Bill C-59: An Act to implement certain provisions of the fall economic statement tabled in Parliament on November 21, 2023 and certain provisions of the budget tabled in Parliament on March 28, 2023

• The hybrid mismatch rules are an integrity measure intended to prevent the erosion of the Canadian tax base by neutralizing the tax benefits of hybrid mismatch arrangements.
• Hybrid mismatch arrangements are cross-border tax avoidance structures that exploit differences in the income tax treatment of business entities or financial instruments under the laws of different countries to avoid taxes, by creating:
• a “deduction/non-inclusion mismatch” (i.e., a deduction on a payment in one country with no taxable income for the recipient in another); or
• a “double deduction mismatch” (i.e., deductions in multiple countries for a single expense).
• This measure implements recommendations from the G20/OECD Base Erosion and Profit Shifting (BEPS) Project. Several countries (e.g., the United States, the United Kingdom, Australia and the European Union member states) have implemented similar rules.

• This measure would promote the exploration and development of lithium from brines, which is a form of lithium mining with growing interest, particularly in Western Canada.

• Lithium is one of the six key critical minerals identified under the Critical Minerals Strategy as having the most significant potential for Canadian Economic Growth.

• This measure would expand the eligibility of the Critical Mineral Exploration Tax Credit to flow-through share agreements for lithium from brines entered into after March 28, 2023.

• It would also provide corporations with the ability to issue flow-through shares related to lithium from brines exploration and development expenses made after March 28, 2023.

• This measure facilitates intergenerational business transfers while protecting the integrity of the tax system.

• Although the stated purpose of Bill C-208 was to facilitate intergenerational business transfers, the rules introduced by Bill C-208 contain insufficient safeguards and are available where no transfer of a business to the next generation takes place.

• The Budget 2023 proposals would ensure that the exception to the anti-surplus stripping rule is available only where a genuine intergenerational business transfer takes place. To provide flexibility, it is proposed that taxpayers who wish to undertake a genuine intergenerational share transfer may choose to rely on one of two transfer options:

• an immediate intergenerational business transfer (three-year test) based on arm's length sale terms; or

• a gradual intergenerational business transfer (five-to-ten-year test) based on traditional estate freeze characteristics (an estate freeze typically involves a parent crystalizing the value of their economic interest in a corporation to allow future growth to accrue to their children while the parent's fixed economic interest is then gradually diminished by the corporation repurchasing the parent's interest).

• The immediate transfer rule would provide finality earlier in the process, though with more stringent conditions. In recognition of the fact that not all business transfers are immediate, the gradual transfer rule would provide additional flexibility for those who choose that approach.

(e) - Dividend Received Deduction by Canadian Financial Institution Groups

• Budget 2023 proposed an integrity measure that would deny the dividend received deduction for dividends received by financial institutions on shares that are mark-to-market property.

• This measure ensures that business income received by financial institutions in the form of dividends on shares that are held in the ordinary course of their business is subject to tax on the same basis as gains (profit) from those same shares. This measure also complements existing anti-avoidance rules that apply in cases where a corporation receives a dividend on a share in which its holds minimal risk.

• This measure does not impose a new tax on financial institutions. Instead, this measure ensures that business income earned by financial institutions is taxed appropriately.

• These rules provide an exception for dividends received on preferred shares.

• By increasing the rate of the Climate Action Incentive payment rural supplement from 10 per cent to 20 per cent, this measure recognizes the increased energy needs and limited access to clean transportation options for rural Canadians. This measure would benefit individuals and families residing in small and rural communities in provinces where the federal fuel charge applies.

• By continuing to use the Census Metropolitan Area designations based on the 2016 Census for the 2024-25 and 2025-26 fiscal years to determine eligibility for the rural supplement, this measure would ensure that all those who are residing in a community that has been eligible for the rural supplement would maintain their eligibility and continue to benefit.

