Budget Implementation Act, 2018, No. 2

Part 1 implements certain income tax and related measures by (a) introducing rules intended to provide greater certainty with respect to various tax consequences arising from certain foreign divisive reorganizations; (b) ensuring that the existing cross-border anti-surplus stripping rule cannot be circumvented through transactions involving the use of partnerships or trusts; (c) introducing rules to prevent misuse of the foreign accrual property income regime through the use of tracking interests involving foreign affiliates; (d) ensuring consistency between the trading or dealing in indebtedness rules and the investment business rules within the foreign accrual property income regime; (e) ensuring that the at-risk rules apply appropriately at each level of a tiered partnership structure; (f) providing that the Minister of Public Safety and Emergency Preparedness can determine international operational missions for the purpose of the deduction available for income earned by members of the Canadian Forces or police officers on such missions; (g) amending the synthetic equity arrangement rules and securities lending arrangement rules to prevent the artificial generation of losses through the use of equity-based financial instruments; (h) ensuring that social assistance payments under certain programs do not preclude individuals from receiving the Canada Child Benefit; (i) ensuring that an individual who is eligible to receive the Canada Workers Benefit can receive the benefit without having to claim it; (j) introducing a refundable tax credit for the purposes of the climate action incentive; (k) providing allocation rules for losses applied against Part IV taxes; (l) preventing the creation of artificial losses on shares held as mark-to-market property by financial institutions; (m) revising the rules relating to the non-partisan political activities of charities; (n) ensuring that a taxpayer is subject to a three-year extended reassessment period in respect of any income, loss or other amount arising in connection with a foreign affiliate of the taxpayer; (o) providing the Canada Revenue Agency with an extended reassessment period of an additional three years, to the extent that the reassessment relates to the adjustment of a loss carryback for transactions involving a taxpayer and non-resident non-arm’s length persons; (p) extending the reassessment period of a taxpayer by the period of time during which a requirement for information or compliance order is contested; (q) requiring that information returns in respect of a taxpayer’s foreign affiliates be filed within 10 months after the end of the taxpayer’s taxation year; (r) enabling the disclosure of taxpayer and other confidential tax information to Canada’s bilateral mutual legal assistance treaty partners for the purposes of non-tax criminal investigations and prosecutions of certain serious crimes; and (s) providing a deduction for employee contributions to the enhanced portion of the Quebec Pension Plan. Part 1 also amends the Mutual Legal Assistance in Criminal Matters Act to, among other things, define the term “agreement” as applying, among other things, to tax information exchange agreements and tax treaties to which Canada is a party, and provide for orders to produce financial information for the purposes of investigation and prosecution of certain offences set out in subsection 462.48(1.1) of the Criminal Code. The enactment also amends paragraph 462.48(2)(c) of the Criminal Code to provide that information may also be gathered under Part IX of the Excise Tax Act and under the Excise Act, 2001. Part 2 implements certain Goods and Services Tax/Harmonized Sales Tax (GST/HST) measures by (a) replacing the requirement that GST/HST be collected on a sale of carbon emission allowances with a requirement that the purchaser self-assess that GST/HST; (b) extending the assessment period for group registered education savings plan trusts that make a special relieving election in respect of their past HST liability; (c) introducing GST/HST rules in respect of investment limited partnerships; (d) clarifying the intended tax policy of excluding books that are sold by a public service body from the GST/HST rebate for printed books; (e) introducing amendments similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested; and (f) introducing amendments similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes. Part 3 implements certain excise measures by (a) broadening the refund regime in respect of excise tax on diesel fuel to allow a vendor to apply for a refund where a purchaser will use excise tax-paid diesel fuel to generate electricity, if certain conditions are met; (b) introducing an anti-avoidance excise measure relating to the taxation of cannabis in respect of the rules establishing the value of a cannabis product on which an ad valorem duty is calculated; (c) introducing amendments to the Air Travellers Security Charge Act and the Excise Act, 2001 that are similar to those to the Income Tax Act to extend the assessment period of a person by the period of time during which a requirement for information or compliance order is contested; (d) introducing amendments to the Excise