THE STANDING SENATE COMMITTEE ON NATIONAL FINANCE
EVIDENCE
OTTAWA, Tuesday, November 21, 2023
The Standing Senate Committee on National Finance met with videoconference this day at 9 a.m. [ET] to study Bill C-241, An Act to amend the Income Tax Act (deduction of travel expenses for tradespersons).
[English]
Mireille Aubé, Clerk of the Committee: Honourable senators, there is quorum. As clerk of your committee, it is my duty to inform you of the unavoidable absence of the chair and deputy chair and to preside over the election of an acting chair. I’m ready to receive a motion to that effect. Are there any nominations?
Senator Smith: Senator Clément Gignac.
Ms. Aubé: Are there any other nominations? It is moved by the Honourable Senator Smith that the Honourable Senator Gignac do take the chair of this committee.
Is it your pleasure, honourable senators, to adopt this motion?
Hon. Senators: Agreed.
Ms. Aubé: Agreed. I declare the motion carried.
Senator Clément Gignac (Acting Chair) in the chair.
[Translation]
The Acting Chair: Good morning, everyone. Thank you, Madam Clerk.
My name is Clément Gignac, I am a senator from Quebec. I have the pleasure of chairing this meeting in the absence of our chair.
I’d now like to ask our colleagues to introduce themselves, starting on my left, please.
Senator Galvez: Rosa Galvez, independent senator from Quebec.
[English]
Senator MacAdam: Jane MacAdam, Prince Edward Island.
Senator Loffreda: Senator Tony Loffreda, independent senator from Montreal, Quebec.
Senator Smith: Larry Smith, Quebec, home of the Grey Cup champions in Montreal.
Senator Marshall: Elizabeth Marshall, Newfoundland and Labrador.
[Translation]
Senator Dagenais: Senator Dagenais, from Quebec.
The Acting Chair: Honourable senators, today we resume our study of Bill C-241, An Act to amend the Income Tax Act (deduction of travel expenses for tradespersons), which was referred to this committee by the Senate of Canada on June 8, 2023.
[English]
We have the pleasure to welcome Tomi Hulkkonen — I am hoping that I am correctly pronouncing your name — Business Manager for the local Carpenters Union and South-West Ontario Area Manager for the Carpenters Regional Council. Welcome and thank you for accepting our invitation from the Standing Senate Committee on National Finance.
Maybe you could start if you have any opening remarks. After that, it will be followed by questions from around the table. Welcome.
Tomi Hulkkonen, Business Manager, local Carpenters Union and South-West Ontario Area Manager for the Carpenters Regional Council, as an individual: Good morning. I’d like to thank the honourable senators for allowing me the opportunity today to appear before committee as a witness in your study of Bill C-241.
My name is Tomi Hulkkonen, and I’m a representative of the Carpenters’ Regional Council, a council of trade unions comprised of all the locals of the United Brotherhood of Carpenters and Joiners of America across Central, Western and Northern Canada. In total, the United Brotherhood of Carpenters represents over 70,000 men and women of the carpenters’ union who work in the trades all over the country.
Today, I stand before you as an individual tradesperson. My family and my birth country of Finland are several generations of tradespeople: brick masons, mechanics, carpenters and electricians. I came to Canada at a young age, but worked in construction during my summers overseas while in high school and learned to love working with my hands and solving problems.
As a tradesperson myself, I’m especially proud to speak to the committee about the impact that this bill will have on the lives of my fellow tradespeople.
I believe the argument in favour of passing Bill C-241 can be broken down into three key areas: parity, cost and mobility for current and future skilled tradespeople.
The skilled trades industry is one of the only industries in our country that does not cover travel expenses over large distances for employees as it relates to their work. Salaried employees across Canada can enter a claim under the Income Tax Act and be compensated for part or all of their work-related travel expenses, and for food, lodging and transportation.
This policy is effective for workers across most industries as travelling for work in other industries is usually for extended periods of time and across longer distances that rule out the possibility of commuting by car. However, our industry is unique in that many tradespeople, especially in rural parts of Canada, are required to travel to job sites over 120 kilometres away from their ordinary place of residence on a daily basis to get to and from work. By nature of being in this industry, tradespeople go where the work is. Certain regions have more employment opportunities than others at certain points in time, and this changes with levels of infrastructure investment. Once a project has finished being built, they will begin working on the next one, often in a completely different area.
Even if a tradesperson were to remain with the same employer for their entire career, it’s conceivable that they could work on tens or even hundreds of job sites over that duration across multiple regions.
Although some workers will regularly fly in to perform work in isolated communities for two to three weeks at a time on what are known as “camp jobs,” the vast majority of the work in our industry involves travel, which actually requires travelling to and from the job site on the same day. This doesn’t meet the current eligibility conditions set out in the Income Tax Act or fall under the temporary relocations that the Labour Mobility Deduction for Tradespeople applies to.
This is regular daily work for many, and the cost to them is excessive. Compensation for tradespeople working regularly in regions outside their place of ordinary residence would bring parity for skilled trades workers. They are essential to Canada’s economic development and the least they expect is to be recognized as such alongside other industries. Our elected and appointed officials enjoy these benefits, just as I enjoy them today. The people who build our country should enjoy them too.
Further, not having recourse to compensation is placing an undue burden on our skilled trades workers. The cost of food, lodging, gas and repairs associated with travelling long distances all add up. For far too long, these workers have been paying out of pocket for these expenses.
My oldest son Theo is a carpenter apprentice who went to work on large projects in northern Ontario when work slowed down at home. He had to drive almost 1,000 kilometres each way and was out of pocket for his food, vehicle expenses and lodging, with no way to recuperate these costs, just to be able to work. His story is similar to thousands of tradespeople today and many who are not able to financially justify these additional costs.
Tradespeople are building the infrastructure that will take our country forward. From solving Canada’s housing crisis to building the infrastructure necessary to facilitate a green energy transition, this work is essential for all current and future Canadians. The status quo is prohibitive to the skilled trades and has the potential to prevent much of this work from being performed.