(g) - Carbon Capture, Utilization and Storage Investment Tax Credit  

• The Clean Technology Investment Tax Credit will encourage investments in clean technology assets in Canada ensuring Canadian businesses remain globally competitive and supporting Canada’s emission reduction targets and achieving net-zero emissions by 2050. 

• The refundable Clean Technology Investment Tax Credit would be available retroactively for eligible investments in property that is acquired and becomes available for use on or after Budget Day 2023 (i.e., March 28, 2023).

• The tax credit will be subject to a phase-out beginning in 2034 and will not be available after that year.

• Significant consultations with stakeholders have occurred since the government first announced its intention to introduce a clean technology investment tax credit in Budget 2022.  Feedback received from stakeholders informed the design of the investment tax credit.

• The labour requirements would ensure that when businesses receive financial support for clean energy investments, workers would also see the benefits.

• In order to be eligible for the highest rates under the investment tax credits, businesses would need to pay workers prevailing wages and create apprenticeship opportunities.

• The labour requirements would apply to work that is on or after the date that enabling legislation for these labour requirements is first tabled.

• The Department of Finance held consultations on the labour requirements with unions, businesses and provincial governments.

• The measure would revise an outdated legislative provision that may prevent some credit unions from being treated as such for income tax and GST/HST purposes.

• Removing the revenue test from the definition of “credit union” would ensure that credit unions continue to be subject to the tax rules that apply to them so they can continue to adequately serve their members’ needs.

• The amendment would apply to taxation years ending after 2016.

• Representatives of the credit union system have expressed support for the measure.

• To help ensure the continued stewardship of funds held in Registered Disability Savings Plans (RDSPs) for the long-term financial security of beneficiaries, this measure would allow a qualifying family member (i.e., the spouse or common-law partner, parent, or sibling of the beneficiary) to replace, as plan holder, another qualifying family member who was the last remaining holder of the plan upon their death.

• As is the case under current rules, should the beneficiary be determined to be contractually competent or an entity be legally authorized to act on their behalf, the qualifying family member who is the replacement plan holder would cease to be the plan holder and replaced by that other individual.

• Budget 2023 expanded the definition of a qualifying family member to include siblings to improve access to RDSPs and to ensure family members would be able to replace each other as plan holder when one of them dies. The proposed change reflects this policy intent and also responds to requests made by stakeholders, including from the Canada Revenue Agency’s Disability Advisory Committee.

• The FHSA program was successfully launched in April 2023. Its enacting legislation received Royal Assent in December 2022 (Bill C-32—Fall Economic Statement Implementation Act, 2022).

• These legislative improvements are generally neutral or relieving in nature for Canadians. They provide more certainty to financial institutions and the CRA in the administration of the program, which will facilitate the efficient rollout of the FHSA program to more Canadians.

• A share buyback occurs when a corporation buys its own stock back from existing shareholders. While buying back shares is one legitimate way that corporations can return value to their shareholders, it can also divert corporate resources away from making investments in their workers and businesses in Canada.

• The 2022 Fall Economic Statement announced the federal government's intention to introduce a 2-per-cent tax on share buybacks by public corporations in Canada, in order to raise revenues and encourage corporations to reinvest their profits in their workers and business.

• Budget 2023 announced that the proposed tax would apply as of January 1, 2024 to the annual net value of repurchases of equity by public corporations and certain publicly traded trusts and partnerships in Canada. A business would not be subject to the tax in a year if its gross repurchases of equity were less than $1 million.

• This measure would exempt fees paid (on or after March 28, 2023) to secure or renew a letter of credit or a surety bond for certain Retirement Compensation Arrangements (RCAs) from a 50 per-cent refundable tax rule.

• This measure would also allow employers to request a refund of previously remitted refundable taxes in respect of fees or premiums paid for letters of credit or surety bonds by RCA trusts, based on the retirement benefits that are paid out of the employer’s corporate revenues to employees that had RCA benefits secured by letters of credit or surety bonds.

