Finance Committee on Oct. 1st, 2025

[Luisa Rizzo]

I think it was my counterpart, Madame Brault, but yes, that's correct.

[Ryan Turnbull, Liberal, Whitby, ON]

Obviously you don't have the number of people who have applied in Quebec, because it's not in effect yet.

[Luisa Rizzo]

The other thing you have to remember is that, with the residents in Quebec, it's administered by Revenu Québec, not the Canada Revenue Agency.

[Ryan Turnbull, Liberal, Whitby, ON]

Let me clarify the GST rebate. We heard that it's approximately $50,000 on a home of $1 million or less. That's the equivalent value for cost savings.

I also want to clarify in terms of when the cut-off is set. If you prepurchase a condo or home that's not been built yet, are you still eligible to get the GST rebate?

[Amanda Riddell]

If you entered into an agreement on or after May 27, you're eligible regardless of the closing date—the closing date has to occur within a period of time, but you have years. Really, it's when you entered into the agreement. It doesn't matter that it's a prepurchase or not.

[Ryan Turnbull, Liberal, Whitby, ON]

We also heard from testimony previously that 97% of new home purchases were under $1 million, I think. Did I get that right?

[Amanda Riddell]

Yes, it's a little over 97%.

[Ryan Turnbull, Liberal, Whitby, ON]

That's a significant amount. I wouldn't have necessarily expected that, but that was helpful.

You indicated that there would be a demand response or that you expected a demand response. I'm trying to understand how this measure fits within a number of other measures that were brought forward by the previous government, the tax-free savings account, the cut to mortgage insurance, which I think was 25%, 30-year mortgages, the homebuyers' plan, which I think allows you to take a $35,000 withdrawal out of your RRSP to purchase a first home, and the first-time homebuyer's tax credit.

Have we done an analysis of how all these things add up for a first-time homebuyer? It seems to me that there's quite a significant number of cost savings. Obviously, a 30-year mortgage doesn't really save you money, but it does on a monthly payment basis, for sure. Have we done an analysis of how those in combination would amount to a significant amount of support? How significant would that be?

[Amanda Riddell]

It is very significant. We did look at it, but unfortunately I don't have the number right in front of me. I could provide you with that number and follow up, if you would like. The largest portion obviously comes from the first-time homebuyer rebate, because it can provide up to $50,000. I would say that the next in line would be the first home savings account, and the homebuyers' plan would be after that in terms of savings.

[Ryan Turnbull, Liberal, Whitby, ON]

The mortgage insurance is pretty significant, with a 25% reduction in mortgage insurance. I'm not sure exactly how much that is, but I seem to recall that it's around $10,000 or more. At least that was my impression, so I would love some clarity on that.

Maybe I'll just say that I've had numerous conversations with individuals concerned about their taxable income being reduced when claiming the disability tax credit, so I'm sure that recipients want us to address that issue.

Ms. Bartucci, I think you said that the department is looking at a solution for this. I think we all need to take that issue seriously. I know I do.

Can you comment briefly?

[Stefania Bartucci]

Sure. Basically, we've heard the same concerns from stakeholders in the disability community. We're considering that, doing our analysis and proposing options.

[Ryan Turnbull, Liberal, Whitby, ON]

Hopefully there are options to address that issue, because I think we can all agree that individuals with limited income who get that disability tax credit can't afford to lose any of that precious income.

Last, the federal fuel charge didn't apply to Quebec. Is that correct?

[Gervais Coulombe]

Yes, that is correct.

[Ryan Turnbull, Liberal, Whitby, ON]

B.C. and Quebec were the only provinces, as I understand it, that had their own system and were not federally backstopped.

[Nina Gormanns]

The third jurisdiction was the Northwest Territories, which had its own carbon tax.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you for that.

How could the money collected by the Province of Quebec be owed somehow by the federal government? Does that make sense to you? It doesn't make sense to me.

[Nina Gormanns]

That is a good question.

[Ryan Turnbull, Liberal, Whitby, ON]

Thank you.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

That's it.

I want to thank the witnesses.

We will now suspend for a few minutes to switch over to our next panel.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Welcome back, everybody. We're resuming the meeting.

I'd like to welcome our witnesses for the second panel.

