Finance Committee on Oct. 8th, 2026

[Jasmine Toor]

With the way mortgages are financed, particularly at the moment, we're seeing.... It used to be that in many instances—I've done mortgages at a bank—we would see some rate competition from non-bank lenders. At the moment, there is a decreased ability of non-bank lenders to compete. Ultimately, that results in less choice for Canadians and oftentimes higher interest rates. That's what we're seeing on the ground and what I'm hearing from brokers across the country as well.

[Eric Lefebvre]

Do you think that raising mortgage financing capacity without adequately increasing housing supply creates a risk that too much borrowing capacity could translate into higher prices, rather than more housing supply?

[Jasmine Toor]

I don't think the two would relate to one another in that way. I think the government is taking the right actions, such as increases on the private insured mortgage side, to increase housing capacity as well as the—

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Toor. We have to end it there.

Thank you, Mr. Lefebvre.

Dr. Martin, we'll continue with you for six minutes, please.

[Danielle Martin, Liberal, University—Rosedale, ON]

Thank you, Madam Chair.

Thank you to the witnesses for being with us today.

I'd like to begin with Professor Stapleton.

Thank you for being with us. I'm happy to be getting into the weeds a bit around automatic tax filing, which is such an important intervention for low-income people across the country.

I want to make sure I understand your point around the many data points that are collected in a tax filing. Are you suggesting that when it comes to automatic tax filing, there should be some kind of further simplified file that gets submitted, particularly in the case of deemed filing? Could you get a little detailed for us about what you're suggesting? Do you think taking that approach would require any changes to what's being proposed in the legislation versus more on the implementation side?

[John Stapleton]

I'll answer the last question first. I think it's mostly on the implementation side, save for the issues of what happens when there are errors and who will clear that up.

Yes, because we ask those 43 questions leading up to line 236 of the tax form, which is adjusted family net income.... AFNI, of course, is the line on which refundable credits are calculated and computed for each person. We're asking a number of questions. We're asking very low-income people whether they're taking money out of RRIFs that they don't have. We're asking a lot of very marginal questions about whether they have other deductions. I do a lot of tax filing with low-income people. I can tell you that with a lot of the language and a lot of the questions, they have no idea what the questions are really asking. You have to interpret the form for them.

For my second point, which I think is a more important point, let's look for a second at just social assistance recipients across Canada. Each one gets a T5007 slip that tells them exactly how much social assistance has been paid. I can tell you that right now governments—I'm not necessarily saying CRA, but governments—know the answers. For all social assistance or income assistance recipients, they know the answers to 41 of the 43 questions that are being asked. They know them in a more timely fashion than the federal government does. There's so much that could be cleared up just through information sharing that could deal with the privacy issues and actually bring a large swath of people into the system who don't file.

Again, as you asked, there's an awful lot—we can go through each one on the list in front of you, if you wish—that doesn't need to be asked of low-income people.

[Danielle Martin, Liberal, University—Rosedale, ON]

These are really important points. The question of interjurisdictional data sharing has been raised by more than one witness—with respect to disability adjudication, for example. Presumably, other pieces of legislation might need to be looked at in order for that information to be transmitted reciprocally between provincial and federal governments. Your point is well taken. I find it intriguing to consider what a simplified version could look like that would ensure that government gets the necessary information but only the necessary information. Thank you.

Mr. Drobina, I represent an urban riding with a lot of renters. One thing I've been noting as I've been speaking with people who are renting is that there doesn't seem to be a lot of clarity as to where we have a supply problem when it comes to rental housing and where it's mostly an affordability problem. I'm talking about downtown Toronto right now. I can't speak for the rest of the country.

I'm wondering if you could speak a bit about ensuring that in rental housing we don't just build a lot of supply that people can't afford; we actually ensure that we have adequate affordable rental housing. Are there tax changes or other federal policy and regulatory changes that you think would help us ensure that when we build rental housing it's affordable and that we have incentives to repurpose housing through creative mechanisms? I'm thinking about community land trusts. I'm thinking about co-ops that effectively take housing supply that's already out there and ensure that it can be made affordable for renters.

[Peter Drobina]

On the supply side, rental providers have responded to the enhanced rebate announced in September 2023. It was also a market where lending capital was relatively inexpensive. There was a high demand for rental units. The industry responded by building more units, to the point where today—and for the last year or year and a half—there is an oversupply of current rental units in large cities and smaller communities.

The affordability problem is another question. It's not just about the ability to supply units. You need to supply them at affordable rents, where the GST and any taxation, development cost charges or levies play a big role. There have been studies showing that approximately 30% of the cost of delivering rental units in Canada can be attributed to some kind of fee or taxation.

I applaud the enhanced rental rebate. I would love for that rebate to apply to rental units coming to market today and—

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Drobina. We're going to have to end it there.

Thank you, Dr. Martin.

We now go to Mr. Garon for six minutes.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you, Madam Chair.

Mr. Stapleton, my sense is that many countries in the Organisation for Economic Co-operation and Development, or OECD, have some process or another for prepopulating or autofilling tax return forms. Generally speaking, we've seen movement towards prepopulation measures in recent years. Now the government is looking to implement automatic tax filing for a certain portion of the population. There seems to be a lot of consensus around that policy.

Do you know how many countries have an autofill system? Why is Canada behind on that front?

[John Stapleton]

I don't know the number. I do know that in the U.K. and Denmark especially, they send prepopulated forms out to people. They populate all 43 questions, let's say, or their similar list of questions—the ones they know the answer to. They send them out to the tax filer and ask them one question: Is this right? Is there anywhere we made a mistake? It gives an opportunity to the tax filer to then simply deal with it by exception. We don't do that in Canada.