• Employers would be able to request a refund of refundable taxes once the corresponding retirement benefits are paid out of corporate revenues to the beneficiaries whose benefits were secured by a letter of credit RCA. This would apply to benefits paid after 2023 and would cease when the employer’s total refundable tax balance (with respect to letter of credit RCAs) is refunded.
• These amendments would solve several employers’ problem of escalating and unrecoverable refundable tax balances which previously had no practical mechanism.

• The government’s Affordability Plan includes the Canada Dental Benefit, which is providing families with direct payments of up to $1,300 per child over the next two years to cover the cost of dental care for their children under 12.

• The government has committed to fully implementing a permanent Canadian Dental Care Plan to cover all uninsured Canadians with an annual family income under $90,000 by 2025.
• The tax statutes are being amended to provide Public Services and Procurement Canada with access to taxpayer information needed to assist in the delivery of the permanent Canadian Dental Care Plan.
• This will allow Employment and Social Development Canada to engage the services of Public Services and Procurement Canada to assist in administering the Canadian Dental Care Plan.

• The GAAR is intended to prevent abusive tax avoidance transactions while not interfering with legitimate commercial and family transactions. If abusive tax avoidance is established, the GAAR applies to deny the tax benefit created by the abusive transaction.

• When it was first enacted in 1988, the GAAR was intended to strike a balance between taxpayers' need for certainty in planning their affairs and the government's responsibility to protect the tax base and the fairness of the tax system. The proposed amendments are intended to allow the GAAR to better achieve its initial objectives.

• The proposed amendments would deliver on the government’s commitment, first made in the 2020 Fall Economic Statement, to improve tax fairness and address sophisticated and aggressive tax planning by strengthening GAAR.

(q) - Employee Ownership Trusts

• An Employee Ownership Trust (EOT) is a form of employee ownership where a trust hold shares of a corporation for the benefit of the corporation’s employees. It also provides another succession option for the owners of private corporations.

• This measure implements the government’s Budget 2023 commitment to introduce rules for an Employee Ownership Trust (EOT) structure. While EOTs can exist under current tax rules, this measure introduces a standard framework on what constitutes an EOT and the associated tax treatment.

• These rules define which employees are eligible to be beneficiaries of an EOT and the rights beneficiaries possess in receiving trust distributions and voting on fundamental trust matters. It also contains provisions to prevent former owners of the corporation from participating as beneficiaries or having undue influence in EOT governance, or preventing trust distributions from favouring a particular set of beneficiaries.

• This measure was refined through feedback received from stakeholders, including members of the Canadian Employee Ownership Coalition, on draft legislation released earlier this year.

• The measure proposes a new concept, the “substantive CCPC”, which would include private corporations that are directly or indirectly controlled by Canadian resident individuals. Investment income earned and distributed by substantive CCPCs would be subject to the same income tax rules as Canadian-controlled private corporations (CCPCs). 

• This measure would not affect CCPCs or genuine non-CCPCs (i.e., private corporations that are ultimately controlled by public corporations or non-resident persons).

• This is an important measure that protects the integrity and fairness of the tax system.

(s) - Zero-Emission Technology Manufacturing

(a) - GST/HST Treatment of Equity Interests in Corporations Without Share Capital

• This measure concerns the determination of which persons are considered to be “financial institutions” (FIs) for GST/HST purposes. An FI includes not only a traditional FI, such as a bank, but also other persons, referred to as de minimis FIs, that provide a significant amount of financial services.

• A person is generally a de minimis FI if: (1) its annual financial revenue (including interest and dividend income) exceeds both $10 million and 10 per cent of its total revenues; or (2) it has over $1 million per year in credit card and interest income.

• Persons other than partnerships are generally entitled to exclude, from their financial revenue and interest income in these de minimis thresholdcalculations, interest and dividends received from a corporation that the person has a controlling interest in (directly or indirectly).

• The measure would allow a partnership to likewise exclude, from the de minimis FI calculation, interest or dividends received from a corporation in circumstances in which the partnership would be related to the corporation if the partnership were itself a corporation. 

