Evidence of meeting #70 for International Trade in the 44th Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.) The winning word was uht.
A recording is available from Parliament.
4:10 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
That's precisely it. They were just raising concerns that perhaps they'd have to sell their vacation property to avoid the 1% tax on the value of their vacation home.
4:10 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Mr. Cannings.
We will go to Mr. Seeback for five minutes, please.
4:10 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
That's great. Thank you, Madam Chair.
Why would you not just be able to simply sign the form saying, “I have an exemption,” instead of having to go through it, fill out all kinds of information about your property, including values that you may not know, and then click a box at the end that says you have an exemption? Wouldn't it just make more sense and make it easier for Canadians if at the start of the form you just clicked, for example, “I have an exemption; it's a seasonal property that's not winterized”?
4:10 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
The question is partly, I guess, directed to the CRA, given that they are responsible for the administration and enforcement of the tax, but perhaps I can comment briefly.
The form is seven pages long, but a significant portion of that is listing the exemptions that are available to property owners. If someone is entitled to an exemption, I'm under the understanding that the CRA's policy is that the value of the property does not have to be provided in the return. Basic property information is required to be provided—the name of the owner, the address of the property, and things like that—but the information that's being requested is actually fairly minimal.
4:15 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
How much money is this supposed to raise? You said one of the goals is to raise revenue to create affordable housing. How much is it estimated that this is going to raise?
4:15 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
The department estimated the UHT would raise approximately $875 million over the fiscal planning period beginning 2022-23 to 2027-28, and $140 million annually thereafter.
4:15 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
How many paper returns is it estimated will be filed?
4:15 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
I can't comment on the number of paper returns that are going—
4:15 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
You can file only a paper return, right? It's the form.
4:15 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
The return can be filed electronically as well as by paper. I believe that currently there is somewhere in the neighbourhood of a fairly even split between paper and electronic forms, but you'd have to—
4:15 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Do you have an estimate of how much it's going to cost to administer all of this? It's going to be millions of forms being sent in to the government for this tax.
4:15 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
I can't answer that question. It's a question that would have to be directed to CRA officials. They are best placed to answer that.
4:15 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
When you developed this policy, did you not look at what the cost-benefit of this would be? We're going to have x amount of revenue, but internally it's going to cost y. Therefore, x minus y is the actual amount of money that's going to be available, allegedly, for affordable housing.
Wasn't that part of the policy consideration?
4:15 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
When we're briefing the minister, we brief the minister on absolutely all aspects of the tax. You can imagine that all relevant considerations, such as cost-benefit analyses, are included in our briefings. Yes, the minister would have been briefed on—
4:15 p.m.
Conservative
4:15 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
It's not something I'm at liberty to provide, unfortunately, because it forms part of the advice to the minister.
I apologize. I'm not trying to be awkward. It's just that as officials, the advice to the minister is confidential, and we're not at liberty to discuss it.
4:15 p.m.
Conservative
Kyle Seeback Conservative Dufferin—Caledon, ON
Given the lack of knowledge of this tax, how are you going to measure compliance?
This is supposed to target non-residents, effectively. That's what we're mostly looking at, but Canadians may have to fill out this form as well.
Do you have any idea how to measure compliance, like who has actually filled this out when they should have? As you said, you don't have access to any municipal databases or an index of properties.
4:15 p.m.
Expert Advisor, Sales Tax Division, Tax Policy Branch, Department of Finance
CRA has a variety of mechanisms it uses to ensure compliance with Canada's tax statutes.
With respect to the specifics of this particular measure, if you're interested in how the CRA intends to go about administering and enforcing the tax, I would suggest the committee speak to CRA officials about that question.
4:15 p.m.
Liberal
The Chair Liberal Judy Sgro
Thank you very much, Mr. Seeback. Your five minutes are up.
Mr. Virani is next, please.
4:15 p.m.
Liberal
Arif Virani Liberal Parkdale—High Park, ON
Thank you very much.
Ms. Riddell, at the outset of your comments, you talked about the census metropolitan area and the census agglomeration, I think. If an entity or a location of a house is designated as rural, it's exempt. How you define rural is based on the CMA or CA definition.
This is a line-drawing exercise. Inevitably, when a line is drawn, some people are on one side of the line, getting exempted, and some people are on the other side of the line, and they are not exempted.
Is that fair?
4:20 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Yes, that's fair.
4:20 p.m.
Liberal
Arif Virani Liberal Parkdale—High Park, ON
You mentioned specifically that even within the CMA/CA fold, if you're in the rural part of a CA or CMA you may be exempted, which might explain some of the questions you heard earlier about why a house 400 metres away is on one side or the other. It's just because a line had to be drawn somewhere.
4:20 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
That's exactly it.
4:20 p.m.
Liberal
Arif Virani Liberal Parkdale—High Park, ON
Here, the line drawing was used because, I presume, you're trying to come up with some proxy for dividing urban versus rural, and it is in urban areas that we have the most sensitive issue about housing shortages. That's what we're targeting with the UHT.
Is that fair?
4:20 p.m.
Director, Real Property and Financial Institutions, Sales Tax Division, Tax Policy Branch, Department of Finance
Yes, that's fair.