness memberships, business-class travel, so-called flexible for this Parliament. However, the donors are not alone in putting expense account provisions and even scholarship programs for their their trust in charities. In the most recent year, the taxpayers of own kids. It is reported that of those who receive benefits, there is an Canada contributed almost $3 billion in federal tax credits, so every average of $6,000 in retirement benefits, $4,000 in fringe benefits, Canadian has an interest in how this money is spent. $4,000 in auto benefits and another $4,000 in health benefits. Last year, the Toronto Star shocked donors and taxpayers with the revelation that the head of one of Canada's largest charities, the SickKids Foundation, took home $2.7 million in salary and That is what we know from only one charity in one thousand severance in a single year.
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