• This integrity measure concerns the GST/HST financial services election.

• This election allows two qualifying corporations to treat most otherwise taxable supplies of property or services between them as instead being exempt supplies of financial services.

• A financial services election that has been made by two corporations may be jointly revoked by them. Currently, there are no restrictions on backdating, which means that corporations can make the revocation effective on a date before the revocation is filed. This allows corporations to change their past supplies from exempt to taxable, allowing for possible tax planning and creating compliance issues for the Canada Revenue Agency (CRA).

• The measure addresses this issue by no longer allowing corporations to backdate the revocation of a financial services election unless they obtain the agreement of the Minister of National Revenue (i.e., the CRA).

• This measure concerns a group relief provision: the election for nil consideration.
• The election allows qualifying Canadian-resident corporations and partnerships to elect to treat certain supplies between them as being made for no consideration in order to reduce cash flow and administrative costs.
• The measure makes two small but relieving technical amendments to this election to ensure that it can be accessed in circumstances that are consistent with the underlying policy of the election but where the current legislative wording of the election prevents its use.

• This measure addresses a “double taxation” issue that arises due to the interaction of two GST/HST provisions: the GST/HST financial services election and the GST/HST imported supply rules for financial institutions (FIs).

• The GST/HST financial services election allows two qualifying corporations  to treat most otherwise taxable supplies of property or services between them as instead being exempt supplies of financial services.
• However, where the recipient corporation receives a supply of a service that is performed partly inside and partly outside Canada, the recipient may nevertheless be required to self-assess tax under the separate imported supply rules even where the financial service election applies to the supply.
• This is contrary to the policy intent of the election and results in “double taxation” since not only is the recipient required to self-assess tax on the supply but the supplier is also required to pay tax on its inputs. The measure addresses this “double taxation” issue by relieving the recipient from having to self-assess tax under such circumstances.

• This measure concerns the Financial Institution (FI) GST/HST Annual Information Return that financial institutions are generally required to file if their total annual revenue exceeds a certain threshold.

• The measure would increase this total annual revenue threshold from $1 million to $2 million.

• The measure reduces the compliance burden of small to medium-size FIs.

• This measure concerns the time limit for the Minister of National Revenue to assess financial institutions (FIs) for Goods and Services Tax/Harmonized Sales Tax (GST/HST) in respect of imported supplies.
• This time limit is generally four years from the end of an FI’s reporting period, but in the case of GST (or federal component of the HST) determined under the imported supply rules for FIs in respect of an outlay or expense, this time limit is instead seven years.
• An FI that provides financial services in multiple provinces generally calculates its liability for the provincial component of the HST on a formula basis based in part on its liability for the federal component of the HST (i.e., the GST), including any federal component amount determined under the imported supply rules for FIs. However, the time limit for the Minister to assess the FI in respect of a provincial component amount determined by this formula is currently only four years.
• The measure would ensure that the seven-year time limit for assessments that applies in respect of the federal component of the GST/HST determined under the imported supply rules for FIs in respect of an outlay or expense also applies to the provincial component of the GST/HST determined in respect of the outlay or expense by this formula.

• The new GST/HST exemption for psychotherapy and counselling therapy services could help reduce the cost of mental health care services and increase access to mental health care practitioners for patients.

• A supply of psychotherapy or counselling therapy services, such as assisting an individual in coping with an illness or disorder, would be exempt from the GST/HST in a province if it is provided by a person who practices the profession of psychotherapy or counselling therapy and is so licensed to practice in that province.

• Similarly, if a province has no such licensing requirements, psychotherapy and counselling therapy services will also be exempt from the GST/HST in that province, if the service is provided by a person that has the qualifications equivalent to those necessary to be so licensed in another province. 

• This relieving measure concerns the GST/HST treatment of services of payment card network operators, such as Visa, MasterCard, American Express and Interac.