Finally, it is necessary to consider the need for increased labour mobility and the impact this has on solving Canada’s skilled trades shortage. To build the infrastructure our country needs, the movement of tradespeople across regions is necessary. This is essential for both people travelling to larger metropolitan areas for work as well as those required to perform work in remote locations.
In rural communities, there are often limited work opportunities for tradespeople that live there. Local projects are infrequent, and to fill in these employment gaps these workers need to travel large distances outside their community. Failure to do so will result in the loss of their primary source of income and this places rural Canadians at a huge disadvantage. It is also a deterrent for people in smaller communities from getting into the skilled trades if the travel required to perform work is prohibitively expensive. The ability to write off travel expenses will increase accessibility to newcomers joining our industry.
The same can be said in the reverse for workers in larger areas who are required to travel to smaller communities to build infrastructure projects there. These jobs include hydroelectric dams, mines, schools, hospitals and other essential services in isolated communities that desperately need access to them.
Infrastructure targets, such as the federal government’s goal of connecting 100% of Canadians by 2030, cannot be expected to be achieved if our workers have to pay out of pocket to perform this work. We cannot afford to leave rural communities behind by making the work there inaccessible due to cost.
As you can see, I’m strongly in favour of Bill C-241 being passed. For decades, our industry has been underfunded, and we are seeing the consequences now as we lack the workers to build the infrastructure Canada so critically needs. I encourage the committee to come together in support of this non-partisan bill to help the skilled tradespeople who build our country by giving them parity with other industries, reducing their out-of-pocket cost to perform essential work and increasing their mobility while boosting accessibility for the next generation to get into the trades. Thank you.
[Translation]
The Acting Chair: Thank you, Mr. Hulkkonen, for your opening statement.
I’d like to take this opportunity to acknowledge the presence of our colleague Senator Pate, who has just joined us.
[English]
Good morning.
[Translation]
We will now proceed to the question period.
I’d like to point out to senators that they have five minutes for the first round of questions. There will no doubt be a second round.
I ask senators to put their questions directly to the witnesses and for the witnesses to answer succinctly.
The clerk will notify me when time is up.
[English]
Senator Marshall: Thank you, Mr. Hulkkonen, for being here this morning. Your opening remarks were excellent and you answered almost all of my questions, but I still have a few more.
You mentioned that you represent 70,000 members. When we had the Department of Finance officials here, we were interested in getting some data from them with regard to the 2022 amendment, the mobility tax credit, and they couldn’t provide us with any data as to how many people took advantage of it and how many people maxed out at the $4,000.
Do you have any information on your members in terms of how extensive the use of the 2022 amendment was?
Mr. Hulkkonen: I don’t have access to that information now. When people do their personal taxes, I’m not usually notified of what they fill in. If there are questions on that that our members have, I would answer them, but at this point, I don’t have any data.
Senator Marshall: Okay. So you don’t have any sense as to how extensively it was used or nobody commented on the $4,000 maximum amount? Because that would be changed in Bill C-241.
Mr. Hulkkonen: The only comment I had was from a member who worked in northern Ontario and said the $4,000 didn’t get him very far.
Senator Marshall: Okay. That’s a good comment.
Mr. Hulkkonen: We all see where flights are priced today and the cost of fuel and travel. It won’t get you very far.
Senator Marshall: You touched on it in your opening remarks, but what will this bill do for your members that the 2022 amendments to the Income Tax Act didn’t do for them? I’m just trying to get a comparison as to how beneficial this bill will be for your workers.
Mr. Hulkkonen: First of all, this is a tax deduction that doesn’t have a limit. I can tell you personally, from my own son, he was out of pocket probably about $15,000 with no way to write that off. So it’s a huge thing, especially for an apprentice coming up in a trade, to be able to recuperate those costs.
Senator Marshall: Do you have any concerns about the current bill? There are some concerns voiced with regard to the fact that it doesn’t have a limit and that it’s reducing the 150 kilometres to 120. Are there any concerns with regard to the bill?
Mr. Hulkkonen: I don’t have concerns because I feel a tax deduction is exactly that — a tax deduction — and it shouldn’t be capped.
Senator Marshall: Okay, thank you. Those are my questions for now.
[Translation]
The Acting Chair: Senator Smith, before I yield the floor to you, I’d like to congratulate your favourite team on winning the Grey Cup, as you mentioned earlier.
For the record, for the thousands of listeners who tune in live or record sessions, I understand that the last time the team won the cup was in 2010, when you were president of the Alouettes. So this must be a touching moment for you.
Senator Smith: Thank you, Mr. Chair. It’s very kind of you to point that out.
[English]
Thank you, Tomi, if I can call you by your first name, for coming in and seeing us.
In our deliberations, the Parliamentary Budget Officer, who does excellent work doing analytical reports on bills and on the progress and performance of various government departments, noted that we could achieve the intended goals of Bill C-241 by simply amending the Income Tax Act to remove the $4,000 cap from the existing tax deduction as well as increase the distance to 150 kilometres.
Seeing that there are two bills and there are similarities but differences, would this eliminate the confusion of having two bills with similar tax deductions but not exactly the same tax deductions? What would be your assessment of what should be done? Can we just put these bills together, clean them up and have the desired effects to benefit your colleagues?
Mr. Hulkkonen: Having seen the progress of the previous bill that was in the budget, it originally started as a tax credit, which we didn’t like from the get-go. A tax deduction is the proper way to take care of travel expenses, et cetera.
Can you modify that? I don’t know. I don’t necessarily have faith in that happening. I know that Bill C-241 has gone through three readings in the House and we’re here now, so it’s almost at the finish line, and I don’t really see a problem with the bill that’s proposed. It’s a very simple bill. There are probably very simple forms, such as a T2200, that are already in place that could capture what the bill is looking for.
Senator Smith: Could there be any confusion, though, with the little differences between Bill C-19 and Bill C-241? Would that cause any confusion for your members? Would it cause any confusion or problems implementing with the tax department of the federal government?
