Bill C-86: The Law's Expected Implementation Date

Bill C-86, also known as the Budget Implementation Act, 2018, No. 2, was introduced in the 42nd Parliament, 1st Session, which ended in September 2019. It received Royal Assent on December 13, 2018, and made changes to several existing acts, including the Patent Act, the Trade-marks Act, the Copyright Act, and the Bank Act.

Consumer protection framework

Bill C-86, the Budget Implementation Act, 2018, No. 2, received Royal Assent on December 13, 2018, and introduced a new financial consumer protection framework. This framework, which applies to banks and authorised foreign banks, contains some of the most far-reaching consumer protection provisions ever proposed for banks operating in Canada.

The Financial Consumer Agency of Canada (FCAC) released two reports in 2018 that highlighted areas for improvement in consumer protection and regulatory oversight of banks in Canada. In response, the government introduced Bill C-86, which strengthened the FCAC's mandate and powers, and introduced the new framework.

The new financial consumer protection framework includes:

• Measures to prevent predatory selling practices by institutions, including a prohibition on imposing undue pressure on customers and taking advantage of them.
• Requirements for institutions to create policies that ensure products and services offered to individuals are appropriate for their circumstances and financial needs.
• Training requirements for officers and employees offering products or services regarding the consumer protection provisions.
• Disclosure requirements, including the need to disclose that institutions are prohibited from taking advantage of or imposing undue pressure on consumers.
• Redress and complaints procedures, including the requirement to establish complaints procedures that are satisfactory to the Commissioner of the FCAC, and to keep records of complaints for at least seven years.
• Whistleblowing procedures, amendments to the Financial Consumer Agency of Canada Act, and corporate governance amendments.

The new regulations, which were published in August 2021, consolidate and replace existing consumer protection regulations that apply to banks and authorised foreign banks. They include new obligations for institutions, such as improving the timeliness of complaint handling processes and updating disclosure requirements. The regulations are scheduled to come into force on June 30, 2022.

Income tax and related measures

Bill C-86, also known as the Budget Implementation Act, 2018, No. 2, received Royal Assent in December 2018 and is now law. The bill implements certain income tax and related measures, including:

• Introducing rules to provide greater certainty regarding tax consequences arising from certain foreign divisive reorganizations.
• Preventing the circumvention of the existing cross-border anti-surplus stripping rule through transactions involving partnerships or trusts.
• Preventing the misuse of the foreign accrual property income regime through the use of tracking interests involving foreign affiliates.
• Ensuring consistency between the trading or dealing in indebtedness rules and the investment business rules within the foreign accrual property income regime.
• Ensuring the appropriate application of the at-risk rules at each level of a tiered partnership structure.
• Allowing the Minister of Public Safety and Emergency Preparedness to determine international operational missions for the purpose of tax deductions for income earned by members of the Canadian Forces or police officers on such missions.
• 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.
• Ensuring that social assistance payments under certain programs do not prevent individuals from receiving the Canada Child Benefit.
• Ensuring that individuals eligible for the Canada Workers Benefit can receive the benefit without having to claim it.
• Introducing a refundable tax credit for the purposes of the climate action incentive.
• Providing allocation rules for losses applied against Part IV taxes.
• Preventing the creation of artificial losses on shares held as mark-to-market property by financial institutions.
• Revising the rules related to the non-partisan political activities of charities.
• Subjecting taxpayers with foreign affiliates to a three-year extended reassessment period for any income, loss, or other amount arising from their connection with the affiliate.
• Providing the Canada Revenue Agency with an additional three-year extended reassessment period for adjustments related to loss carryback transactions involving taxpayers and non-resident non-arm's length persons.
• Extending the reassessment period of a taxpayer by the period during which a requirement for information or compliance order is contested.
• Requiring that information returns regarding a taxpayer's foreign affiliates be filed within 10 months after the end of the taxpayer's taxation year.
• Enabling the disclosure of taxpayer and other confidential tax information to Canada's bilateral mutual legal assistance treaty partners for non-tax criminal investigations and prosecutions of certain serious crimes.
• Providing a deduction for employee contributions to the enhanced portion of the Quebec Pension Plan.

Amendments to the Excise Tax Act

Bill C-86, also known as the Budget Implementation Act, 2018, No. 2, received Royal Assent on December 13, 2018, and is now law.

