December 13, 1945

DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS


Hon. C. D. HOWE (Minister of Munitions and Supply) moved the second reading of and concurrence in amendments made by the senate to bill No. 173, respecting the Department of Reconstruction and Supply. He said: Mr. Speaker, several amendments have been made to the bill. They fall into three classes. The first amendment is purely a revision of wording and makes no material change. The second class of amendments- there are several of them-make it clear that there is an appeal to the exchequer court from any decision of the minister. A recent judgment of the court had made that somewhat doubtful, and so the bill has been rewritten to make it clear that all decisions of the minister with reference to matters in the renegotiation section are subject to an appeal to the exchequer court. There are two further amendments the purpose of which is to put a termination date to the period during which contracts are subject to renegotiation. A contract to be subject to renegotiation must have been entered into before the second day of September, 1945, and any bulk termination of contracts cannot be for any year later than the fiscal year that includes September 2, 1945. That is the purpose of the amendments to the bill. Its provisions have not been weakened fMr. Mackenzie King.] in any way, and I have no hesitation in moving concurrence in the amendments made by the other house. Motion agreed to; amendments read the second time and concurred in. The house having reverted to orders of the day:


SHIPPING ACCOMMODATION


On the orders of the day:


LIB

David Arnold Croll

Liberal

Mr. D. A. CROLL (Spadina):

Mr. Speaker, may I direct a question to the Minister of National Defence? It was reported in the press yesterday that after December 15, the Lady Nelson would be used for transporting to this country the wives and other dependents of soldiers. Has the minister a statement to make on that matter?

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   SHIPPING ACCOMMODATION
Sub-subtopic:   TRANSPORTATION TO CANADA OF WIVES OF SERVICE PERSONNEL
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LIB

Douglas Charles Abbott (Minister of National Defence; Minister of National Defence for Naval Services)

Liberal

Hon. DOUGLAS ABBOTT (Minister of National Defence):

Yes. My hon. friend told me that he was going to ask this question, and I am glad that he has done so because the session will be over in a day or two and it might be well for me to state just what the position now is.

The basic policy governing the repatriation of soldiers and war brides from the United Kingdom remains unchanged. Very briefly this policy, as hon. members are already aware, is that no major movement of dependents will be undertaken until all troops who are available for repatriation, and have priority rights, have been returned to Canada. However, recent developments have now placed us in a more favourable position than was previously anticipated.

By the end of this month we shall have repatriated since V-E day slightly more than

180,000 soldiers in addition to Royal Canadian Navy and Royal Canadian Air Force personnel, leaving approximately 100,000 soldiers to return from overseas. This latter figure includes the occupation force of 25,000 and repatriation and other controlling staffs in the United Kingdom. This position is sufficiently favourable to justify our planning to allot in the latter part of January, and thereafter, an increased amount of shipping to repatriation of dependents without prejudice to the early repatriation of servicemen still abroad. The ships we propose employing for the return of dependents are our two hospital ships, the Lady Nelson and the Letitia. The Lady Nelson arrives in Canada on December 15 on its last trip with battle casualties. There will be, of course, a small

Income War Tax

number of casualties to service personnel resulting from accidents and- sickness, and these will continue to be returned to Canada by hospital ship; the remaining space will be made available to dependents. It is estimated that the Lady Nelson is capable of carrying between 200 and 300 dependents and can make about three round trips every two months.

The Letitia is at present in Vancouver where she is undergoing normal maintenance. She will return to England, via the Panama canal, and be dry-docked for necessary repairs and it is anticipated will be available for transatlantic runs about the end of January. We plan on employing this hospital ship in the same manner as the Lady Nelson. The Letitia can accommodate approximately 400 dependents, and can also do about three round trips in two months.

At the moment a strong possibility exists that in addition to these two ships at an early day we will be able to divert the Lady Rodney to carrying dependents. This ship was recently taken off the Newfoundland run and is now employed on troop carrying. The Lady Rodney has a capacity for approximately 250 to 300 dependents.