Mr. Hulkkonen: There’s always confusion when it comes to the Income Tax Act, so yes, there would be some. But again, this isn’t even just for union members; this is for travelling Canadians. It’s not a partisan bill. It’s not a union bill. It’s a tradesperson bill, so all tradespeople would have a simple way of claiming that deduction. I know the way that Bill C-241 is proposed, it’s very simple. How the form is, how it incorporates into the Income Tax Act, I’m not sure, but I’ll leave that in more capable hands.
[Translation]
Senator Smith: Do I have time for another question?
[English]
The existing labour mobility tax deduction is conditional on temporary work location and temporary lodging being in Canada. There’s no condition like this in Bill C-241.
Do your members work across the border? If so, is there something that could potentially become an issue should Bill C-241 pass?
Mr. Hulkkonen: It was never intended to be a cross-border bill. It was always intended to be in Canada only.
[Translation]
Senator Smith: All right. Thank you.
[English]
Senator Loffreda: Thank you for being here this morning to discuss these issues and our bill.
I’ll just take you back. When we had the Parliamentary Budget Officer, Yves Giroux, here in committee, he stated the following:
. . . The bill seeks to eliminate the maximum deduction amount of $4,000 and to reduce the distance to the job site from 150 kilometres to 120 kilometres.
To do those things without running into the problems the finance officials and my office have raised, it makes more sense to amend paragraph 8(1)(t) in order to remove the $4,000 cap, and to amend paragraph 8(14)(c) in order to replace 150 kilometres with 120 kilometres. Those are the two simplest ways to achieve the purpose of the bill, while avoiding the administrative issues flagged by the finance officials.
Do you agree that amending Bill C-241 in this way would reach the main objectives of the bill while avoiding administrative issues related to having two similar deductions? Would you agree that there are some issues that need to be amended in this bill?
Mr. Hulkkonen: There are many questions there, so can you start with —
Senator Loffreda: Let’s start with the first amendment he’s proposing: to remove the $4,000 cap and to amend and replace the 150 kilometres with the 120 kilometres. If I go into the issues, there is the $4,000 and then there is the kilometres. Those are two amendments he’s proposing.
Mr. Hulkkonen: I was against a limit to the deduction from day one. I was against it being a credit, and it later turned into a deduction, which I agree with.
Whatever needs to be done to make tradespeople able to write off their true expenses when they travel, I’m in favour of. However, the intent of the original budget was not the same as Bill C-241. So I am happy to see there is consideration to now amend that, but I have no faith in the process of it actually happening.
Senator Loffreda: Okay. There are issues with the bill. For example, it does not define travel expenses or construction activity; they are not defined in the bill, which could lead to confusion. The bill also raises issues of fairness between the tradespeople, contracted apprentices and other employees in terms of considering non-deductible personal expenses for some and deductible for others. There are some equality issues there. You talked about parity in your opening statement.
The bill also does not require a minimum relocation period or set limits on the number of trips or the number of deductible expenses —
Mr. Hulkkonen: You shouldn’t have any limits. If we need Canadians to travel across the country, there should be no limit on how long it takes for them to get there, how long they are there and how many times they go there. If a project has to be built, it needs to be built.
Senator Loffreda: But the travel could span multiple fiscal years. Do you feel that’s —
Mr. Hulkkonen: Absolutely. Many projects span multiple years.
Senator Loffreda: And the taxpayers will have to choose between the two options. This will result in the taxpayer having substantially similar deductions for the same purpose while leading to administrative challenges for the Canada Revenue Agency.
You didn’t feel that the budget implementation act and the labour mobility tax deduction achieved the objectives of this bill? You feel there are objections here —
Mr. Hulkkonen: No. There are shortcomings there, yes.
Senator Loffreda: Because Canada’s Building Trades Unions stated that they were in favour of the Budget Implementation Act and they were not in favour of this bill right here.
Mr. Hulkkonen: I won’t get into them, but there were some politics that existed behind the scenes on that one as well. I was well aware of the process.
Senator Loffreda: Why do you say there were politics behind the scenes there?
Mr. Hulkkonen: I won’t get into those right now because I don’t want to muddy the waters on anything. The entire intent of Bill C-241 is to make a very simple bill that doesn’t leave anyone behind. Travel costs may be many. They may be by vehicle, air or train. It’s whatever works for the individual travelling from their place of residence — there’s not an airport in remote communities, so those people have to go by car; other people have access to rail.
We could make the bill very complicated, but the best thing to do is to make it simple. I’m sure that when it comes out in the form of a document that has to be filled out, those people in finance and in the income tax part of the government can simplify it. It doesn’t have to be confusing.
The Acting Chair: Thank you, Senator Loffreda. You might go on a second round. We will move on.
Senator MacAdam: In terms of your membership, approximately what percentage of your members could avail themselves of the benefits proposed under this bill? I know you mentioned you don’t have access to their tax information, but with your knowledge of the membership, how many would travel 120 kilometres to go to a work site? I’m assuming some employers may reimburse some travel costs, so that would have to be taken into consideration as well.
Do you have any sense of approximately what percentage of your membership might benefit from this bill?
Mr. Hulkkonen: At any given time, there are thousands of carpenter members alone who are travelling across Canada. With the amount of work that we see coming and that is projected, that could easily double.
I don’t know the exact number. I know in my local, where my membership has been around 600 active members, at any given time, we’ve probably got 30 to 40 on the road.
Senator MacAdam: Okay.
This bill does not link the expenses claimed to earned income. That is one way this bill is different than the other deduction. I want your thoughts on that. Do you think that could open it up to abuse? With all this travel and incurring all these expenses, you have to link that to earned income. That’s what the previous bill did. This doesn’t talk about that.
Mr. Hulkkonen: It was left very simple just so that whatever the structure was to put it into place could be implemented. It wasn’t open-ended in the hope there would be confusion or fraud; it was left simple so that those who come up with all the forms and reporting methods could fill in the blanks on that.
