International Trade Committee on June 8th, 2023

[Arif Virani, Liberal, Parkdale—High Park, ON]

I also understand that the census metropolitan area as a notion or formula is not unknown to the Government of Canada. That is a long-standing StatsCan definition that is used in other areas.

Is that fair?

[Amanda Riddell]

Yes, that's fair.

[Arif Virani, Liberal, Parkdale—High Park, ON]

Okay.

I'll turn it over to Mr. Sheehan to continue the questioning.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Thank you very much.

Thank you for your presentation. Let's pick up a bit from where Kyle was going about the 1% versus, say, a 2% or 3%. If it is something that we're looking at doing, what would be the advantages of increasing from 1% to 2% or 3%?

[Amanda Riddell]

The decision to go with 1% was a decision for the minister, so that is a question you should probably put to the minister.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

That's fair enough.

We're talking a lot about Ontario cottages and the term “cottages”. For people south of northern Ontario, we call them camps, and that's a big distinction, a bit of a joke, but the camps in northern Ontario.... The prices of cottages or camps in Ontario are about $300,000 to $800,000, on average. Sure, we have $800,000 camps in northern Ontario, but a lot of them are around the $300,000 mark when you talk about northern Ontario. When you talk about Parry Sound, Muskoka, and then you start talking about Port Carling.... I went to a cornfest there once—and wow, there were Rolls-Royces pulling up. It's a very rich area.

There is this functioning thing...and this is before all of this. I've been involved in local politics for about 26 years—on the school board and then on city council—and it was about assessment. MPAC, along with the mil rate, sets the tax rate. When there is a bunch of activity where people are buying homes, it has the effect of raising taxes for Canadian ratepayers, and everyone.

How exactly do you guys determine the 1%? On what value is it determined? Is it through an assessment corporation like MPAC, or is it through another process to you?

[Robert Ives]

The 1% applies on the greater of the assessed value for municipal taxation purposes and the property's most recent sales price. There is the ability of a property owner, if they disagree with the use of either of those, to use the fair market value of the property by way of an election.

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Okay. That's fair enough.

This is the last one. Congressman Brian Higgins, who is just a stellar individual, did a lot of work against Trump on the section232 tariffs. I asked him if he was aware of the exemption about the 28 days, and he was not, because he was really talking about a very specific group of people.

Could you please explain to the committee again the 28-day exemption? I think a lot of people may be exempt but just aren't aware. Is there retroactivity, to go back and to file and say, “Well, I just wasn't aware that I was exempt”?

[Robert Ives]

The exemption that has the 28-day component is the so-called vacation property exemption, which is available in certain areas of the country. As was mentioned earlier, to qualify for that exemption it has to meet both the location test and the use test, and I believe it was described already, but I can go over it again. The property has to be located in an area of Canada that is the rural part of a census metropolitan area or a census agglomeration having 30,000 or—

[Terry Sheehan, Liberal, Sault Ste. Marie, ON]

Would there be retroactivity, say, if you did not file in this year, 2022-23, and you just realized that you could have been exempt?

[Robert Ives]

It's the sort of question that you would need to ask the Canada Revenue Agency, but I suppose, if a person filed a return on the basis that they had tax owing and then discovered after the fact that they actually were eligible for an exemption, that the person could file an amended return with the CRA to correct that fact.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We'll go on to Monsieur Savard-Tremblay for two and a half minutes, please.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

Thank you, Madam Chair.

We heard from farmers, and they said they had concerns about the vacant housing tax.

The requirement to house seasonal foreign workers means that those accommodations will be vacant in the off-season, which makes sense. Farmers told us that, even when they are exempt from the tax, they still have to file a return, costing them between $500 and $1,000. They have to do all that when they are already dealing with difficult circumstances.

If they were formally exempted from filing a UHT return, would it have any impact on the revenue coming from the tax? I'm sure there would be some impact, but do you have a sense of how to measure it?

[Robert Ives]

When it comes to farmers, if a Canadian farmer owns a residential property in their own name, there is no UHT filing requirement, as they're an excluded owner as a Canadian citizen or a permanent resident of Canada. Where the issue comes up is where a farm is incorporated and the residential property is held under the title of the corporation.

The Department of Finance is aware of a number of concerns about the filing requirement, despite the fact that corporate farmers would otherwise qualify for an exemption. We are looking at those issues and briefing the Minister of Finance on that.

[Simon-Pierre Savard-Tremblay, Bloc, Saint-Hyacinthe—Bagot, QC]

The committee received a brief from the Canadian Federation of Agriculture indicating that farmers have to file a return.

[Robert Ives]

As mentioned, if the farmer owns the property individually, they are not required to file, but again, if it's a farmer who's operating as a corporation, then currently the requirement is that they need to file in respect of any residential property they own.

[The Chair, Liberal, Judy Sgro]

Thank you.

Mr. Cannings, you have two and a half minutes.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Thank you.

I'm just trying to dive down into the way we could maybe improve the definitions here on a national scale. We had Representative Higgins before us a couple of days ago, who basically said that these are vacation homes; they're cottages. If you looked at it, you would know that's what it was.

I immediately thought, well, that would be kind of hard to define in legal terms.

Is there any way you could set a ratio of, say, the assessed value of a home versus the average assessed value in that region or something? Would that be too much in the weeds for finance to look at?

[Amanda Riddell]

Again, we're kind of tripping into advice to the minister here, so we have to be careful about what we say, but we are taking all of the feedback into consideration, and we'll be briefing the minister on that feedback.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I'm just trying to think where I was going with this. I've totally lost my train of thought.

I guess I'm trying to find some sort of way here where we can maybe smooth out these sharp lines that Mr. Virani was talking about, if you're on one line of a geographical boundary, because this is an issue.

I represent a riding on the border. I have never heard of this issue before. No one has ever come to me to complain. It seems the history of the Lake Erie shoreline that Mr. Baldinelli represents is very different from where I am. I'm just trying to find out where we could change that.

What would be the process of the feedback and changing? I tried to get at this earlier. Is there a way it could just be changed in regulation, without having to come back to us?

[Amanda Riddell]

I think it depends on what specifically is being changed. The UHT Act is mostly set out in legislation, but certain of the legislative sections provide quite a wide scope for doing quite a number of things under regulation. If there were changes to be made, and if that were something the government desired to do, we would have to take a look at those specific things. If they could be accomplished by way of regulation, that would obviously be the more desirable way to go.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

I just thought of what I was going to ask. Is there any double jeopardy here? If you're in B.C. and you're a foreign owner paying 2% in annual tax, now you'd have to pay 3%. Is that what they're facing?

[Amanda Riddell]

Do you mean if you're in one area that's subject to multiple levels of tax? Yes, they accumulate.

[Richard Cannings, NDP, South Okanagan—West Kootenay, BC]

Okay. Thank you.

[The Chair, Liberal, Judy Sgro]

Thank you very much.

We have two members to finish this round. I'm going to just say three minutes each, so that Mr. Carrie and Mr. Arya have an opportunity to ask some questions.