Act, 2001 that are similar to those to the Income Tax Act to enable the disclosure of confidential information to Canada’s bilateral mutual legal assistance treaty partners, or to Canadian police officers, for the purposes of non-tax criminal investigations and prosecution of certain serious crimes; and (e) making housekeeping amendments to the Excise Act, 2001 in order to ensure consistency between the English and French version of the legislation. Part 4 enacts and amends several Acts in order to implement various measures. Division 1 of Part 4 amends the Customs Tariff in order to simplify it and reduce the administrative burden for Canadian businesses and the Government of Canada by consolidating similar tariff items that have the same tariff rates and removing end-use provisions where appropriate. The amendments also clarify existing tariff provisions and make other technical amendments. Division 2 of Part 4 amends the Canada Pension Plan to modify the calculation of the amount to be attributed for a year in which a contributor is a family allowance recipient and their first or second additional contributory period begins or ends. Subdivision A of Division 3 of Part 4 amends the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things, (a) establish thresholds below which the acquisition of control of certain entities, or the acquisition or increase of a substantial investment in them, does not require the approval of the Superintendent of Financial Institutions; (b) allow financial institutions to invest in the Canadian business growth fund; and (c) ensure that customers can provide consent electronically to receive electronic documents. It also corrects a reference to the Insurance Companies Act in the Budget Implementation Act, 2018, No. 1. Subdivision B of Division 3 of Part 4 amends the Canada Deposit Insurance Corporation Act to, among other things, (a) make technical amendments to clarify the method of calculating insured deposits, to remove outdated references, to repeal certain provisions not yet in force and to clarify that withdrawals made following the amalgamation of two or more member institutions or the continuance as a federal credit union will be considered to be made from pre-existing deposits and that the separation of accounts following the amalgamation is limited to a period of two years; (b) exclude amounts borrowed by the Canada Deposit Insurance Corporation under paragraph 60.2(2)(c) of the Financial Administration Act from the calculation of the Corporation’s total principal indebtedness; and (c) clarify that the liquidator of a member institution of the Canada Deposit Insurance Corporation must not apply the law of set-off or compensation to a claim related to insured deposits. It also repeals two sections of the Financial System Review Act. Subdivision C of Division 3 of Part 4 amends the Office of the Superintendent of Financial Institutions Act, the Trust and Loan Companies Act, the Bank Act and the Insurance Companies Act to, among other things, clarify that providing legally privileged information to the Superintendent of Financial Institutions does not constitute a waiver of the privilege. Division 4 of Part 4 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to remove the right of persons to decide not to proceed further with importing or exporting currency or monetary instruments that are required to be reported. Division 5 of Part 4 amends the Canada–Newfoundland and Labrador Atlantic Accord Implementation Act to, among other things, allow for the application, within the offshore area, of the provincial greenhouse gas pricing regime and to confer powers and impose duties and functions on the Canada–Newfoundland and Labrador Offshore Petroleum Board for the application of that regime. It also amends the Greenhouse Gas Pollution Pricing Act to provide that the provincial regime does not apply if the offshore area is mentioned in Part 2 of Schedule 1 to that Act. Finally, it amends the Offshore Health and Safety Act to postpone the repeal of certain regulations. Division 6 of Part 4 amends the Canada Business Corporations Act to set out criteria for identifying individuals with significant control over a corporation. The Division also sets out a requirement for a corporation that meets certain criteria to keep a register of individuals with significant control and requirements respecting the information to be recorded in it. Finally, the Division includes applicable offences and punishments. Subdivision A of Division 7 of Part 4 amends the Patent Act in order to (a) provide a regulation-making authority for the establishment of requirements for written demands relating to patents; (b) specify that an act committed for the purpose of experimentation relating to the subject matter of a patent is not an infringement of the patent and that licencing commitments that bind the owner of a standard-essential patent or the holder of a certificate of supplementary protection that sets out such a patent bind any subsequent owners or holders; (c) expand the rights of a person in respect of a claim in a patent who meets the requirements to be considered a prior user; (d) ensure that patent prosecution histories may be admissible into evidence for certain