I believe there are many forms in place now that require employer input, so it’s not like someone could just travel and not link it to their income.
I’m not the person who would create those forms.
Senator MacAdam: Right. I realize it would obviously be linked to income, but with all the travel costs, it’s conceivable that the travel could be a huge percentage of your actual earned income or your gross income from doing activities.
Mr. Hulkkonen: And it is. I watched my son destroy a vehicle in two years by travelling 100,000 kilometres a year. He spent all of his spare money on food and lodging. He probably would have been better to just stay home. That would be another body not at a project that’s not getting built.
There’s an entire reason why. I’d look at the reverse argument: Why should we limit those deductions for travelling tradespeople? That’s been the issue all along. Everyone in this room, quite conceivably, can write off whatever they need to throughout the entire calendar year. Why should our tradespeople have it any worse? We’re not asking for better. We’re just looking for the same consideration.
Senator MacAdam: Okay. It was just for me — your thoughts on the difference between the two deductions.
Mr. Hulkkonen: The difference is that the other bill obviously had a lot more input and made it through different levels of government or Finance Canada. This was simple as a private member’s bill. I don’t have access to all of that. I simply petitioned my local MPs as to who would consider taking it forward, and Chris Lewis stepped up.
Senator MacAdam: Okay, thank you.
[Translation]
Senator Dagenais: I’m going to ask you a few questions. I’m going to talk about income in general for construction workers. To what extent could this ability to deduct travel expenses enable tradespeople to increase their incomes?
[English]
Mr. Hulkkonen: Absolutely.
[Translation]
Senator Dagenais: Are there workers who don’t benefit from the current $4,000, because for them it’s too complicated tax-wise or too costly in accounting fees?
[English]
Mr. Hulkkonen: Yes. I can tell you again just from personal experience. That was why I really wanted this bill to take off. It is difficult watching young people try to get ahead in their trade but they can’t because they are just paying too much that many give up. We have a lot of tradespeople who make it to their second or third year of apprenticeship and, due to the cost of their travel and out-of-pocket expenses, they give up and go work somewhere else.
[Translation]
Senator Dagenais: In your opinion, will this law favour contractors in their choice of labour during major construction projects?
[English]
Mr. Hulkkonen: Yes. The interesting thing is that entrepreneurs can actually write off their expenses. I know that because I was one before my life as a representative for tradespeople. The workers who are working for them can’t. A lot of crews are a boss and three or four workers. They travel. The boss writes everything off. The workers can’t write anything off if they have to get there themselves.
[Translation]
Senator Dagenais: You talked about this a bit in your introduction, but could you give us more information on the benefits tradespeople have on the American side, as compared to the current situation in Canada?
[English]
Mr. Hulkkonen: From what I understand of the U.S. side, because I do have friends there, they were all in shock that this bill even had to be introduced because their tradespeople can write off what we can’t in Canada. That was from their mouths.
[Translation]
Senator Dagenais: Some things are sometimes simpler in the United States. I’m not the only one who thinks so.
[English]
Senator Galvez: Thank you for being with us today, Mr. Hulkkonen.
You said that you know that the bill is about parity, the cost and mobility. I understand very well about the cost because as a civil engineer, I have dealt with tradespeople and technicians in all the areas. I know that things are not the same; they are really different. An electrician or somebody in electronics has more advantages than a carpenter or a mason. I understand that.
I want to talk about the issues with parity and those differences. You said it’s already complicated in terms of taxes. Imagine in Quebec where we have two tax reports to do. It’s very complicated. I understand that not everybody has the same ability to fill out the forms — or have the time — and see all the places where they can write off some of their expenses. But at the end, the issue is not with respect to whether they are independent workers or working for a given entrepreneur. What is the big difference? Because I know independent workers write off a lot of things while working for a company — it’s linked to earnings, as my colleague was talking about.
Mr. Hulkkonen: That’s an interesting point. A lot of people who consider themselves independent employers or workers are actually not. They are dependent upon someone else for their employment. They are actually the ones who are playing with the tax system whereas they should actually be remitted for their income tax, Canada Pension Plan, or CPP, Employment Insurance, or EI, et cetera, and they should have Workplace Safety and Insurance Board, or WSIB, paid on them.
There is an entire underground economy in Canada and the United States where workers are classified as independent employees but they are not; they are actually dependent upon the employer. They should be taxed and paying their fair share of CPP and EI so that the burden doesn’t fall upon those employers who are running their businesses properly. That’s one consideration.
Again, if you are truly an independent contractor, you can write off all of your travel, but if you are a worker who is working for that independent contractor, you cannot.
Senator Galvez: So what is happening right now is there is this lack of manpower, so that’s why these independent workers have to go wherever they are called. They don’t have just one boss but different bosses, sometimes in different provinces. I see people in Quebec going to Ontario, New Brunswick or Nova Scotia and having to drive hundreds of kilometres because of that.
How can we repair the situation when you’re saying that independent workers can have more possibilities of tricking the system than those who are working for just one employer — but unfortunately, this is impossible because of the lack of manpower right now?
Mr. Hulkkonen: That’s an entirely different conversation. We can talk for days on that.
Unions have always fought for people to be classified properly. Again, with a bill like this, it would encourage people to actually act responsibly and act as an employee who is able to write off their travel. That’s ultimately what those people are trying to do: They are trying to cover their expenses and pretend they are a business when they are not.
Even though they work for multiple different people, so do our members. An average apprentice will work for 10 different contractors in four years. That doesn’t make them an independent contractor. They move from one job or one employer to another. A lot of these self-classified independent contractors or independent workers are doing that as well, but they are just not paying their tax. They are taking what is called a “straight cheque” in the industry.
Senator Galvez: As you said, it is a longer conversation.
You said that the intent of the two provisions included in Bill C-241 and the amendment to the Income Tax Act had different intentions. Can you expand upon that?
