Finance Committee on Oct. 8th, 2026

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

Thank you very much.

[The Chair, Liberal, Karina Gould]

Thank you, MP Guglielmin.

Now it's over to Mr. Lavoie for five minutes.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you, Madam Chair.

Ms. Khanna, I want to start by taking a quick moment to thank the United Way. For those of us in the greater Quebec City area, and even in my riding of Beauport—Limoilou, the United Way is really making people's lives better. More than $20 million is supporting more than 225 organizations, helping some 200,000 people. The United Way really makes a difference.

In preparation for today's meeting, I met with representatives of organizations that are making a real difference in their communities thanks to the funding they receive from United Way. They include Entraide Agapè, Maison de la famille de Québec and Patro Roc-Amadour. I can tell you the money is going to the right place, to the right people. I wanted to take this opportunity to thank you for the work you do.

You talked about infrastructure in your opening remarks. It is that one of your three priorities? When you say infrastructure, are you talking about services, programs or physical infrastructure? Tell me a bit more about your infrastructure priorities.

[Anita Khanna]

Thank you so much for your support of your local Centraide and its excellent work.

When I speak about infrastructure, I'm speaking about community services navigation to access benefits and supports. Crucial to that is also the infrastructure of space for community programming. You could think of it as physical infrastructure, such as the space and resources required to deliver supports and the social infrastructure, which is really the operationalization and functioning of those supports so that there are services, staff and skilled people available to assist residents.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

Thank you.

I also noticed that you stressed the point that vulnerable people aren't always aware of the programs they're entitled to and don't know how to access them. What can we do to better communicate that information and raise that awareness, so people don't fall through the cracks and miss out on the services they are entitled to and, above all, need?

[Anita Khanna]

That's a wonderful question.

It's important to leverage trusted relationships with community organizations and partners such as banks and labour networks and to ensure all communications are multilingual and target communities that are diverse and will benefit from that information. As well, accessible formats, as my colleague Ms. MacKenzie has described with braille, large print, etc., are important.

The other thing is equipping community organizations to assist members to navigate to these services. Our 211 community information and navigation service can help ease the burden on the CRA or Service Canada by being an early connection to help people understand what is available in terms of services and benefits and to build and maintain trust with individuals so they can take the next step to connect with government services and opportunities.

[Steeve Lavoie, Liberal, Beauport—Limoilou, QC]

I was just going to ask about the 211 service. You talked about it briefly, and you've often referred to it.

In practical terms, how does the 211 service make it easier to connect with people? How could it play a bigger role in communicating information, to foster access?

[Anita Khanna]

The number 211 can be dialed in most regions of Canada to reach a skilled human navigator to assist with the presenting issue. Say someone calls because they need food. Because the navigator is skilled and trained, they can help the caller identify needs they might have related to housing, tax filing and the rest to have a fulsome level of support around them.

The 211 system can also be leveraged by government as a first stop and a front door to these community services and community information. We would certainly recommend that the government look into leveraging the infrastructure that has been built and supported by other provinces and territories and by the federal government during the pandemic—and further—to support access.

The 211 system takes inbound phone calls and makes outbound calls to contact people. In some regions, we have partnerships with the health care system and other social service organizations so that there is a coordinated—

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Khanna. We're going to have to end it there.

Thank you, Mr. Lavoie.

On behalf of the committee, I'd like to thank all the witnesses for being with us today.

We're going to take a quick five-minute break to get ready for our next hour.

[The Chair, Liberal, Karina Gould]

Colleagues, we are going to resume our meeting. At the top of the hour, because we have new witnesses with us, I would like to remind participants of the following points.

Please wait until I recognize you by name before speaking. Those of you who are participating by video conference, click on the microphone icon to activate your mic, and please mute yourself when you are not speaking. You can, at the bottom of your screen, select the appropriate channel for interpretation: floor, English or French. Also, I'll just give a reminder that all comments should be addressed through the chair.

I'd like to take a moment to welcome our next set of witnesses. We have appearing with us Mr. John Stapleton, principal, Open Policy; Ms. Jasmine Toor, vice-president of public affairs, Mortgage Professionals Canada; and Mr. Peter Drobina, vice-chair, tax and incentives committee, the National Apartment Council.

You will each have five minutes for your opening remarks.

Mr. Stapleton, we will begin with you.

[John Stapleton, Principal, Open Policy, As an Individual]

Thank you very much, Madam Chair and members of the committee, for inviting me. It's a privilege.

I want to speak about automatic income tax filing, but from a slightly different perspective than usual.

As we know, for most Canadians, filing a tax return is about determining how much money we owe government, but for many low-income Canadians, again as you know, it is about determining how much money the government owes them, and that distinction is crucial.

Over several decades—actually, since 1978—we have constructed an income security system in which filing an income tax return has become the gateway to benefits. People who owe no income tax must nevertheless file a return to receive money intended to help them meet their basic needs. We've made tax filing a condition of receiving benefits, even when there is no tax to pay.

I have four observations over the next four minutes.