purposes; (e) clarify when a late fee must be paid in respect of divisional applications as well as when the confidentiality period begins in the case where a request for priority is deemed never to have been made. Subdivision B of Division 7 of Part 4 amends the Trade-marks Act to, among other things, (a) add bad faith as a ground of opposition to the registration of a trade-mark and for the invalidation of a trade-mark registration; (b) prevent the owner of a registered trade-mark from obtaining relief for acts done contrary to section 19, 20 or 22 of that Act during the first three years after the trade-mark is registered unless the trade-mark was in use in Canada during that period or special circumstances exist that excuse the absence of use; (c) clarify that the prohibitions in subparagraph 9(1)(n)(iii) and section 11 of that Act do not apply with respect to a badge, crest, emblem or mark that was the subject of a public notice of adoption and use as an official mark if the entity that made the request for the public notice is not a public authority or no longer exists; and (d) modernize the conduct of various proceedings before the Registrar of Trade-marks, including by providing the Registrar with additional powers in such proceedings. It also makes certain housekeeping amendments to provisions of the Trade-marks Act that are enacted by the Economic Action Plan 2014 Act, No. 1 and the Combating Counterfeit Products Act. Subdivision C of Division 7 of Part 4 amends the Copyright Act in order to specify that certain information is not permitted to be included within a notice under the notice and notice regime and to provide for a regulation-making power to prohibit further types of information from being included within such a notice. Subdivision D of Division 7 of Part 4 enacts the College of Patent Agents and Trade-mark Agents Act. That Act establishes the College of Patent Agents and Trade-mark Agents, which is to be responsible for the regulation of patent agents and trade-mark agents in the public interest. That Act, among other things, (a) requires that individuals obtain a licence in order to act as patent agents or trade-mark agents and that licensees comply with a code of professional conduct; (b) authorizes the College’s Investigations Committee to receive complaints and conduct investigations into whether a licensee has committed professional misconduct or was incompetent; (c) authorizes the College’s Discipline Committee to impose disciplinary measures if it decides that a licensee has committed professional misconduct or was incompetent; and (d) creates new offences of claiming to be a patent agent or trade-mark agent and unauthorized representation before the Patent Office or the Office of the Registrar of Trade-marks. That Subdivision also makes consequential amendments to certain Acts. Subdivision E of Division 7 of Part 4 amends the Bankruptcy and Insolvency Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of in an insolvency proceeding or when the agreement relating to such property rights is disclaimed or resiliated in such a proceeding. It also amends the Companies’ Creditors Arrangement Act to provide that intellectual property users may preserve their usage rights when intellectual property rights are sold or disposed of. Subdivision F of Division 7 of Part 4 amends the Access to Information Act and the Privacy Act to provide that the head of a government institution may refuse to disclose, under either of those Acts, information that is subject to the privilege set out in section 16.1 of the Patent Act or section 51.13 of the Trade-marks Act. It makes a related amendment to the Pest Control Products Act. Subdivision G of Division 7 of Part 4 amends the National Research Council Act to clarify that the National Research Council of Canada has the authority to dispose of all forms of intellectual property that it develops, including future rights to such property and to provide the Council with the authority to dispose of real, personal, movable and immovable property, complementing the current provision in the Act that allows it to acquire such property. Subdivision H of Division 7 of Part 4 amends the Copyright Act in order to modernize the legislative framework relating to the Copyright Board so as to improve the timeliness and clarity of its proceedings and decision-making processes. More specifically, it repeals spent provisions and (a) codifies the Board’s mandate and establishes decision-making criteria; (b) establishes new timelines in respect of Board matters, including earlier filing dates for proposed tariffs and longer effective periods for approved tariffs, and empowers the Governor in Council to make additional timelines by regulation; (c) formalizes case management of Board proceedings; (d) reduces the number of matters that must be considered by the Board; (e) streamlines procedural steps across different tariff contexts, maintaining differences between them only where necessary; (f) amends relevant enforcement provisions, including the availability of statutory damages for certain parties in respect of Board-set royalty rates and enforcement of Board-set terms and conditions; and (g) modernizes existing language and structure for