Mr. Hulkkonen: I don’t have the final wording of the current budget or act in front of me, so I can’t get too technical on it. But the intent of the tax deduction — Bill C-241 — was to truly encourage people to look at other options outside of what is available in their immediate area. There are lots of skilled tradespeople across Canada who could be used on projects that are nowhere near their places of residence. With a $4,000 limit on that, they wouldn’t necessarily even consider going there. Two flights could be $4,000. After that, they are spending money out of their pockets to go work somewhere.
I did it myself. I commuted for three years to Sault Ste. Marie from Windsor. Ultimately, you are no further ahead. But to be able to actually write off those expenses, you would be able to recoup those costs by the end of the year. These are considerations that all people have: How do I budget for this, and how do I balance my own books?
Senator Galvez: I will go on a second round.
Senator Pate: Thank you very much for joining us. You might have covered this, so I apologize if I missed the details. It sounds like employers are actually not working as employers. So would I be correct in understanding, then, that most members don’t actually get reimbursed for their travel expenses from employers; they are expected to operate as a series of independent contractors?
Mr. Hulkkonen: They won’t even necessarily act as independent contractors. Those who are actually doing the job properly will take a normal cheque and will have their expenses taken off of that. But they will be at a serious disadvantage because they don’t have a way to write off the deductions. That’s the entire intent of Bill C-241. It’s another thing that will help bring those people out of the underground and let them claim their expenses and recuperate costs. They don’t have to be underground. When they go underground, you’re not collecting income tax on them either. Billions of dollars in Canada are lost every year on activities such as you described.
Senator Pate: So the introduction of the tax deduction currently doesn’t assist that process?
Mr. Hulkkonen: It’s only $4,000.
Senator Pate: Okay. And employers don’t reimburse beyond that or —
Mr. Hulkkonen: Some employers do and some don’t. It’s entirely up to that employer.
Senator Pate: Okay.
Would you have any other recommendations that would prevent employers from not reimbursing full expenses?
Mr. Hulkkonen: Not really. I do not see what the purpose of that would be. If the person is truly spending money out of pocket to go to work, then why wouldn’t they be able to recuperate those costs?
Senator Pate: So you still see it as necessary through the tax system rather than through the employment —
Mr. Hulkkonen: You can’t force employers to do that. I don’t think it’s a good idea, either, to force employers to do that because that will cause other shenanigans. I see it daily as a union rep.
To make a simple system that is fair for all Canadians would be the solution to a big problem.
Senator Pate: You mentioned the issue in terms of recruitment, and I appreciate that. What barriers do you see currently beyond the ones you have already identified for getting particular groups, such as people living in poverty or people who are marginalized whether by race or gender, into the various trades you have talked about? Also, do you see any way this bill would actually address those barriers or do those barriers need to be addressed in other ways?
Mr. Hulkkonen: We are already doing great work addressing those barriers. The federal government has several programs available to help recruit from those areas of the population. The provincial government of Ontario is also doing great work on that.
We utilize everything we can to encourage that. I can tell you that our membership has grown significantly due to encouraging females into the trades, as well as people with other barriers. We do as much as we can to encourage that already.
Senator Pate: Can you give us any information, if you have it, about the average income of those who you think might be expected to benefit from this?
Mr. Hulkkonen: For someone who stays at home, from my statistics, the average member would work about 1,500 hours per year. When you open up the opportunity for some of these “camp projects” as they’re called, those workers could easily work in excess of 3,000 hours per year. There is potential to double the income.
Senator Pate: What is the average income in the area?
Mr. Hulkkonen: Quick math would be about $75,000 or $85,000 per year currently for a licensed tradesperson.
Senator Pate: What’s the range? What would be the lowest, say an apprentice, through to master level?
Mr. Hulkkonen: A lot of apprentices who are working in the non-unionized industry are actually working at minimum wage to start.
Senator Pate: Okay. That’s fine. Thank you very much.
[Translation]
The Acting Chair: Before moving on to the second round, I would like to ask my colleagues to stay after the meeting, we will have a brief in camera session to discuss tomorrow’s agenda.
I’ll put on my committee member hat to ask you a question.
Senator Loffreda and other colleagues have pointed out the discrepancies between what’s currently in this bill and what’s already in the 2022 budget.
There is one point that has not yet been addressed. Currently, there is an obligation to stay away from home for 36 hours in order to deduct these expenses. In the bill, there is no such constraint.
For example, a person can leave in the morning, go to work sites and return in the evening. This situation does not exist in other trades or professions. This is one of the discrepancies with the current system.
You talked about fairness and parity. Do you have any comments on this lack of requirement to stay away for at least 36 hours in order to be able to deduct these expenses?
[English]
Mr. Hulkkonen: Yes. Again, at face value, you can see the difference in parity where there are lots of travelling salespeople, consultants or others who do travel. They might travel a loop. I do it occasionally. I’ll travel to London and Sarnia and back to Windsor in a day, and that’s well in excess of 120 kilometres.
Why would we put a cap on time spent away from home when there are many projects being built or other types of work — it’s not just construction. It could be a mechanic in northern Ontario who would have to travel to do something. Why would you put a time limit on that when there is not even lodging at a lot of these projects? Just to be able to go to the job and back, there is no way to stay away from home. You physically have to drive there, take a plane, a train, whatever it is, and then come back in the evening. That’s a lot of time spent away from home, and it’s a lot of money out of pocket just to do your daily work.
Senator Marshall: I want to talk about that $4,000 limit. I agree with you; I don’t think $4,000 is very high. I represent Newfoundland and Labrador, and I go back and forth every weekend. Of course, the plane is half filed with people going back and forth between Alberta or the mines up North.
Where did the $4,000 come from? I was under the impression that either the unions or the associations that represent the workers, that was what they wanted. I was going back over old testimony to see where I got that impression.
Where did the $4,000 come from? Even back in 2022, when the Income Tax Act was amended to provide for this, $4,000 is not a lot of money, especially if you’re going across the country or between provinces. Where does it come from?