The first is in the form of a question: How much does government already know? I've prepared an inventory, which you have, of 43 information items. This is like the normal income tax return that we all do, or that most of us do. It's the simple return that Canadians encounter in navigating the tax and benefit filing process. Not all items apply to everyone, as we know, and some overlap, but many involve information that governments already possess: age, pension income, employment income reported on various T-slips, government benefits and taxes deducted at source. In other words, we frequently require people to tell government what it's already been told, not always to the CRA but to government in general.

Of course, there are circumstances that government cannot know about without asking, but surely we can distinguish between information we genuinely need from individuals and information already sitting in government records. Please look at the 43 items. For people with little income and straightforward circumstances, that distinction should be the starting point for automatic filing.

Second, complexity is not the answer. We're told by some that we have too complex a tax system to bring in automatic filing. C.D. Howe has done that, and they have a point.

Our tax system contains an extraordinary collection of deductions, credits, exemptions and discussion of family circumstances. Not every return can be prepared from the information already available, but I'd like to turn that argument around: If our tax system is too complicated to administer automatically for people whose financial circumstances are simple, perhaps the problem we're looking at is not automatic filing but the tax system itself. The existence of complicated tax returns is no reason to require people with uncomplicated circumstances to complete them.

The third comment is again in the form of a question: What does government really need to know, and when do they need to know it? Governments increasingly expect people to report changes in marital status, address, household composition and other personal circumstances. Some of this information is essential. Marital status can affect benefits and an address is necessary to communicate with people, but we should distinguish three questions: What does government genuinely need to know, when does it need to know it and what should happen when someone fails to report a change on time?

Of course, these are not the same questions. Someone who has moved, separated from a spouse, lost employment or experienced a family crisis may not regard updating government records as their first priority. Government understandably wants accurate information, but that does not justify imposing an unnecessarily continuous reporting obligation on people who may already be struggling. We should examine whether every reporting requirement is necessary. Certainly, the 43 questions on the tax return are not necessary for refundable credits. We should examine whether the timing is proportionate and whether the consequences of non-compliance are fair.

Finally, I'm concerned about the allocation of responsibility for errors. Who is responsible when government gets it wrong? Bill C-31 would allow the CRA to prepare returns for certain eligible individuals who have not filed, and that is a welcome direction, but proposed subsection 150(1.6) also raises a concern about treating errors or omissions as misrepresentations attributable to an individual who fails to correct information on a CRA-prepared return. Think about what that means. Government prepares a return using information available to them. It sends a notice to the individual, who may bear the consequences for failing to identify and correct an error.

There are safeguards and opportunities to respond, but those safeguards must be meaningful for people who need to move frequently, have difficulty receiving mail, struggle with official correspondence or simply don't understand that government may, in some instances, make a mistake. If government takes responsibility for preparing a tax return, it must also accept an appropriate share of responsibility for getting it right.

In closing, I support automatic filing, but its success should not be measured simply by the number of additional returns CRA processes or produces. It should be measured by whether people—

[The Chair, Liberal, Karina Gould]

Thank you, Mr. Stapleton. I'm going to have to end it there. That was five minutes.

We're going to continue now with Ms. Toor for five minutes.

[Jasmine Toor, Vice-President, Public Affairs, Mortgage Professionals Canada]

Thank you, Chair and members of the committee.

My name is Jasmine Toor. I'm here on behalf of Mortgage Professionals Canada, representing mortgage brokers, lenders, insurers and other professionals who help Canadians access housing finance.

We welcome several measures in the spring economic update and Bill C-31 that strengthen Canada's housing finance system and expand choice for consumers. In particular, we support the decision to allow private mortgage insurers to insure residential properties of up to eight units, changing the definition of a residential home from four units to eight.

Current federal regulations for mortgage insurance set the maximum number of units on a property that can be insured at four. When purchasing buildings with more than four residential units, buyers therefore do not have access to insured mortgages, which typically offer lower interest rates than the commercial mortgages to which those buyers are limited.

As the government seeks to increase housing supply and reduce the cost of bringing new housing online, increasing the maximum number of units that can be mortgage-insured on a property will make residential properties more financially attractive to build and own by granting owners access to the lower interest rates of insured mortgages. This is a practical change that can help unlock financing for smaller multi-unit housing projects—the kind of “missing middle” housing options that Canada urgently needs. It gives lenders and borrowers more options that can make smaller-scale rental and multi-unit development more viable.

We also support the increased mortgage funding and insurance capacity proposed in division 7 of Bill C-31.

Clause 266 increases the securities guarantee ceiling. Not every mortgage lender funds itself through deposits. Many lenders rely on securitization to compete. Greater capacity can support a more diverse lender market, greater competition and more choice for Canadians. Greater competition can ultimately help Canadians access more competitive financing.

Clause 267 increases the aggregate protected loan limit from $300 billion to $500 billion. This provides greater capacity for privately insured mortgages and supports competition among mortgage insurers and the lenders that rely on their coverage.

These are all positive steps towards a mortgage market with more competition, more capacity and more choice for Canadians.