• Budget 2023 announced an amendment to the Excise Tax Act that clarified and restored the longstanding policy that payment card clearing services provided by a payment card network operator are taxable administrative services and not GST/HST-exempt “financial services”.

• This measure prescribes by regulation the services of a payment card network operator that would be excluded from the Budget 2023 provision.

• The measure ensures that these services, which have always been treated as GST/HST-exempt supplies of financial services, are not inadvertently made taxable as a result of the Budget 2023 provision.

(j) - Joint Venture (prescribed activities)

• The joint venture election simplifies GST/HST compliance by allowing joint venture participants to elect one person (the operator) to be responsible for accounting for tax in respect of their collective joint venture activities.

• The election is available, however, only if the joint venture activities are eligible activities listed in the Joint Venture (GST/HST) Regulations.

• On August 9, 2022, the Government announced it would add the following activities to the list of eligible activities in the Joint Venture GST/HST Regulations - the operation of a pipeline, rail terminal or truck terminal used for the transportation of oil, natural gas or related or ancillary products.

• This amendment would be deemed to have come into force on January 1, 1991.

• This coming into force date was chosen because the proposed new eligible activities are very similar to other activities that have been eligible activities since the introduction of the GST in 1991. Some affected businesses may have believed that their activities were already eligible activities and accounted for tax ‘as if’ a valid election were in effect. If so, the retroactive application of the changes will validate this. As it is an accounting simplification measure, there are no costs or revenues associated with it.

• The Input Tax Credit Information (GST/HST) Regulations describe information that businesses must obtain from their suppliers to support their input tax credit claims.

• These requirements are graduated, with more information required when the consideration for a supply equals or exceeds thresholds of $30 or $150.

• To simplify GST/HST compliance, the amendments increase these threshold amounts to $100 (from $30) and $500 (from $150), and allow billing agents to be treated as intermediaries for purposes of the input tax credit information rules.

• These amendments would come into force on April 20, 2021.

(l) – GST Rebate on Purpose-Built Housing/Cooperative Housing Corporations

• Bill C-56, the Affordable Housing and Groceries Act, which received royal assent on December 15, 2023, introduced a temporary 100-per-cent rebate of the Goods and Services Tax (GST)/federal component of the Harmonized Sales Tax (HST) on the cost of new purpose-built rental housing projects for which construction begins after September 13, 2023 and before 2031, and for which construction is substantially completed before 2036.

• The 100-per-cent rebate is intended to incentivize the construction of new purpose-built rental housing throughout Canada—to help create the necessary conditions to build the types of housing Canadians need, and want to live in.

• This measure would ensure that cooperative housing corporations that provide long-term rental accommodation would also be eligible for the 100-per-cent GST rebate for new purpose-built rental housing, provided the conditions for the rebate, including any prescribed conditions, have been met.

Rebate of Excise Tax for Goods Purchased by Provinces

Part 5 – Various Measures

Division 1 - Federal Financial Institutions

• The Government of Canada is committed to protecting and supporting the mental and physical health of workers.

• Dealing with pregnancy loss can be extremely challenging, and individuals who experience it often need time away from work to support their recovery. Without it, they are more at risk of developing prolonged mental health problems, such as clinical depression, anxiety disorders, and post-traumatic stress disorder.

• To better support federally regulated private sector employees during this difficult time, the Government is proposing changes to the Canada Labour Code to provide three days of paid leave following a pregnancy loss. In the event of a stillbirth, employees would be entitled to prolong their leave for a period of eight weeks without pay.

• The new leave will provide workers with greater job and income security while they recover. It will be available to the individual who was pregnant, the spouse or common-law partner, and any person who intended to be the legal parent of the child, including the biological parent and parents who were planning to have a child through adoption or surrogacy. The leave will be available to individuals who are employed in a federally regulated private sector workplace.