The amendments to the Excise Tax Act (ETA) are divided into three parts:

• Amendments to the ETA (GST/HST Measures) and to Related Legislation
• Amendments to the ETA (Excise Measures), the Air Travellers Security Charge Act, and the Excise Act, 2001
• Customs Tariff Simplification

Amendments to the ETA (GST/HST Measures) and to Related Legislation

The amendments to the ETA (GST/HST Measures) include:

• Replacing the requirement that GST/HST be collected on the sale of carbon emission allowances with a requirement that the purchaser self-assess the GST/HST.
• Extending the assessment period for group registered education savings plan trusts that make a special relieving election regarding their past HST liability.
• Introducing GST/HST rules for investment limited partnerships.
• Clarifying the intended tax policy of excluding books sold by a public service body from the GST/HST rebate for printed books.
• Introducing amendments similar to those in 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.
• Introducing amendments similar to those in 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 non-tax criminal investigations and prosecutions of certain serious crimes.

Amendments to the ETA (Excise Measures), the Air Travellers Security Charge Act, and the Excise Act, 2001

The amendments to the ETA (Excise Measures), the Air Travellers Security Charge Act, and the Excise Act, 2001, include:

• Broadening the refund regime for excise tax on diesel fuel to allow vendors to apply for a refund when a purchaser will use the excise tax-paid diesel fuel to generate electricity, provided certain conditions are met.
• Introducing an anti-avoidance excise measure related to the taxation of cannabis, establishing rules for calculating the value of a cannabis product on which an ad valorem duty is calculated.
• Introducing amendments similar to those in 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.
• Introducing amendments similar to those in 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 non-tax criminal investigations and prosecutions of certain serious crimes.
• Making housekeeping amendments to the Excise Act, 2001, to ensure consistency between the English and French versions of the legislation.

Customs Tariff Simplification

The amendments to the Customs Tariff include:

• Simplifying the Customs Tariff to reduce the administrative burden on Canadian businesses and the Government of Canada by consolidating similar tariff items with the same tariff rates and removing end-use provisions where appropriate.
• Clarifying existing tariff provisions and making other technical amendments.

Amendments to the First Nations Land Management Act

Bill C-86, also known as the Budget Implementation Act, 2018, No. 2, received Royal Assent on December 13, 2018. The bill amends the First Nations Land Management Act (FNLMA) to give effect to changes to the Framework Agreement on First Nation Land Management.

The FNLMA is an opt-in law enacted in 1999 to ratify the 1996 Framework Agreement on First Nation Land Management. The Framework Agreement established the option for First Nations to govern their lands outside of the Indian Act. The FNLMA and the Framework Agreement provide signatory First Nations with the recognised authority to make laws relating to their lands, including resources and the environment.

The amendments to the FNLMA introduced by Bill C-86 include:

• The first piece of federal legislation enacted to reference Canada's commitment to the United Nations Declaration on the Rights of Indigenous Peoples (UNDRIP).
• First Nations with land codes in force now have greater control over their monies when their land code comes into force.
• First Nations can now manage jointly held reserve lands under land code.
• Employees of First Nations with land codes in force now have protections in legislation, such as limiting personal liability in the conduct of their duties.
• First Nations communities have greater control over the voting process to approve their land code.

The amendments to the FNLMA are expected to facilitate an additional 50 First Nations in becoming signatories to the Framework Agreement over the next five years.

Amendments to the Canada Business Corporations Act

The Canadian federal government passed Bill C-86, or the Budget Implementation Act, 2018, No. 2, in late 2018, which included amendments to the Canada Business Corporations Act (CBCA). These amendments came into force on June 13, 2019, and aimed to address concerns around money laundering and tax evasion, while also enhancing transparency over company ownership and facilitating the prosecution of financial crimes.

The amendments to the CBCA specifically targeted private, non-distributing companies. These companies are now required to establish and maintain a Register of Individuals with Significant Control, which entails identifying those with a "significant number of shares" and obtaining the necessary information for inclusion in the ISC Register. This significant control is defined as holding at least 25% of the company's voting rights or an equivalent share of the company's fair market value.

Division 6 of Part 4 of Bill C-86 sets out the criteria for identifying individuals with significant control over a corporation. It mandates that corporations meeting specific criteria must maintain a register of these individuals and stipulates the information that must be recorded. Additionally, this division outlines applicable offences and punishments.

Bill C-86, in conjunction with the subsequent Bill C-97, represents the Canadian government's efforts to enhance corporate governance rules and address long-standing concerns about financial crimes. These new rules empower authorities to expose and prosecute financial crimes more effectively, fostering greater accountability and transparency in corporate ownership structures.

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