Is there a reason we couldn't do it? There are two real reasons. The first is the number of questions and the need to answer a lot of questions that are not applicable in the first place, but that's in the act. We have to ask them and answer them. The second is timing. When do we really need to know these items? Other countries are more lax. They are more flexible in terms of saying, “Well, let us know within a certain period of time what has changed.” There doesn't have to be the immediacy that seems to be built into our system: “If your marital status has changed, we need to know immediately”, etc.

Those are the two big things: too many questions that are not relevant to refundable credits, and being a bit too timely in our approach.

[Jean-Denis Garon, Bloc, Mirabel, QC]

Thank you.

Recently, the CRA had some problems, let's just say. It made a lot of mistakes. We have people coming to our offices who are having major issues with the CRA. Some private companies have told me that they are responsible for what they put on their tax returns when they file. They sometimes worry about the fact that the CRA can make mistakes, do some sort of audit to correct its own mistake after the fact, and recalculate the allowances and tax credits they're entitled to.

Here's my question: If prepopulated or autofilled tax forms are used, what happens when the agency makes an autofill error? Is there some sort of amnesty for the person using the autofill feature?

[John Stapleton]

Other countries, I believe, have a joint onus. In our system, the onus is all on the individual. For example, if you happen to not get your T5 in the mail or distributed to you by email but CRA has it, then of course there's an error. You didn't have the opportunity to correct it because you never received the information in the first instance. We can work together. In other words, if CRA takes its role seriously, sends out what it has to and does the best job it can possibly do, the individual then has the onus to come up with the information.

The other part of your question is this, really: What if CRA's interpretation is different from the interpretation you have? We see this all the time with cash.

[Jean-Denis Garon, Bloc, Mirabel, QC]

If I may, I'd say it's not even about that. It's about the fact that the CRA makes a lot of mistakes. My fear is that it can autofill certain information, certain answers to questions, only to realize afterwards that it made a mistake and recalculate the amounts people are entitled to.

I'm worried that the agency will fill in the wrong information and then punish taxpayers for its own mistake. What I want to know is whether there are any protections for taxpayers, especially the vulnerable ones benefiting from the policy. Are there any such safeguards?

[John Stapleton]

Absolutely. There should be those mechanisms to write things off in some cases, or, if somebody owes the Canada Revenue Agency money, to do it over a very extended period of time so that they don't run into those types of hardships.

Also, there's the issue of standards—for example, the standards, as I said, for cash. If a babysitter takes the cash they received and then buys groceries on the way home, the CRA will not count that because they'll say they have no record of it. I think they need to get a lot more flexible in terms of what they're able to accept and what their standards are for people, especially low-income people—

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Stapleton. I'm going to have to end it there.

Thank you, Mr. Garon.

We will continue now with Mr. Guglielmin for five minutes, please.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you, Chair.

Thank you, witnesses, for your testimony so far.

Housing affordability is a super important topic. You can't make it through a bakery or a grocery store—certainly in Vaughan, and I'm sure in the rest of the country—without this topic being top of mind, especially for young people or growing families trying to find suitable homes.

Ms. Toor, a new Remax survey found that 65% of Canadians say they would make at least one major compromise to afford a more sustainable home. We see that 63% would relocate. More than 60% cite affordability as a consideration for where to buy, and people are taking second jobs or asking family for help.

From what your members are seeing, are Canadians now being forced to make increased financial sacrifices to qualify for mortgages?

[Jasmine Toor]

Qualifying for a mortgage—I can speak from experience, having purchased a home and qualified for it, and even having done mortgages myself—requires a great amount of sacrifice, especially if you're putting down a 20% down payment.

Fortunately, we have vehicles such as insured mortgages. I think the government has made some very critical changes in that regard. We were one of the associations that pushed for an increase in the insured mortgage cap to $1.5 million and for 30-year amortizations. We would love to see 30-year amortizations across the board for insured borrowers. Those have had some very meaningful impacts and have hopefully helped some people enter the housing market who had been struggling to enter it. They've allowed them to put a lower down payment on the purchase of a home. In Ontario specifically, we're seeing that the HST relief has had a meaningful impact for borrowers.

We hope to see more of these policies coming forward. I think we are on the right track. Obviously, it takes some time for the true impact of all of these changes to be felt.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

For your members, when they see a young person or a young couple rejected for a first-time mortgage, what is the primary reason? Is it the stress test or household debts, or is their income not keeping pace with housing costs?

[Jasmine Toor]

I would say the primary.... Qualifying for a mortgage in Canada is extremely difficult. The stress test is certainly in place for a reason. It has protected borrowers, especially from the high interest rate increases we saw in the postpandemic period. It actually prevented people from losing their homes, so it is a valuable measure.

When qualifying for a home, you have to have the income that matches the pricing of a home. This is often an impediment, but at the same time, the stress test has protected many borrowers who would have potentially lost their home if they hadn't been able to manage the price increases.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

The general cost of living keeps a lot of people from qualifying.

[Jasmine Toor]

I would say so, yes.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Thank you.

Mr. Drobina, your organization has repeatedly asked the government to bring back a modernized MURB incentive. Why do you believe that would generate more rental housing?

[Peter Drobina]

The old 1970s and early 1980s MURB incentive program created an environment where investment in rental housing was somewhat of a tax benefit. Someone could invest, on a tax-deferred basis, any capital gains into new rental housing. It was pretty much a capital recycling program whereby capital that was made on the construction of new rental housing could be applied to another rental housing project on a tax-deferred basis. Any situation where tax is deferred or eliminated gives the opportunity for the industry to provide more rental housing at more affordable rates.

[Michael Guglielmin, Conservative, Vaughan—Woodbridge, ON]

Really quickly, the CMHC has warned that we would need to double the rate of homebuilding to restore affordability to 2019 levels, yet it's also forecasting that housing construction will slow down. What are we missing?