Mr. Hulkkonen: I do know that during the last election, there were many promises made, so I would see this as a carrot. We’ll do something for you. It may not be everything that you want, but you’ll get something, and that satisfied most people. To me, that doesn’t satisfy the actual problem or fix the problem. It’s a temporary Band-Aid for something that is going to just be more expensive day in and day out.
I don’t know where the $4,000 came from. It’s not a number that makes any sense to me.
Senator Marshall: Okay. You’re not aware, for example, that your union or association put forward that $4,000 or that they were quite agreeable to it?
Mr. Hulkkonen: No, I don’t know where the number came from. It may have started lower, and then some of the other building trades may have fought to bring the number up a little bit. To me, any type of a cap on it never made sense — that’s not fair — so Bill C-241 would address that.
Senator Marshall: Okay. Thank you very much.
Senator Loffreda: Thank you for your testimony this morning. I know it’s never too easy — always tough questions — but thank you for being here and clarifying a few issues for us.
You did mention that this bill leaves nobody behind, but it does. The bill would also introduce fairness issues among tradespersons, indentured apprentices and other employees. That is because it would provide the former with tax recognition for long-distance commuting while considering it a non-deductible personal expense for the latter group of people.
Do you believe that the deduction should be expanded to other types of tradespersons, apprentices or other self-employed people or salaried employees whose travel costs are not covered by their employer? I know Senator Gignac raised this issue. It’s important. It’s a question of inequality.
Mr. Hulkkonen: Absolutely, it could be expanded to capture those people. In the industry that we deal with, we have apprentices who all get registered and tradespeople who are ultimately trying to get their licence. There are other types of workers out there who are doing similar type of work, but I don’t know how much of it is actually the trade. Are they jack of all trades or are they people just doing gig work? I don’t know. I don’t know how to capture those people myself. I would look to others for advice on that.
Absolutely, it should be expanded to Canadian tradespeople to be able to write off their travel expenses.
Senator Loffreda: Thank you for that. If I go back to the labour mobility tax deduction, I just want to know, do you understand it? You’ve looked into it in order to support Bill C-241. Does it not achieve the same objectives without the shortcomings?
If I read the statement — you said it was political, but I would like to share it. Canada’s Building Trades Unions stated:
. . . “Budget 2022 included a historic win for Canada’s skilled trades workers with the inclusion of the Labour Mobility Tax Deduction for Tradespeople.” It also said, “Canada’s building trades unions is proud of securing tax fairness for skilled trades workers through the Labour Mobility Tax Deduction for Tradespeople.”
With that goal achieved, Bill C-241 is not only problematic but also redundant. . . .
That’s a strong statement from Canada’s Building Trades Unions.
I do know that you previously said it’s political. We could say many things are political, but any thoughts or comments on expanding that?
Mr. Hulkkonen: Those are the comments of the people who said them. I will repeat that there were politics involved. Why some groups supported one bill — I’m an independent here. This is a private member’s bill. I feel that that bill was short-sighted. I have spoken to the leadership of Canada’s Building Trades Union about it.
Senator Loffreda: What was their comment?
Mr. Hulkkonen: Their comments were politically motivated, and I won’t repeat them here. The fact is, this bill was actually introduced by a Conservative member of Parliament, and they were upset about that. In fact, in the first reading in the House of Commons, there was a member from Hamilton West, I believe, an NDP, who was quite upset that a Conservative could even consider this bill. I said, this is not a partisan bill. This is a simple tax bill, and it’s fairness for all tradespeople. There were political motivations that created some of those statements.
Although something is better than nothing, that bill that is currently in place does not go far enough, not even close.
Senator Loffreda: But you feel it could be expanded to include many others, so you take that statement that it doesn’t leave anybody behind because it does leave people behind, right? I mean there are parity issues with respect to what is deductible and what is not deductible for other tradespeople besides those targeted here in this bill.
Mr. Hulkkonen: What would those other tradespeople be? I’m not understanding. It’s open-ended as far as tradespeople.
Senator Loffreda: Like I said in my opening comment, between tradespeople, indentured apprentices and other employees. For example, there is a fairness issue with the tradespersons, apprentices and other employees not identified as tradespeople through this bill, right, equality issues with other workers.
Mr. Hulkkonen: I’m not understanding who these other workers are that you’re talking about.
Senator Loffreda: It could range from office workers to other professionals. They are not just tradespeople. It’s not only tradespeople who require mobility for their work, right?
Mr. Hulkkonen: Sure.
Senator Loffreda: There are other people who require mobility for their work. It could be a doctor or a nurse, anybody else. It could be an office worker, it could be an accountant. It could be a lawyer.
Mr. Hulkkonen: I do not see that — I wouldn’t include lawyers in there. I know they can write off —
Senator Loffreda: I met a lawyer on a trip that is required to go to Newfoundland every second week.
Mr. Hulkkonen: They are covered by their firms.
The Acting Chair: Senator Loffreda, maybe in third round.
Senator Galvez: Thank you, Senator Loffreda, I was going that way with my previous questions. I will seek clarification. Please give the definition of trade workers. Whom do you include in trade workers?
Mr. Hulkkonen: There are hundreds of trades that are recognized by all the provincial bodies and I’m sure some federal bodies, so anyone classified as a tradesperson.
Senator Galvez: Apprentices are there?
Mr. Hulkkonen: Yes, if there is an apprenticeship that leads to a trade certificate, they are trade workers.
Senator Galvez: Okay. The bill doesn’t make a reference to a definition in another bill. It just says trade, correct? Sometimes we can go look at the definition as defined in another bill, and there is a list. In this bill, it just says “trade.”
Mr. Hulkkonen: That is correct. There was no intent in this bill to exclude people that work in other industries. But tradespeople is something that can actually be recognized because provincial bodies all govern their apprenticeships. You are registering as an apprentice or a tradesperson with that body, so there is an actual defining group of people that it’s made for.
Senator Galvez: Would it be important that you add that definition or you refer in parentheses as defined in this act so we know exactly the people that will be targeted with this bill?
