November 30, 1945

CCF

Alexander Maxwell (Max) Campbell

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

Mr. CAMPBELL:

There is another group of people I should like to bring to the attention of the minister, although I do not know whether or not he can help them. I refer to settlers who moved from the dried-out. areas into the semi-bush country and who just had

Income War Tax

their first crops about the time they began to get good prices. When they first moved in they put up temporary shacks: I know that last year quite a few wanted to build themselves decent houses, but because they had quite good crops which were worth a good deal of money the income tax was very heavy, and ' they were precluded from building their homes. I was wondering if there was any way of giving these people a little help.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

It would be quite inconsistent with all income tax principles to permit capital expenditure for houses to be regarded as deduction from income for taxation purposes. What I am about to say may not be entirely relevant, but if they w-ere settlers who had suffered losses in the place from which they moved, such losses may now be set off against profits in other years. That is, the loss in-any particular year may be carried back against the profits of the previous year, or against the profits of the three following years. This system has been in force for only a year or two; nevertheless, in cases where there are actual losses there is some mitigation of the rigours of the income tax in years of high profits and high gains. I cannot see any hope of making any change in the law which will allow persons to build houses for themselves out of their profits, and of that being allowed as a deduction for income tax purposes.

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CCF

Alexander Maxwell (Max) Campbell

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

Mr. CAMPBELL:

This particular group will have to start all over again. They lost practically everything they had.

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IND

Herbert Wilfred Herridge

Independent C.C.F.

Mr. HERRIDGE:

Has the minister given consideration to the greater decentralization of income tax administration? In British Columbia the administration is centred in Vancouver, and the great majority of the people have no contact with it. I have heard it suggested on many occasions that if the administration were decentralized it would do a great deal to speed up the service of the department, and1 in this way the department would be able to give more satisfactory service and advice to the majority of the people.

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LIB

James Joseph McCann (Minister of National Revenue; Minister of National War Services)

Liberal

Mr. McCANN:

The matter of district reorganization has been under review for the past year. A year ago a committee was set up to study the whole problem with respect to the matter. Ten days or two weeks ago I tabled in the house-and a copy was tabled in the other place-the report of that commission. Although this report has not yet been accepted by the government, there is an outline of a plan for greater district organization from one end of the country to the other. This is done with a view to giving better

service to the public. Then, it will give assistance to some of the offices in the larger centres by the setting up of subdivisions to assist offices which are already overworked.

I am not prepared to make a statement as to the exact location of these new offices until such time as this report has the endorsa-tion of the government. I can only say that the matter is well in band', and that it is the purpose and the aim of the taxation division of , the Department of National Revenue to give the public better service, both by opening up new districts, and by adding to the staff as many competent people as we can get and are needed.

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PC

Gordon Knapman Fraser

Progressive Conservative

Mr. FRASER:

Every year I have referred to these district offices. I hope that an office will be put in Peterborough. Last year one man was sent up there, and was placed in the back of the customs house. Very few people knew he was there.

In many instances the final receipts for income tax payments are not sent out for two or three years. Taxes may be due, but the taxpayer may believe he has made a full payment. Then the govfernment will come along and tell him that he should have paid a tax on this or on that. In my view this condition is not fair to the taxpayer, particularly when he must wait two or three years for his bill, and have included on that bill interest for that length of time. We have noticed that this has happened in the Belleville district, -which serves Peterborough. I must say, however, that that district is served much better since the addition of more staff. I do not think the taxpayer should be charged interest until he gets his bill. It would be proper to make the charge from the time he receives it until the bill is paid. What does the minister think about this?

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LIB

William Alfred Robinson

Liberal

Mr. ROBINSON (Simcoe East):

What is the present position of those persons who have maintained in their homes British refugee children during -the war, and who are still maintaining the-m? Has the department given any consideration to extending income tax deductions to those people? They have been put to a great deal of expense and are worthy of great credit.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Perhaps the hon. member is familiar with the history of the situation respecting British children. A distinction was drawn between children from- the United Kingdom who came under a government-sponsored scheme, and those who did not. With regard to the former class some deduction for income tax purposes was allowed the Canadian taxpaper who took these children

Income War Tax

who were moved under an arrangement made between the governments. However, no such deduction was allowed in other cases.

The relevant amendment in 1944 was as follows:

In this act, unless the context otherwise requires, words referring to a child of a taxpayer include

(b) a person who is under 18 years of age and wholly dependent on the taxpayer for support and of 'whom the taxpayer has in law or in fact the custody and control.

That was the first time parliament accepted the principle that a deduction could be allowed in respect of a child who was not a child of the taxpayer, either in fact or by adoption. But since that time a taxpayer may get a deduction in respect of any child who is wholly dependent or, as the section says, any child under eighteen years of age who is wholly dependent on the taxpayer for support, and of whom the taxpayer has in law or in fact the custody and control.

I would suppose that some of the British children who are here are not wholly dependent upon the Canadian taxpayer for support. In that event, if they are only partly dependent, there would not be a deduction. But for those who are wholly dependent the deduction is now allowed.

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LIB

James Ewen Matthews

Liberal

Mr. MATTHEWS (Brandon):

What is the status for tax purposes of children from the United Kingdom maintained in Canada?