I wish to point out here that the carrying of dependents presents different problems from those incurred in the carrying of troops, and only certain ships are suitable for repatriating war brides with any economy of carrying capacity. Ships which carry dependents must have additional stewardesses and other ship staffs. They must be stocked with crockery and have suitable dining facilities; and in addition have different sanitary arrangements from those provided on our troopships.

The government is, and always has been, fully aware of the desirability of returning to Canada the dependents of Canadian soldiers at the earliest possible moment consistent with the rights of service personnel having repatriation priority. It therefore affords me no little pleasure to be able to inform the house of this shipping which is being made available at an earlier day than had hitherto been considered possible.

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   SHIPPING ACCOMMODATION
Sub-subtopic:   TRANSPORTATION TO CANADA OF WIVES OF SERVICE PERSONNEL
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PC

Norman James Macdonald Lockhart

Progressive Conservative

Mr. LOCKHART:

May I ask a supplementary question? There is no particular delay, I hope, in repatriating compassionate

cases?

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   SHIPPING ACCOMMODATION
Sub-subtopic:   TRANSPORTATION TO CANADA OF WIVES OF SERVICE PERSONNEL
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LIB

Douglas Charles Abbott (Minister of National Defence; Minister of National Defence for Naval Services)

Liberal

Mr. ABBOTT:

None whatever. They are

being handled exactly as in the past. We have been continually bringing over a certain number in this class.

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   SHIPPING ACCOMMODATION
Sub-subtopic:   TRANSPORTATION TO CANADA OF WIVES OF SERVICE PERSONNEL
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PC

Norman James Macdonald Lockhart

Progressive Conservative

Mr. LOCKHART:

I asked the question

because I understood that there was some hold-up of compassionate cases.

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   SHIPPING ACCOMMODATION
Sub-subtopic:   TRANSPORTATION TO CANADA OF WIVES OF SERVICE PERSONNEL
Permalink
LIB

Douglas Charles Abbott (Minister of National Defence; Minister of National Defence for Naval Services)

Liberal

Mr. ABBOTT:

None whatever.

47696-215J

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   SHIPPING ACCOMMODATION
Sub-subtopic:   TRANSPORTATION TO CANADA OF WIVES OF SERVICE PERSONNEL
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TRADE AND EMPLOYMENT


On the orders of the day:


PC

John Bracken (Leader of the Official Opposition)

Progressive Conservative

Mr. JOHN BRACKEN (Leader of the Opposition):

I had wished to direct a question to the Prime Minister, and I am sorry that he has gone, but perhaps the Minister of Veterans Affairs will bring the question to his attention?

It arises out of the statement made by the Prime Minister yesterday morning in tabling certain documents, one relating to the loan made by the United States to the United Kingdom, and I think also a white paper issued by the United States government containing among other things, a proposal for an international trade conference likely to be called in the coming summer. Has the government of Canada received an invitation from the United States government to attend such, a conference; and whether or not it has received such an invitation, should such an invitation be received will the government give favourable consideration to making its delegation to the proposed conference a non-partisan delegation rather than one representing only the government itself?

Hon. IAN A. MACKENZIE (Minister of Veterans Affairs): I shall be very glad to

direct the Prime Minister's attention to the question of my hon. friend, and possibly it may be answered later in the day.

Topic:   DEPARTMENT TO ASSUME FUNCTIONS OF RECONSTRUCTION AND MUNITIONS AND SUPPLY- CONCURRENCE IN SENATE AMENDMENTS
Subtopic:   TRADE AND EMPLOYMENT
Sub-subtopic:   CANADIAN REPRESENTATION AT INTERNATIONAL CONFERENCE IN 1946
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INCOME WAR TAX ACT


Hon. J. L. ILSLEY (Minister of Finance) moved the second reading of bill No. 234, to *amend the Income War Tax Act. Motion agreed to, bill read the second time, and the house went into committee thereon, Mr. Macdonald (Brantford City) in the chair. On section 1-Contractual annuities.


LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

I should like to make a statement to the house regarding this proposed amendment relating to the taxation of annuities. The committee may recall that when we were discussing the resolution on which the amendment is based I stated that the question of defining the capital element to be excluded from annuity payments for tax purposes was a very complicated one. The amendment I am now proposing to the bill which is before the committee is simpler and, at the same time, more generous to the taxpayer than the existing provision in the bill.

The amendment which I 'am now submitting provides that the capital element to be

Income War Tax

excluded from annuity payments Shall be based on either the commuted value of the annuity at the time it begins or the amount which the annuitant could, under the contract, have chosen to receive in lieu of the annuity if this amount is stated in the contract.

I should like to point out that the main problem that has had to be faced in connection with annuities is the possibility in certain cases of tax avoidance if the commuted value or optional lump sum payment is used, as is proposed in this amendment, as the basis for excluding the capital element in annuities. The possibility of abuse is in connection with deferred annuities where a large lump sum payment is made for an annuity to begin many years in the future, and the annuity may be an annuity certain for a very few years. Under such an arrangement a person would, in effect, secure tax exemption on the interest earnings of this large amount of capital which would have accumulated over the period of deferment. Possibly I have in my own mind exaggerated the importance of this danger, but I did not feel justified in presenting to the house legislation which would be subject to criticism along the lines I have just suggested. I think, however, that the proviso at the end of the amendment I have just moved will be a sufficient safeguard against the tax avoidance possibilities in the device I have just mentioned. The proviso states that notwithstanding this provision (meaning the provision relating to the exclusion of the capital element from annuity payments) the minister may, in any case in which he considers it proper to do so, exercise the powers conferred on him by subsection 2 of this section.

Subsection 2 just referred to states as follows:

"Where, under any existing or future contract or arrangement for the payment of money, the minister is of the opinion

(a) that payments of principal money and interest are blended, or

(b) payment is made pursuant to a plan which involves an allowance of interest,

Whether or not there is any provision for payment of interest at a nominal rate or at all, the minister shall have the power to determine what part of any such payment is interest, and the part so determined to be interest shall be deemed to be income for the purposes of this act."

This section, gives the minister power to deal effectively with any tax evasion which might be prompted through the somewhat generous provision with respect to the taxation of the interest element in annuities.

I had better read the amendment and send copies to those who are interested in the bill. The amendment is:

That the following be substituted for paragraph (b) in lines 9 to 30, page 1:

(b) annuities received under a contract (other than payments described in paragraph

(c) of this subsection) except a portion of each amount received thereunder that bears the same relation to the whole amount as the amount that the annuitant could, under the the contract, have chosen to receive in lieu of the annuity or, if no such choice is provided by the contract, the present value (computed in such manner as the minister may by regulation prescribe) of the annuity at the time of commencement thereof, bears to the aggregate computed in the case of an annuity for life on the assumption that the annuitant will live during the period of his normal expectation of life (calculated in accordance with mortality tables approved by the minister) of the *annuity for which the contract provides:

Provided that this provision shall not be construed to prejudice the operation of subsection 2 of this section.

Topic:   INCOME WAR TAX ACT
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LIB

Ian Alistair Mackenzie (Minister of Veterans Affairs; Leader of the Government in the House of Commons; Liberal Party House Leader)

Liberal

Mr. MACKENZIE:

I move accordingly, Mr. Chairman.

Topic:   INCOME WAR TAX ACT
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LIB

James Lorimer Ilsley (Minister of Finance and Receiver General)

Liberal

Mr. ILSLEY:

Is a further explanation

desired for this?

Topic:   INCOME WAR TAX ACT
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PC
PC

James MacKerras Macdonnell

Progressive Conservative

Mr. MACDONNELL (Muskoka-Ontario):

Am I correct in understanding that this is really designed to meet a difficulty which some people thought existed in the original subparagraph (ii) of paragraph (b) of subsection 1, particularly relating to the words "the amounts paid exclusively for the annuity", and that the words here, "the amount the annuitant could, under the contract, have chosen to receive in lieu" are now put in as applying both to annuities received in case of death and annuities received not in the case of death? In other words, those words are now considered to apply to both cases?

Topic:   INCOME WAR TAX ACT
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December 13, 1945