Mr. Hulkkonen: We could. I have no opposition to defining what a tradesperson is.
Senator Galvez: Okay. Thank you.
Senator Smith: One of the issues that came from the Parliamentary Budget Officer that was mentioned — I’m not sure if it’s a real concern or not — was tradespeople crossing the border and working in a non-Canadian environment, and whether they would try to utilize this tax opportunity for themselves. I’m not going to say anything negative about it. You mentioned that you knew people who work in the United States. Of course, the United States is much more lenient than we are in terms of how they set up the taxing scheme for tradespeople.
What are your thoughts are on this? Will this evolve to the type of issue that people going to the United States do some trades right across the border? If it happened now, is it possible that it could happen as part of the law?
Mr. Hulkkonen: I don’t think it would happen. Again, every income tax form that I have seen is fairly clearly defined. This one would obviously have a place of principle residence and the place where the work is being performed. If it’s not being performed in Canada, it’s automatically not acceptable. That would be verifiable through the employer as well.
Senator Smith: We have one piece of legislation in place. Now we have another bill. The Parliamentary Budget Officer suggested that if there were one bill with the rules in place that everyone would accept or at least work with, it would be more productive and less potentially problematic. I’m just wondering what your comments are. If you had the ability to make everything perfect, what would be the perfect outcome between a piece of legislation that exists now and a proposed piece of legislation that we’re considering?
Mr. Hulkkonen: If the existing legislation adopted the intent and the framework of Bill C-241 — from the get-go, I never understood why there was any type of a limit to things and why people had to be away from home for X amount of time before it could be applicable. That never made sense to me.
That bill felt to me like it was written by bureaucrats, not by people who actually experienced the hardship of travel for work.
Senator Smith: Would there be any tweaking of Bill C-241 that you would implement if you had the power to do so to make it in your mind a more perfect type of bill for implementation?
Mr. Hulkkonen: We could have addressed some of the questions that I have heard today on structure of the bill. But the intent of the bill was not to compete with another bill, it was simply to lay the groundwork for smarter minds than mine to put the actual rules in place. Again, it comes down to the intent. Let’s get Canadians working across the country. Treat them fairly like other sectors or other industries do, and all of the nuts and bolts and the actual tax code, if you want to call it that, that was not my expertise. I was hoping that those people could step in and help out.
Senator Smith: The purpose of my asking the question was just — in government, periodically, you get confusion from pieces of legislation, especially if one follows another one. It may be an opportunity for committees like we have to make recommendations so that’s why I asked you the question. You’re the experienced individual who has been around. You have seen many examples of the good and the bad. We must ensure that if we’re going to do something from a legislative perspective that we try to deliver the best product for Canadians. This is not about us, it’s about Canadians and tradespeople. That’s why I asked that question, just to get your comment.
Mr. Hulkkonen: My comments would be I would like to see something happen here. I have pushed Bill C-241 as much as I could as an individual. I haven’t really involved other trades or anything else. I have tried to keep as a private member’s bill.
Again, the way that the current bill made its way through government and into a budget, I wasn’t happy with the process. I won’t speak to the politics behind the scenes. I disagree with the intent of that from the beginning. That will not be enough to get people to move around Canada and do the work that has to get done.
Bill C-241 is a simple bill. I think we’re overcomplicating it. The intent is there. I’m turning now to people in government to say that here is the intent. If it does pass, and I truly hope it does, let those people then put the actual framework in place to make it simple for a tradesperson to work and claim those expenses at the end of the year.
[Translation]
Senator Dagenais: I have two questions. Here is the first one: what proportion of construction workers are what you might call self-employed, meaning they don’t have an employer-employee relationship?
[English]
Mr. Hulkkonen: I don’t know the actual percentage amount, but there are tens of thousands of them.
We’ve calculated tax fraud from independent workers not actually claiming their taxes properly to be in the several billions of dollars in Canada. It takes a lot of people to create that type of a tax deficit of not claiming their taxes.
[Translation]
Senator Dagenais: You’re right. Would incorporating rather than remaining self-employed be more advantageous for tradespeople, or is it too expensive to incorporate? Obviously, the accounting isn’t the same.
[English]
Mr. Hulkkonen: I personally did set up a company when I was younger, and it is a lot of work, and I think a lot of independents do so because they don’t want to be caught, first of all. They want to have a loose system where they can go around, do their gig, disappear and go to the next one, and that’s not what Canada needs right now. We need people to go to work, pay their taxes and be able to actually fairly claim their expenses.
There are tens of thousands of those so-called gig workers. We run across them every day.
[Translation]
Senator Dagenais: Thank you very much.
[English]
Senator MacAdam: We have talked about a few of these things already, but I just wanted to bring some of it to a head.
Bill C-241 does not define eligible travel expenditures or construction activities. It also requires no minimum period for relocation, places no limit on the number of trips or the amount of expenses that could be deducted in a year, and I’m talking about the $4,000 cap compared to the other, but it’s also not linked to earned income.
Do you agree that scoping these issues would provide additional certainty to your membership in submitting their tax returns? It would lead to less confusion, less risk of reassessment from the Canada Revenue Agency to really define these things in advance rather than keeping it too open-ended? Would you agree that there’s uncertainty and no one wants to get a tax bill at the end that they weren’t expecting in terms of how they interpreted the bill?
Mr. Hulkkonen: Absolutely there could be more scope and direction added to the bill. Again, when I looked at the bill, I didn’t introduce it as something that was 100% bulletproof and buttoned up, and I would think that government wouldn’t even allow this to pass if there wasn’t more structure to the reporting process so that people who are considering travelling for work would know that ahead of time — that this is where I’m going, this is what I can claim — because they wouldn’t choose to travel one way versus the other if they didn’t know for certain which they could actually write off.
Senator MacAdam: Okay, thank you.
The Acting Chair: We recognize a former auditor with such questions, so thank you, Senator MacAdam.