We have, as an individual, Kim Moody, fellow chartered professional accountant. We also have Isabelle Demers, here in person, who is the vice-president of development, public affairs and innovation strategic. We also have Mike Moffatt, who is a founding director. All virtual witnesses have conducted a mandatory witness onboarding test.

I'd like to make a few comments for the benefit of the new witnesses.

Please wait until I recognize you by name before speaking. For those participating by video conference, click on the microphone icon to activate your mic. Please mute your mic when you are not speaking. For those on Zoom, at the bottom of your screen you can select the appropriate channel for interpretation: floor, English or French. For those in the room, you can use the earpiece and select the desired channel.

This is a reminder that all comments should be addressed through the chair.

You will have five minutes for your opening remarks, after which we will open the floor to questions.

We'll start with Kim Moody for five minutes, please.

[Kim G. C. Moody, Fellow Chartered Professional Accountant, As an Individual]

Thank you, Mr. Chair.

Good afternoon, committee members. My name is Kim Moody. I am appreciative of the opportunity to speak before you today. I have a long history of serving the Canadian tax profession with a variety of significant leadership positions, and I continue to do that. I'm a prolific writer on taxation matters, including writing a weekly column for the Financial Post.

Today I'd like to briefly comment on whether or not Bill C-4 lives up to its title, “An Act respecting certain affordability measures for Canadians and another measure”, and offer some suggestions for improvement. Before I do, all committee members and witnesses who have appeared before this committee obviously know that Bill C-4 is not yet law. That's why we're here to discuss and allow the parliamentary process to run its course. If you believe the messaging from the government, this bill is indeed law with respect to the proposed 1% tax cut for the lowest personal tax bracket. In my view, such messaging is misleading. It's only possible because of the CRA's current policy on the provisional administration of tax proposals, which I wrote about in one of my recent articles.

Canadians' overall financial literacy needs to improve in order for them to make good financial decisions and be better informed come election time. Trumpeting that the proposed 1% tax cut is law when it is not is misleading politics and does nothing to advance the important objective of improving Canadians' financial literacy. The CRA's policy should not be used to suggest that such provisions are law until they are. Anything less undermines our parliamentary process. In my view, this needs to change.

With respect to the simple question of whether or not the bill lives up to its title, the short answer is “no”. While the government states that the maximum tax savings for the 1% tax cut is $400 per person, the more important statistic is what the average savings will be for Canadians. The Parliamentary Budget Officer stated in the June 18, 2025, costing note that the rate change will save tax filers “an average of $110” in the next year and gradually increase to an average of $200.

Let's be generous and say that it is $200. For average Canadians, that's 55¢ per day—less than the cost of a daily cup of coffee. To suggest that this tax cut will make a material difference in Canadians' quest to deal with affordability issues, including the millions of Canadians who already don't pay federal income tax, is silly. It won't. For some who suggest that this immaterial tax cut is tax reform, well, think again: It's not. I'll say more on that in a bit.

While I think tax cuts are necessary to deal with affordability, productivity and competitiveness issues, this minuscule tax cut is not it. It needs to go much further. To balance such revenue loss, significant expenditure reduction by government needs to be completed. The proposed Conservative tax cut of 2.25% that was put forward during the recent election campaign, combined with government expenditure reductions, would have been a much more significant step in that direction.

As mentioned many times in my writings, a more meaningful and critical tax cut for the country would be to eliminate the highest personal tax bracket, which was unnecessarily introduced in 2016. That introduction included messaging that asked high-income earners to pay “just a little bit more”, an offensive speaking point when one understands how much high-income earners already pay when compared with the whole of Canada. Our country's high personal tax rates stifle productivity and competitiveness. As recently reported by the Fraser Institute, Canada's top combined statutory income tax rate ranks fifth highest out of 38 OECD countries. These personal tax rates have contributed to an exodus of capital and successful Canadians leaving Canada. We need to stop this.

Before I offer suggestions for improvement, I'll quickly comment on the proposed GST measures in the bill. While a GST holiday for new home purchases can assist with affordability measures, to restrict it to first-time homebuyers significantly reduces access. It's not only first-time homebuyers who are struggling with affordability matters. There are numerous reasons why existing homebuyers may desire or need to purchase a new home. Why restrict this to only first-time homebuyers?