Division 4 - Tobacco and Vaping Products Act

• Tobacco use continues to be the leading preventable cause of illness and premature death. More than 46,000 people in Canada die because of tobacco use every year; that is one Canadian every 11 minutes.
• The total public health costs due to tobacco use in Canada, including both direct and indirect costs, are estimated at more than $11 billion per year. In 2021, the tobacco industry’s total wholesale revenue in Canada was approximately $4.6 billion.
• For decades, the Government of Canada has undertaken activities to address the national public health problem of tobacco use and to protect the health of Canadians from tobacco-related disease.
• The Government conducts activities aimed at preventing vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products, among other activities.
• The Government commits $66 million annually towards federal tobacco and vaping activities.
• These activities include regulating tobacco and vaping products, educating the public on the health hazards of using tobacco and vaping products, and providing funding to First Nations, Inuit, and the Métis Nation to develop and implement their own self-determined, culturally appropriate and distinct approaches to reducing commercial tobacco use based on their own needs and priorities.

• Today, the costs of federal tobacco and vaping activities are paid entirely by taxpayers. There has never been a comprehensive federal cost recovery framework that highlights the connection between the tobacco and vaping product industries and the costs of implementing and enforcing the legislative and regulatory framework.

• That is why the government announced in the Fall Economic Statement its intention to amend the Tobacco and Vaping Products Act to enable the fixing of fees or charges and related compliance and enforcement tools to implement a tobacco cost recovery framework.
• While the proposed amendments would provide the authority to develop and implement tobacco and vaping cost recovery frameworks, Health Canada is currently exploring a phased approach to the implementation of cost recovery frameworks for tobacco and vaping. The initial priority would be implementing the framework for tobacco.
• If adopted, the amendments would help minimize the cost burden on taxpayers of funding federal tobacco and vaping activities.

• Prior to considering the implementation of a vaping recovery framework, Health Canada would gather lessons learned from the development and implementation of the tobacco cost recovery framework, and would look at the impacts of new federal regulations on vaping products.
• Before making any regulations and implementing cost recovery frameworks, Health Canada would consult with partners, stakeholders, and other interested parties.

• The Government of Canada undertakes many activities to address the national public health problem of tobacco use, to protect the health of Canadians from tobacco-related disease, and to prevent vaping product use from leading to the use of tobacco products by young persons and non-users of tobacco products, among other activities.
• These activities include regulating tobacco and vaping products, educating the public on the health hazards of using tobacco and vaping products, and providing funding to First Nations, Inuit, and the Métis Nation to develop and implement their own self-determined, culturally appropriate and distinct approaches to reducing commercial tobacco use based on their own needs and priorities.  The Government of Canada commits $66 million annually to its federal tobacco and vaping activities.

• While the Government of Canada has cost recovery frameworks in place for other regulated products such as cannabis products, drugs and medical devices, and pesticides, there has never been a comprehensive federal cost recovery framework that highlights the connection between the tobacco and vaping product industries and the costs of implementing and enforcing its legislative and regulatory framework.

• If the legislative amendments are adopted, developing tobacco and vaping cost recovery frameworks would help minimize the cost burden on Canadian taxpayers of funding federal tobacco and vaping activities. Before making any regulations and implementing cost recovery frameworks, Health Canada would consult with partners, stakeholders, and other interested parties.

• The government is amending the Canadian Payments Act to expand membership eligibility in Payments Canada to three sets of regulated entities:

• Payment service providers that will be supervised by the Bank of Canada under the Retail Payment Activities Act;
• Credit union locals that are part of a credit union central; and,
• Operators of clearing houses designated under the Payment Clearing and Settlement Act and overseen by the Bank of Canada.

• Providing payment service providers and credit union locals access to Payments Canada’s core payment systems will enable them to better serve their clients with enhanced low-cost electronic payment services, including faster and more predictable transfers to and from non-affiliated accounts.

• This measure demonstrates concrete progress in the government’s payments modernization commitment and is broadly supported by stakeholders.

Division 6 - Measures related to Competition

For several years, stakeholders and members of the public have voiced serious concern over growing corporate concentration, rising prices, and the power of corporate giants. The Government is responding to these concerns with comprehensive competition reforms following a public consultation.

