July 19, 1944

PRIVILEGE-MR. JAQUES REFERENCE TO STATEMENT OF MR. COLDWELL IN ALBERTA ON JULY 18

SC

Norman Jaques

Social Credit

Mr. NORMAN JAQUES (Wetaskiwin):

My attention has been called to an item in to-day's paper as follows:

The incident occurred when Mr. Coldwell, main speaker of the meeting, said that Norman Jaques, Social Credit member for Wetaskiwin in the House of Commons, declared in the house recently that the finance of Canada was controlled by Jews.

I am not apologizing for or retracting anything that I have said in this house or on the public platform outside this house, but I will challenge the hon. member for Rosetown-Biggar (Mr. Coldwell) to show where I have ever made such a statement. What I have said is that international finance is under Jewish control. Now I will go further and say it is evident that the C.C.F. intend to make that control national and are using the

strong arm of their gestapo to enforce their control.

Topic:   PRIVILEGE-MR. JAQUES REFERENCE TO STATEMENT OF MR. COLDWELL IN ALBERTA ON JULY 18
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?

Frederick Clayton Casselman

Mr. CASSELMAN:

C.C.F. storm troopers called in.

Topic:   PRIVILEGE-MR. JAQUES REFERENCE TO STATEMENT OF MR. COLDWELL IN ALBERTA ON JULY 18
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WAYS AND MEANS

INCOME WAR TAX ACT


The house in committee of ways and means, Mr. Bradette in the chair.


LIB

Joseph-Arthur Bradette (Deputy Speaker and Chair of Committees of the Whole of the House of Commons)

Liberal

The CHAIRMAN:

The committee is on resolution 27.

27. That dividends paid by a wholly-owned subsidiary non-resident company to a Canadian parent company be exempt from tax when received by such parent company.

Topic:   WAYS AND MEANS
Subtopic:   INCOME WAR TAX ACT
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CCF

Stanley Howard Knowles (Whip of the Co-operative Commonwealth Federation)

Co-operative Commonwealth Federation (C.C.F.)

Mr. KNOWLES:

Will the parliamentary

assistant indicate what amount of taxes will be forgone by the adoption of this resolution?

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Subtopic:   INCOME WAR TAX ACT
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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. D. C. ABBOTT (Parliamentary Assistant to the Minister of Finance):

We have no information which would show the amount of taxes forgone, as the hon. gentleman puts it. As the committee will appreciate, the purpose of the proposed amendment is to avoid triple taxation. The situation now with respect to a wholly-owned subsidiary in Canada is that the dividends to the parent company are exempt because they have already been taxed in the hands of the subsidiary. In other words, company to company dividends are exempt from tax to avoid double taxation. As the law stands at present, if a foreign subsidiary is taxed in the foreign country, say the United States or some other, at rates comparable to those in force in Canada, those profits in effect will be subject to triple taxation because they will be taxed in the foreign country, they will be taxed again in the hands of the parent company in Canada, and they will be taxed once more and distributed to the shareholders. If the tax rates in the foreign country are lower than the Canadian tax rates then there would be some benefit in a complete tax exemption on dividends received from a foreign subsidiary company, and that of course is not the intention of this resolution. In order to guard against the possibility of that situation I am going to ask one of the ministers to move an amended resolution which will in effect provide for a tax credit covering the amount of tax paid in the foreign country by such wholly-owned subsidiary of a Canadian corporation. On that basis there will be no tax advantage to the parent. The Canadian parent company would be in the same tax situation as though it were an individual carrying on business in the two count-tries and subject to tax in the foreign country.

Income War Tax

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

In the

case of a wholly-owned subsidiary of a Canadian company operating under a Canadian charter in a foreign country, what would be the .position (a) under the law as it stands at present and (b) under the proposed change? What is meant by "non-resident"? Would that be a non-resident company?

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Subtopic:   INCOME WAR TAX ACT
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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

I must apologize; there was so much noise I could not get my hon. friend's point clearly. A wholly owned subsidiary resident abroad is not now subject to payment of Canadian income tax at all; but if it brings the dividends into Canada they are taxable income in the hands of the parent company.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I understand that, but what is meant by "resident abroad"? The case I gave is that of a company which is a subsidiary company but is operating under a Canadian charter; that is to say the capital structure is set up under the Canadian Companies Act, but it operates in the United States. Is that a non-resident company within the meaning of this resolution?

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Subtopic:   INCOME WAR TAX ACT
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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

The question of residence

is a question of fact. The case my hon. friend cited may be a company which comes under section 4(k) of the Income War Tax Act. Brazilian Traction is an example of that kind of company. It is incorporated in Canada but its business and assets are situated entirely outside Canada, and it operates outside of Canada.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

Exactly,

but that is not a subsidiary.

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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

No, it is not a subsidiary.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I do not

mind giving the name of the company. Fraser Companies Limited is a Canadian corporation with subsidiaries. A wholly owned subsidiary, Fraser Paper Limited, is incorporated under a New Brunswick charter, but all of its assets are situated across the Saint John river in the state of Maine, where its whole undertaking is carried on. What will be the position of that company with respect to the provisions of resolution 27? It depends on the meaning * you give to the words "resident" or "nonresident." Is it a non-resident company?

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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

I think the position of that company would be this. It is a Canadian company carrying on business abroad. As such it is entitled to take credit for any taxes which it is obliged to pay to the foreign jurisdiction, and therefore it is not a company which needs

the protection of this proposed resolution because it will have already received credit for the foreign taxes in its own Canadian tax returns. This resolution contemplates a wholly owned subsidiary of a Canadian company which is incorporated and operates abroad and is therefore not a Canadian taxpayer and is not in a position to take credit as a Canadian taxpayer is for taxes which have been paid in a foreign jurisdiction, although in fact all the equity of the company is owned by a Canadian taxpayer.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury):

I think

that explains the situation, but I want clarification of what is meant by "non-resident company." A company has not a residence but it has a legal domicile. The legal domicile of the example I gave is in Canada, but the operations are in the United States. Perhaps it would be better if it were made clear in the legislation what a resident company means and what a non-resident company means.

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LIB

Douglas Charles Abbott (Parliamentary Assistant to the Minister of Finance)

Liberal

Mr. ABBOTT:

Consideration can be given

to that in drafting the legislation. As my hon. friend knows, there is a long line of cases which lay down what the residence of a company is for taxation purposes.

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NAT

Richard Burpee Hanson

National Government

Mr. HANSON (York-Sunbury) :

Are not

the words "legal domicile" used?

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July 19, 1944