How do we improve our tax system and improve affordability for Canadians? Is it with immaterial personal tax cuts? No. It's with tax reform. As many tax practitioners who have appeared before this committee over the years have previously stated, our income tax statute is a patchwork quilt and a mess. It's tired and tattered and full of political measures, such as the prohibition of deductions on certain short-term rentals and the recent amendments to the alternative minimum tax. These are counterproductive and ineffective policies, and they contribute to the fact that our tax system is far too complex. A key objective of tax reform should be to simplify and remove obvious ineffective policies, but it should also encompass big-bang personal and corporate tax reforms that incentivize investment in Canada and make a real difference in improving affordability for average Canadians.

I was hopeful that the tax reform task force proposed by the Conservatives during the election campaign would have been that step in the right direction. While the Liberals have proposed “an expert review of the corporate tax system”, such a proposal does not go far enough. Corporate tax revenues are approximately 17% of overall federal government revenues—

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Mr. Moody, that's time.

You can continue your remarks once we start the questioning.

[Kim G. C. Moody]

All right. No problem.

[The Vice-Chair (Jasraj Hallan), Conservative, Jasraj Singh Hallan]

Next, we have Ms. Demers.

You have five minutes, please.

[Isabelle Demers, Vice-President, Strategic Development, Public Affairs and Innovation, Association des professionnels de la construction et de l'habitation du Québec]

All right. Thank you so much, Mr. Chair.

Mr. Chair, members of the Standing Committee on Finance, on behalf of our association, thank you for having us here today as part of the study of Bill C‑4.

Please note that our intervention today will be limited to the portion of the bill related to the GST rebate measures.

My name is Isabelle Demers. I'm vice-president of strategic development, public affairs and innovation at the Association des professionnels de la construction et de l'habitation du Québec, or APCHQ.

Founded in 1961, the APCHQ represents more than 28,000 businesses in the residential construction and renovation industry. It is the largest voluntary membership association in the construction industry in Canada.

First of all, the APCHQ welcomes the introduction of Bill C‑4, one of the key measures of which, announced by the Prime Minister on March 20, is the full or partial GST rebate for first-time homebuyers under $1.5 million.

This measure, which the APCHQ has been proposing for a number of years, represents a concrete step towards affordability and home ownership.

This measure has generated enthusiasm among many households aspiring to become homeowners. However, in early June, the ways and means motion announced that the GST rebate will be retroactive to May 27, 2025, and not to March 20, 2025, the day the government made the official announcement.

At that time, confusion arose among many first-time homeowners. Several of them had indeed decided to take action and purchase their first homes following the government announcement. The discontent they expressed to home builders is understandable.

Take Michelle, for example, a first-time homebuyer, who has lived for several years in affordable housing in a popular neighbourhood. She had to leave her apartment due to renovations and a rent increase. The retroactive change in the effective date for GST rebates will cost her more than $10,000 in additional expenses.

Or take Olivier, a first-time homebuyer who was informed of the announced measures, but he signed his contract on May 27, 2025, the deadline. The change in the effective date will cost him more than $25,000.

The APCHQ, like contractors and buyers, is asking why May 27 was chosen as the start date for the GST rebate, and if it is not retroactive, why it was announced on March 28. The date appears to have been set arbitrarily, without any clear justification. Therefore, the APCHQ is calling on members of Parliament to move the effective date of the measure to March 20, 2025, the official date of the announcement, rather than May 27. The legislative amendment would restore fairness among buyers and honour the original intent of the measure.

Conversely, and all things being relative, the change would have a minimal financial impact on the government. Based on an estimate from the Parliamentary Budget Officer, the APCHQ estimates that applying the GST rebate to purchases made between March 20 and May 27, 2025, would result in a cost of $53 million but would help nearly 2,000 more households across Canada.

Becoming a homeowner means putting down roots, feeling at home and building a place to grow and thrive. Buying a home is often the most significant investment of a lifetime, and it is young families who are the most affected. Every financial support offered to them is a breath of air in a very uncertain economic context.

This is why we believe that correcting the effective date to March 20, 2025, is essential to support as many households as possible during this housing and home ownership crisis while respecting the original intent of the publicly announced measure.

Thank you for your attention, and I am available to answer your questions.