• Competition is a well-known driver of economic prosperity, spurring innovation and a greater variety of better product and service offerings at lower prices.

• Complementing the changes introduced in Bill C-56, these amendments will provide Canadians with a more modern and effective competition law. They will, among other things, help prevent harmful mergers and anti-competitive collaborations, and better hold large firms to account for their conduct.

• The amendments will benefit consumers by keeping prices low, creating better protection against false discounts and greenwashing claims, and enabling repairs. They will benefit businesses, notably SMEs, by ensuring markets are contestable and empowering smaller players to take cases directly to the Competition Tribunal. They will also benefit workers, by fostering economic dynamism and clarifying that labour markets are relevant to merger analysis.

• The amendments are informed by the comprehensive review of the Competition Act undertaken by the Government over the past two years, and offer a carefully crafted balance of the views of stakeholders.

• The rules enacted by the amendments are clear, objective, and predictable to provide the certainty the marketplace needs to thrive and for the law to be effective. They will also bring Canada more in line with key comparable jurisdictions.

Division 7 - Public Post-Secondary Educational Institutions

In the aftermath of the Laurentian University insolvency, Canadians have raised concerns with the Government of Canada about the challenges faced by public post-secondary educational institutions (PSEIs) in insolvency and restructuring situations. Recognizing these concerns and after receiving feedback from PSEI stakeholders and provincial and territorial governments, the Government is proposing to amend the Bankruptcy and Insolvency Act (BIA)and the Companies’ Creditors Arrangement Act (CCAA) to exclude public PSEIs from becoming subject to proceedings under these laws.

• Canada’s PSEIs play an essential role in our country’s social and economic development.  Federal, provincial, and territorial governments and other post-secondary education stakeholders share a common interest in fostering a sustainable, high‑quality post‑secondary educational system.

• The Government has heard the concerns raised by Canadians about the challenges presented when a public PSEI becomes insolvent. 

• The Government has engaged with provinces and territories and sought feedback from universities, colleges, experts, and lenders and other post-secondary education stakeholders to explore ways to better protect the public interest functions of post-secondary institutions in insolvency and restructuring situations. 

• Based on this feedback, the Government is proposing amendments to exclude public post-secondary educational institutions from the jurisdiction of federal insolvency laws.

• These amendments encourage preventative solutions to financial distress that take into account the important public interest functions of these institutions, as well as provincial and territorial jurisdiction over post-secondary education.

The Government looks forward to continued dialogue with provincial and territorial counterparts and other PSEI stakeholders on the implementation of these amendments.  

Division 8- Money Laundering, Terrorist Financing, Sanctions Evasion and Other Measures

• The Government of Canada is committed to maintaining a strong Anti-Money Laundering and Anti-Terrorist (AML/ATF) Regime that protects Canadians and the integrity of the financial system.     

• The 2023 Fall Economic Statement proposes legislative amendments to continue strengthening the AML/ATF framework with measures to address sanctions evasion, support operational effectiveness, combat trade-based financial crime and environmental crimes, and address risks related to white-label ATMs.

• Regarding sanctions, the 2023 Fall Economic Statement proposes to amend to the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) to enable the Financial Transactions and Reports Analysis Center of Canada (FINTRAC) to combat sanctions evasion by employing its expertise to develop intelligence products, and, where appropriate, disclose its findings to law enforcement partners.

• Regarding operational effectiveness, the 2023 Fall Economic Statement proposes changes to the Criminal Code to: to better target third-party money laundering; update provisions related to the search, seizure, and restraint of proceeds of crime; and adapt the production order for financial data so that it more effectively applies to accounts relating to digital assets.

• Regarding trade-based money-laundering, the 2023 Fall Economic Statement proposes amendments to the PCMLTFA and the Customs Act to enhance the Canada Border Service Agency’s authority to regulate the compliance of traders, report suspicions to law enforcement, and use regulatory tools to enforce compliance.

