Tuesday, October 29, 2002
Mr. Pat Martin (Winnipeg Centre, NDP): Mr. Speaker, I find it outrageous that breaking the law should be tax deductible for any taxpayer, personal or corporate. Yet we continue to allow companies to write off fines as a business expense. Presumably Acres International will be able to write off the fine it just got for bribing the Government of Lesotho.
I ask the government, what possible justification could there be for continuing to allow businesses to deduct fines and penalties as tax write-offs?
Hon. Maurizio Bevilacqua (Secretary of State (International Financial Institutions), Lib.): Mr. Speaker, I will take this opportunity to clarify the issue which I am sure is of great concern to the hon. member.
Fines and penalties imposed under the Income Tax Act are not deductible. According to a Supreme Court of Canada decision however, other fines may be deductible but only if they are legitimate business expenses.
Mr. Pat Martin (Winnipeg Centre, NDP): Mr. Speaker, the Supreme Court in 1999 ruled that fines and penalties can be deductible and since then, businesses have been deducting fines and penalties. The government's own lawyers argued against this. They argued that it is contrary to public policy to allow fines and penalties as tax deductions, but they lost that argument in the Supreme Court. The government did not waste any time cracking down on the disability tax credit. Yet since 1999 it has known that this tax loophole for its buddies exists and has failed to take any action.
I ask the minister again, will the government take action within this tax year to clarify the Income Tax Act so that businesses cannot deduct fines and penalties?
Hon. Maurizio Bevilacqua (Secretary of State (International Financial Institutions), Lib.): Mr. Speaker, we will of course monitor the effects of the case under discussion to ensure that fines for serious infractions are not deductible.
I do want to clarify something else that the hon. member mentioned in reference to disability. I want the hon. member to know that the government increased by 70% the funding for disabled Canadians and has done amazing work, particularly led by the hon. member for Fredericton.