greater clarity and consistency. Division 8 of Part 4 amends the Employment Insurance Act to, among other things, increase the maximum number of weeks for which parental benefits may be paid if these benefits are divided between claimants. It also amends the Canada Labour Code to, among other things, increase the aggregate amount of leave that may be taken by employees under sections 206.1 and 206.2 if that leave is divided between employees. Division 9 of Part 4 enacts the Canadian Gender Budgeting Act in order to state the Government’s policy of promoting gender equality and inclusiveness by taking gender and diversity into consideration in the budget process. It also establishes related reporting requirements. Division 10 of Part 4 amends the Bank Act to strengthen provisions that apply to a bank or an authorized foreign bank in relation to the protection of customers and the public. It implements enhancements in the areas of corporate governance, responsible business conduct, disclosure and transparency, and redress. It also amends the Financial Consumer Agency of Canada Act to strengthen the mandate of the Financial Consumer Agency of Canada and grant additional powers to that Agency. Division 11 of Part 4 amends the First Nations Land Management Act to give effect to amendments to the Framework Agreement on First Nation Land Management respecting, among other things, procedures for obtaining community approval of a land code, the lands to which a land code may apply, the addition of lands to First Nation land by order of the Minister and the transfer of capital moneys. Division 12 of Part 4 amends the First Nations Fiscal Management Act to, among other things, (a) enable more Aboriginal organizations and First Nations to benefit from the provisions of the Act in order to strengthen their financial management systems and give them access to long-term financing; (b) address certain administrative issues identified by the bodies established under the Act; and (c) provide another option for First Nations to access moneys held by Her Majesty for their use and benefit. Division 13 of Part 4 amends the Export and Import Permits Act to give the Minister of Foreign Affairs the authority to issue an import allocation for goods that are included on the Import Control List under subsection 5(6) of that Act. Division 14 of Part 4 enacts the Pay Equity Act to establish a proactive process for the achievement of pay equity by the redressing of the systemic gender-based discrimination experienced by employees who occupy positions in predominantly female job classes. The new Act requires federal public and private sector employers that have 10 or more employees to establish and maintain a pay equity plan within set time frames so as to identify and correct differences in compensation between predominantly female and predominantly male job classes for which the work performed is of equal value. The new Act provides for the powers, duties and functions of a Pay Equity Commissioner, which include facilitating the resolution of disputes, conducting compliance audits and investigating disputes, objections and complaints, as well as making orders and imposing administrative monetary penalties for violations of that Act. The new Act also requires the Pay Equity Commissioner to report annually to Parliament on the administration and enforcement of the new Act. Division 14 also amends the Parliamentary Employment and Staff Relations Act to provide for the application of the Pay Equity Act to parliamentary employers with certain adaptations and without limiting the powers, privileges and immunities of the Senate, the House of Commons and the members of those Houses. It also makes the Minister of Labour responsible for the administration of the Federal Contractors Program for Pay Equity. Finally, it makes related and consequential amendments to certain Acts and repeals the section of the Budget Implementation Act, 2009 that enacts the Public Sector Equitable Compensation Act. Subdivision A of Division 15 of Part 4 amends the Canada Labour Code to, among other things, (a) provide five days of paid leave for victims of family violence, a personal leave of five days with three paid days, an unpaid leave for court or jury duty and a fourth week of annual vacation with pay for employees who have completed at least 10 consecutive years of employment; (b) eliminate minimum length of service requirements for leaves and general holiday pay and reduce the length of service requirement for three weeks of vacation with pay; (c) prohibit differences in rate of wages based on the employment status of employees; (d) address continuity of employment issues when a work, undertaking or business becomes federally regulated or in cases of contract retendering; and (e) update group and individual termination provisions by increasing the minimum notice of termination. Subdivision B of Division 15 of Part 4 amends the Canada Labour Code to allow the Minister of Labour to designate a Head of Compliance and Enforcement who will exercise most of the powers and perform most of the duties and functions that are related to the administration and enforcement of Parts II, III and IV of the Code. Division 16 of Part 4 amends the Wage