• Regarding white-label ATMs, the 2023 Fall Economic Statement broadens the PCMLTFA framework to apply to intermediary companies, known as ‘acquirers,’ offering cash withdrawal services for white-label ATMs. 

• To combat environmental crime, the 2023 Fall Economic Statement proposes to amend the PCMLTFA to enable FINTRAC to share intelligence with Environment and Climate Change Canada and the Department of Fisheries and Oceans.

• Finally, the 2023 Fall Economic Statement proposes to amend the PCMLTFA to improve FINTRAC’s strategic intelligence products by allowing it to list names of foreign entities, including persons, and address technical inconsistencies and close loopholes.

Division 9 – Federal-Provincial Fiscal Arrangements Act

• The purpose of the amendment to the Federal-Provincial Fiscal Arrangements Act is to clarify the Government’s intention to publish details on payments related to major transfer programs to fulfill the publication obligations set out in section 42.

• The proposed amendment ensures that Canadians will have access to up-to-date detailed information on Equalization and other major transfers payments to provinces and territories. 

• The proposed amendment confirms that payment information will be released for major transfers and specifies the details and the tool to be used for publication.

• The publication obligation under Section 42 is not intended to apply to tax-related payments made by Canada to provinces, territories and Indigenous governments, as the administrator of their tax system. Publication of detailed information on these payments raises concerns in terms of disclosure of sensitive taxpayer information, appropriate prior consultations with impacted governments and potential misinterpretation of information being provided.

Division 10 - Public Sector Pension Investment Board Act

In Budget 2023, the Government re-affirmed its Budget 2022 commitment to add two seats to the Board of Directors of the Public Sector Pension Investment Board (PSPIB) for representatives of organized labour, in keeping with the current recruitment rules for filling positions for board members.

Board Composition

• As announced in Budget 2022 and 2023, the Government is proposing to move forward with the expansion of the membership on the Public Sector Pension Investment Board from 11 to 13 members, with the Board’s new seats filled by representatives of organized labour.

• The PSPIB is founded on the principle of independent, professional management of the investments for the pension plans in the interest of the beneficiaries and contributors.

• Its Board was established to support its arms-length relationship that results in investment decisions which are focused on maximising return without undue risk of political or outside influence.

• Amendments to the Board membership seek to preserve the high threshold of qualification required to participate on the Board, while permitting greater representation on it. 

Division 11 - Department of Housing, Infrastructure and Communities Act

• This legislation establishes the Department of Housing, Infrastructure and Communities and its mandate to advance national housing outcomes, reduce and prevent homelessness, and support and promote public infrastructure in order to foster inclusive, sustainable, and prosperous communities.  

• Through this legislation, Infrastructure Canada will become the Department of Housing, Infrastructure and Communities. The Act will establish a Minister of Infrastructure and Communities and a Minister of Housing, both supported by the Department and a single deputy minister, and the authorities necessary to support them in carrying out their roles and responsibilities.

• This legislation will set out the powers, duties, and functions of both Ministers and provide a framework for the activities to be undertaken by the department, notably managing government programs, distributing funding, convening partners, conducting research, collecting and publishing data, and establishing and remunerating advisory committees or councils. 

• Enabling legislation will not create additional bureaucracy. Rather, it demonstrates that the federal government is aligning itself to address infrastructure and housing priorities in an integrated fashion, and ensures the department is equipped to deliver on its broadened mandate.

• The Department of Housing, Infrastructure and Communities Act supports greater coordination between all orders of government, in partnership with developers, community housing providers, Indigenous peoples and the business community, and meaningful collaboration that will help address the housing crisis and support integrated planning for future infrastructure investments.

• Growing and vibrant Canadian communities require affordable homes as well as other infrastructure like public transit, modern water and wastewater systems, and community centres. The Department of Housing, Infrastructure and Communities will support the government improving housing outcomes and enhancing public infrastructure.