Senator Loffreda: Given that you’re supporting the bill, I just want to clarify an important point that I raised previously. To go from your home to work, that is not tax deductible for anybody. I worked as an auditor for six years. We could deduct expenses when we went to see a client, but if we went to the office, it was not tax deductible. Here in this bill, we’re introducing deductibility for tradespeople. You said in your statement it doesn’t leave anybody behind. It’s leaving many professions behind, and we are in a period of scarce resources where businesses need employees. We can name the industries, and I can take two minutes doing so, but they need employees. We are lacking resources.
As I’ve asked, why would we approve a bill without amending it, leaving so many people behind for long-distance commuting? Canada is a huge nation, and there might be regions where employees need to travel.
Like I said in my statement, it’s a non-deductible personal expense for other employees or apprentices.
Given this being clarified, would you agree that maybe other employees should be included and it should not only be tradespeople? I do know we have a housing shortage, and you’ve talked about it being political, and I do know being a housing shortage, everybody wants to address that issue. I feel it’s an issue that needs to be addressed, but when we talk about tax fairness, there are two deductions at this point, and we all know tax is confusing enough. It’s creating confusion.
Would it not be fairer if it includes all employees? We are lacking doctors. We are lacking nurses. We are lacking — I can go on and on, but I just want to make sure that it’s clear to you and your statement, and maybe you could answer me and share your thoughts on that.
Mr. Hulkkonen: I don’t disagree with you on that. At the time when this was introduced, we were looking to solve a lot of problems in our industry, and I took it upon myself to work with a member of Parliament to create something simple that could get tradespeople working around Canada, not thinking at all about what you’ve talked about, about doctors and nurses.
Maybe the Income Tax Act has to be looked at more broadly for everybody, but I can’t speak to all the circumstances that you have mentioned because I don’t confidently know what those industries do. I can’t say that any of those people are not compensated or their companies don’t compensate them. I just know how it works in construction and other related trades.
I’m not about excluding Canadians. This bill is the most open bill that there is for tradespeople. Maybe another bill has to be introduced or maybe the Income Tax Act has to be looked at again, like I said, with a broader lens to accommodate Canadians who have to travel for work.
Senator Loffreda: The housing supply is a priority for all of us, and I do agree with the intention of the bill, but it excludes many other workers where we have scarce resources in many other industries, and going from your home to your work, if it’s a hospital, is not tax deductible.
Now, if you’re going to see a client outside the hospital, that becomes tax deductible, or a lawyer, for example, or that law firm would pay for him to go see the client, but I doubt very much that your employer would pay — I’ve never, in my 35 years of experience, had somebody tell me their employer is paying them to get to the office or to get to their place of work from their home.
We’re a large country with scarce resources at this point in time and the housing industry has to be addressed, but there are other industries that need to be addressed as well where we need some form of clarity of what’s deductible, what’s not deductible, and some form of equality between professions. There’s not one profession that’s more important than another.
Mr. Hulkkonen: I’m not disagreeing with you at all on that. I’m only saying for construction there is a reason they call us journeypeople. Typically, when you have fulfilled your apprenticeship requirements and have your ticket, as we call it, you journey to try to find work because work is cyclical in our industry. A hospital doesn’t just move up and go 150 kilometres away from your house to open up over there, and then force the nurses and doctors to not commute 5 kilometres but now commute 150. Construction specifically is very different. The projects come and go, and they can come and go in very remote places, and the way the tax code is set up right now does not encourage people to travel for work.
Senator Loffreda: I just want it to be clear to include all employees, not just tradespeople in construction, because the tax should be fair. Tax fairness for all Canadians, right? That’s what I’m getting at.
[Translation]
The Acting Chair: I don’t know if you want to respond.
[English]
Mr. Hulkkonen: I guess the only concluding remarks is I’ve heard some concerns. The bill was never designed to be sneaky or go under the table. It’s designed to be a simple bill that could be simply encoded into the Income Tax Act with some framework, with some forms that people can complete. It was never meant to exclude Canadians. The intent was to include all.
I do ask the senators here to consider why anybody would put a limit to a claim on travel because it simply doesn’t make any sense, other than it was a carrot to make people happy and go away. My opinion as an individual, it was not enough. It was almost an insult because the true costs of travel in Canada don’t reflect what’s in the budget right now and in the Income Tax Act.
It’s a simple bill. Is there some cleanup to do, some i’s to dot or t’s to cross? Absolutely. That wasn’t my intent. It was simply to be a bill that could be considered, and when passed or during the process of being passed, it could be made simple, not overregulated. We have all seen tax forms that are super-complicated that nobody would even consider trying to fill out on their own. Make it simple. Get Canadians working, and if that’s a start, then I agree, Senator Loffreda, maybe the Income Tax Act should be looked at more broadly for all Canadians to encompass the scenarios that you have brought up.
Senator Loffreda: Thank you.
[Translation]
The Acting Chair: Thank you very much, Mr. Hulkkonen, your testimony has enlightened us and been very helpful. I would like to point out that the sponsor of the bill, MP Chris Lewis, will be invited to testify next week.
For people listening and watching, whether live or recorded, I want to point out that Bill C-241 — because we often refer to the 2022 budget — was introduced on February 8, 2022, that is, before the budget tabled by the Minister of Finance a little later. So, we have a lot of comparisons, but initially, this bill, as you said, was not intended to exclude people; it had been presented like that.
Also, we’re paying close attention to the bill. It’s quite rare for the Income Tax Act to be amended without the Finance Minister’s approval. In 20 years, it’s only happened once, in 2020, with regard to corporate transport. We want to take our time, and I want to assure the witness and the people watching us that the Senate is independent. We do an objective second-look analysis and if we can improve the bill or anything, that is our job.
This concludes the official part of our meeting. Before I bring this meeting to a close, colleagues, I’d like to thank the entire support team for this committee, those who are in evidence in this room with me and also those who are behind the scenes. Thank you for all your hard work. Under the leadership of the clerk who helps make our committee a success, I declare the meeting adjourned.
Thank you.
(The committee adjourned.)