Earner Protection Program Act to, among other things, increase the maximum amount that may be paid to an individual under the Act, expand the definition of eligible wages, expand the conditions under which a payment may be made under the Act and create additional requirements related to Her Majesty in right of Canada’s right of subrogation in respect of payments made under the Act. Division 17 of Part 4 amends the Bretton Woods and Related Agreements Act, the European Bank for Reconstruction and Development Agreement Act and the Official Development Assistance Accountability Act to harmonize the periods within which the reports under those Acts must be laid before Parliament in order to better communicate Canada’s international development efforts. It also repeals the definition of “official development assistance” in the Official Development Assistance Accountability Act and confers the power to define this expression by regulation. Division 17 also enacts the International Financial Assistance Act, which provides the Minister of Foreign Affairs and the Minister for International Development with powers, duties and functions to support the delivery of a sovereign loans program, an international assistance innovation program and a federal international assistance program that promotes the mitigation of or adaptation to climate change through repayable contributions. Division 18 of Part 4 enacts the Department for Women and Gender Equality Act which, among other things, establishes the Department for Women and Gender Equality to assist the Minister responsible for that department in exercising or performing the Minister’s powers, duties and functions that extend to and include all matters relating to women and gender equality, including the advancement of equality in respect of sex, sexual orientation, or gender identity or expression and the promotion of a greater understanding of the intersection of sex and gender with other identity factors. It also contains transitional provisions. Finally, Division 18 makes consequential amendments to other Acts. Division 19 of Part 4 enacts the Addition of Lands to Reserves and Reserve Creation Act which authorizes a Minister, designated by the Governor in Council, to set apart lands as reserves for the use and benefit of First Nations. The Division also repeals Part 2 of the Manitoba Claim Settlements Implementation Act and the Claim Settlements (Alberta and Saskatchewan) Implementation Act. Division 20 of Part 4 amends section 715.42 of the Criminal Code to require the publication of any decision not to publish a remediation agreement or order related to that agreement and of any decision related to the review of such a decision, to specify that the court may make the first decision subject to a condition, including one related to the duration of non-publication, and to allow anyone to request a review of that decision. Division 21 of Part 4 enacts the Poverty Reduction Act, which sets out two targets for poverty reduction in Canada. Division 22 of Part 4 amends the Canada Shipping Act, 2001 to, among other things, (a) authorize the Governor in Council to make regulations respecting the protection of the marine environment from the impacts of navigation and shipping activities; (b) authorize the Minister of Transport to (i) make an interim order to mitigate risks to marine safety or to the marine environment, and (ii) exempt any person or vessel from the application of any provision of that Act or the regulations if doing so would allow the undertaking of research and development that may enhance marine safety or environmental protection; (c) increase the maximum amount of an administrative penalty that the Governor in Council may fix by regulation; (d) authorize the Minister of Fisheries and Oceans, pollution response officers and accompanying persons to enter private property in the case of a discharge of oil from a vessel or oil handling facility; and (e) double the administration monetary penalties for certain violations. Division 23 of Part 4 amends the Marine Liability Act to modernize the Ship-source Oil Pollution Fund, including, among other things, (a) removing the Fund’s per-occurrence limit of liability; (b) in the event that the Fund is depleted, authorizing the temporary transfer to the Fund of funds from the Consolidated Revenue Fund; (c) modernizing the Fund’s levy so that the Fund is replenished by receivers and exporters of oil; (d) ensuring that the Fund’s liability for claims for economic losses caused by oil pollution aligns with international conventions; (e) providing that the Fund is liable for the costs and expenses incurred by the Minister of Fisheries and Oceans or any other person in respect of preventive measures when the occurrence for which those costs and expenses were incurred has not yet created a grave and imminent threat of causing oil pollution damage; (f) authorizing the provision of up-front emergency funding out of the Fund to the Minister of Fisheries and Oceans for significant oil pollution incidents; (g) creating an expedited, simplified process for small claims to the Fund; and (h) providing for administrative monetary penalties for contraventions of specified or designated provisions under that Act.