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I do not know whether there is any special advantage there or not. The provision with regard to government-sponsored transfers of children was never repealed, so far as I recollect. So that the taxpayer who has custody of one of those children has two sections under which he might come. Whether one section is more advantageous than the other, I do not know.

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PC

Gordon Knapman Fraser

Progressive Conservative

Mr. FRASER:

I should like the minister to tell us what he thinks about my suggestion that the interest should not start until the taxpayer receives his account from the department.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I do not agree with it. Here you have one taxpayer who correctly computes his tax liability and pays his money. You have another taxpayer who incorrectly computes his tax liability and keeps part of the money which it is eventually decided should have gone to the crown. The suggestion is that he keep it interest free, and I do not see the equity in that.

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PC

Gordon Knapman Fraser

Progressive Conservative

Mr. FRASER:

I doubt very much whether the minister could probably make out an income tax form and be absolutely correct according'to the decisions of the offices across

the country. Every one of them has a different idea as to the rulings. The matter must come to Ottawa when any one. objects or is not sure; it goes through the office here and eventually gets back to the district office. Perhaps a year or two or three years may elapse. There may be a dispute over an amount that should be payable. I know of one case where there was a difference of $700. The taxpayer thought he was entitled to it, and it was two years before it was decided that he was not entitled to it. I understand that the district office said he was entitled to it but the head office said he was not. When there is any doubt about the matter I do not think the taxpayer should pay interest.

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CCF

Percy Ellis Wright

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

Mr. WRIGHT:

A few moments ago the minister said that it was against the principles of the income tax that deductions should bo allowed for the building of homes.

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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

That is right.

Mr. lYRIGHT: When the minister considers the matter of taxation before his next budget I think he should give some consideration to changing that principle. I would suggest that it be done this year, because there is a scarcity of material and it might bring about an increase in the price ceiling, but in another year serious consideration might be given to permitting deductions from income tax for what is spent on the building of a home. We need homes in Canada and we need better homes. It is very difficult for people, especially those in the lower income groups, to acquire a home under our present income tax structure. I am not suggesting that deductions be allowed where a home costing $10,000 or $20,000 or $50,000 is built, but I think serious consideration should be given to allowing some exceptions in the case of the moderate home costing from $5,000 to $7,000. There is a tremendous need for homes of that type; there is a tremendous need for housing on our farms, in our industrial areas and in our towns and villages practically all over ' Canada.

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PC

William Alexander McMaster

Progressive Conservative

Mr. McMASTER:

I should like to bring up a matter which perhaps should have been brought up earlier. It has to do with ministers; not ministers of the crown but ministers of the gospel. I believe it has been decided by the income tax authorities that no allowance for an automobile can be made to ministers. Take a minister out west or in some parts of Ontario; he may have several charges and it is imperative that he have an automobile. Some fair allowance should be made on an annual basis without its being necessary for these men to keep the receipts

Income War Tax

they get every time they buy gas or oil. There should also be a reasonable depreciation allowance. An automobile is absolutely necessary in their work and some fair allowance should be granted.

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PC

Harry Rutherford Jackman

Progressive Conservative

Mr. JACKMAN:

This question has come up in previous sessions. I am not going to press it now, but I want to let the minister know that at some time or another we want some action. There should be not only an allowance not only for automobiles which are needed by ministers to visit their flocks, but be some exemption in regard to the cost of the automobile. This brings to my mind the old question of clergymen of the Protestant religion who are paid so much money as against priests of the Roman Catholic church who do not receive salaries or stipends. Some take the vow of poverty and do not have a fixed income. At any rate they are not

assessable and I think that point will be granted. Whether a man has a family or whether he is a celibate he has to have a roof over his head. If we are to have equality between the two religions in this country, some consideration should be given to ministers of the Protestant persuasion who must provide themselves with a manse or a lodging of some description. If the church sees fit to give the minister a manse, the rental value must be computed and added to his income and he pays on the total amount.

I am only asking that equality prevail as between the two religions. I think all members of this house believe that we must have equality, no matter what faith one belongs to. I will leave it with the minister at the present time. This is a matter which comes up periodically, although I have not had any letters on it this particular session. But it has come up in previous years, and those of us who belong to the Protestant persuasion believe that equality of treatment should be given to our ministers.

I should like to ask the minister under what section of the income tax act is the wife of a farmer able to carry on a poultry division of her own and not have her income bulked in with the general income of the farm? Is that done under a section of the income tax act?

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LIB

James Joseph McCann (Minister of National Revenue; Minister of National War Services)

Liberal

Mr. McCANN:

There is no particular form for that type of return; it just gets down to a matter of practice and regulation where the law does not see the last nickel or the last drop and takes into consideration the peculiar circumstances of the woman on the farm. I just want to make one observation with reference to the remarks the hon. member made

about the taxation of clergymen. As far as income tax returns are concerned, clergymen of all denominations in Canada are dealt with on exactly the same basis.

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PC

Harry Rutherford Jackman

Progressive Conservative

Mr. JACKMAN:

If the minister had

enough experience in his department-

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LIB

James Joseph McCann (Minister of National Revenue; Minister of National War Services)

Liberal

Mr. McCANN:

I have had plenty of experience. I do not propose to let the hon. member for Rosedale broadcast any such statement to the people of Canada as he has done. I know his purpose.

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November 30, 1945