CIIT Committee Report

Report on the Impacts of the Underused Housing Tax on Canadian border communities: Conservative Dissenting Report

This dissenting report reflects the views of the Conservative Members of Parliament who serve on the Standing Committee on International Trade (CIIT): Kyle Seeback, Vice Chair of the Committee and MP for Dufferin—Caledon, Tony Baldinelli, MP for Niagara Falls, Richard Martel, MP for Chicoutimi—Le Fjord, and Matt Jeneroux, MP for Edmonton Riverbend.

Introduction

While Conservative Members are generally pleased with the Evidence contained within this report, they firmly believe its recommendations fall short of what was being asked by concerned stakeholders.

The Conservative Members also acknowledge that the existing recommendations in the report fail to recognize the federal government’s unpreparedness when it comes to implementing the Underused Housing Tax (UHT), and the existing recommendations also fail to prescribe specific changes and tangible solutions that were directly provided to the committee by concerned stakeholders who are being significantly impacted by the UHT.

This dissenting report contains five additional recommendations below that Conservatives members of the Committee want to put on the record for the federal government’s consideration and response. These recommendations were put forward from concerned stakeholders who are being impacted by the UHT.

Recommendation 1

Having now extended the filing requirements for the UHT twice, Conservatives call on the Government of Canada to place an immediate pause on the implementation of the Underused Housing Tax.

By now delaying the filing requirements twice, the government has acknowledged it is not prepared to properly implement this new tax. As such, prior to any decisions being made to move forward, the government must recognize it still needs to clarify, rectify where possible, answer and address the significant questions and uncertainty about the UHT and its implementation, particularly amongst taxpayers in rural and border communities. Recommendation 2

That the Government of Canada amend Section 2(2) of Regulation 2022-12-15, which deals with “prescribed areas” to include a further subsection (c), specifically:

(c)  an area that is within the municipal boundary of any municipality having a population of less than 50,000 people.

That the Government of Canada amend Section 2 (3) of Regulation 2022-12-15, which deals with “prescribed condition” to extend the 28-day exemption to any property located in a municipality of less than 50,000 people, specifically:

For the purposes of paragraph 6(7) (m) of the Act, a prescribed condition, for a calendar year and in respect of a person that is an owner of a residential property located in an area referred to in subsection 2 or subsection 3, is that the residential property is used as a place of residence or lodging by the owner or the owner’s spouse or common-law partner for at least 28 days during the calendar year.

This recommendation was made to the Committee in a written submission dated June 23, 2023.

By creating a prescribed area of a municipal population with a ceiling of no more than 50,000 people, the intent of the Act to deal with the housing crisis Canada’s major urban centres is maintained. This amendment would be a simple way of dealing with the inequitable situation that the current Act and its regulations have created and is not detrimental in the federal government’s objective of trying to deal with the housing crisis in our urban centres.

Recommendation 3

That the Government of Canada amend Section 2(3) of Regulation 2022-12-15, which deals with “prescribed condition” to include residential property that is owned by a corporation, LLC or Trust that is used as a place of residence or lodging by a shareholder of the corporation or unit owner of the LLC or beneficial owner of the Trust, or his or her spouse or common-law partner for at least 28 during the calendar year.

As well, the Government of Canada amend Section 2(2) (b) (ii) of Regulation 2022-12-15, which deals with “prescribed area” to provide that whether or not a residential property is located in a “population center or not” it deemed to be a prescribed area for the purpose of Section 2(2) (b) (ii) if it is owned by a person, a corporation, LLC or Trust that is used as a place of residence or lodging by the person, a shareholder of the corporation or unit owner of the LLC or beneficial owner of the Trust, as the case may be, or his or her spouse or common-law partner for at least 28 during the calendar year.

This recommendation was put forward to the Committee in a written submission dated June 23, 2023.

The availability of this exemption to those seasonal homes, cottages and recreational properties that are registered in the names of corporations, LLCs or Trusts where the said properties are used by the shareholders or beneficial owners of those properties. By implementing these two amendments, this exemption is now rightfully available to all families who have seasonal homes, cottages and recreational properties regardless of the manner in which they have decided to hold title for themselves.

Recommendation 4

That the Government of Canada further amend Section 2 (3) of Regulation 2022-12-15, which deals with “prescribed condition” to extend the 28-day exemption to any property owner so long as some other family related property owner has used the property for at least 28 days during the calendar year, specifically: 

For the purposes of paragraph 6(7) (m) of the Act, a prescribed condition, for a calendar year and in respect of a person that is an owner of a residential property located in an area referred to in subsection 2 or subsection 3, is that the residential property is used as a place of residence or lodging by the owner or the owner’s spouse or common-law partner for at least 28 days during the calendar year, or by any other owner who is related to the property owner by blood or marriage, where the other owner or the owner’s spouse or common-law partner has used the residential property as a residence or lodging for at least 28 days during the calendar year. 

This recommendation was provided to the Committee in a written submission dated June 23, 2023.

The availability of this exemption to those seasonal homes, cottages and recreational properties to all registered owners of such properties so long as any one of the owners or his or her spouse or his or her common law partner uses such property for at least 28 days in the calendar year. By implementing this amendment, the inequitable situation involving family cottages owned by multiple family members, not all of which may be able to use and occupy the cottage during any given year is not subject to paying of the tax when the cottage is in fact used by other co-owner family members.

Recommendation 5

That the Government of Canada amend the regulations to exempt Canadian farmers from having to file a UHT return.

This recommendation was put forward by a joint letter supported by the Canadian Federation of Agriculture, Keystone Agricultural Producers of Manitoba, Fruit and Vegetable Growers of Canada, Ontario Greenhouse Vegetable Growers, Canadian Canola Growers Association, Canadian Ornamental Horticulture Alliance, and the BC Agriculture Council in a letter provided to the committee dated June 7, 2023. Additionally known concerned stakeholders included the National Cattle Feeders’ Association and the Canadian Cattle Association.

Requiring farmers to submit a UHT return, even when they are exempt from paying the tax, creates an unnecessary financial and administrative burden on farmers, without effectively achieving the stated objective of the UHT. Farmers have minimal involvement in the housing market, and the majority qualify for a UHT exemption. As such, we urge the government to exempt farmers from the requirement to file a UHT return, ensuring that they are not penalized for failing to do so. This exemption should be granted without any additional application or paperwork requirements for the farmers.