I also want to thank this committee for its continued leadership, and in particular for recommendation 44 in its recent pre-budget report. The recommendation recognizes the need to “Strengthen efforts to combat fraud, money laundering, and financial crime through better coordination between governments, law enforcement, and financial institutions.” We would add mortgage brokers to that list, as brokers serve as a critical component of mortgage financing in Canada.

The report also recognized the need for the federal government to deliver a CRA-enabled, taxpayer-consented income verification tool to help prevent mortgage fraud. Mortgage Professionals Canada, alongside other associations such as the Canadian Bankers Association, the Mortgage and Title Insurance Industry Association and the Canadian Credit Union Association, has advocated this for years. We appreciate the committee specifically recognizing the importance of moving it forward.

The federal government first committed to advancing income verification in the 2024 fall economic statement. One of the most practical steps that the federal government can take is to deliver a secure digital system that allows income to be verified with the CRA, with the consent of the borrower and appropriate privacy safeguards. This would make the mortgage process more reliable. It would help combat mortgage fraud, reduce reliance on documents that can be altered or falsified, reduce unnecessary paperwork for Canadians and give lenders greater confidence in the information they use to make lending decisions.

Our message today is simple: Mortgage Professionals Canada supports measures that increase mortgage funding and insurance capacity. A strong housing finance system needs a diverse range of lenders and insurers so that Canadians have access to competitive financing and meaningful choice. We encourage the government to complete these measures by acting on the committee's recommendation on income verification.

[The Chair, Liberal, Karina Gould]

Thank you, Ms. Toor. That concludes the five minutes.

We will continue now with Mr. Drobina for five minutes.

[Peter Drobina, Vice-Chair, Tax and Incentives Committee, National Apartment Council]

Thank you, Madam Chair and members of the committee, for the opportunity to appear today.

My name is Peter Drobina. I'm a director of federal real estate taxation with Ryan ULC and the vice-chair of the National Apartment Council's tax and incentives committee. I'm appearing on behalf of the NAC, which represents the providers of private sector rental housing in Canada.

My professional background is in GST self-assessment, real estate evaluation and tax disputes. I have spent almost 13 years with the CRA real estate appraisal program, and for the past four years with Ryan ULC I've advised rental developers across Canada on their GST self-assessment requirements, rental rebates, CRA reassessments and tax disputes.

My and NAC's central message is simple. Private rental providers deliver the majority of Canadian rental housing supply and play a vital and central role in meeting our current and future housing needs. To deliver the number of homes that the CMHC has identified as necessary, the industry needs clear, predictable and consistent administrative tax rules so that private capital can continue to flow into new housing.

First, we need more consistency and transparency in GST self-assessment and CRA valuation practices.

Members are seeing significant differences in how CRA appraisers determine fair market value for newly constructed rental buildings, including different legislative interpretations, valuation methods and assumptions in comparable circumstances. These differences are a significant source of reassessment disputes. They can take years to resolve, tie up substantial capital and require significant resources from both the taxpayer and the CRA. Clearer rules, more consistent practices and greater consultation on valuation policy changes are needed to reduce those costs and resolve fair market value GST disputes sooner.

We see a similar issue with the enhanced rental rebate that was announced in September 2023. Uncertainty over CRA's interpretation of when construction begins can lead to materially different outcomes depending on when CRA determines the project started. To avoid that tax cliff, the NAC supports clear and objective eligibility laws and interpretations, including phased-in transition rules where necessary.

These are not simply technical tax issues. Large GST liabilities arise at the worst point in a rental project's lifetime: when construction is complete, capital is fully committed and the building has not yet reached stabilized occupancy. When those liabilities remain in dispute for years, they tie up capital and consumer resources that could otherwise support more rental housing development.

Second, we recognize the need for effective CRA audit and information-gathering powers, but stronger CRA powers should also come with greater transparency and accountability from CRA.

Rental housing providers need clear and timely communication when CRA changes its policies, legislative interpretations or valuation approaches so they can understand and fully comply with the tax legislation. Significant changes should also be developed with appropriate consultation with the rental housing industry and valuation professionals. The goal should be effective enforcement, but also transparent processes, greater consistency and higher-quality standards in CRA assessments.

My third point is on Bill C-31, which proposes to raise the Tax Court's informal procedure thresholds. That may be helpful, but it will have a limited implication to the larger GST disputes common in rental housing. The industry is asking for an applicable informal dispute resolution process with GST fair market value disputes, allowing differences between taxpayer and CRA valuations to be addressed and reasonably resolved earlier without requiring lengthy and costly formal tax dispute proceedings.

Finally, these circumstances and administrative issues need to be considered in the broader context of housing supply in Canada. The NAC is advocating for a modernized MURB-style investment program, a targeted capital gains deferral program for reinvestment in rental housing and more predictable CMHC financing programs. These measures are intended to improve project feasibility and keep private capital flowing into new rental supply.

I would leave the committee with four practical asks. First, improve transparency and consistency in CRA's GST administration and valuation practices. Second, establish clear and objective eligibility rules for rental housing rebates, with appropriate transition or phase-in measures. Third, ensure expended CRA information-gathering powers are accompanied by greater consistency, accountability and quality in CRA audits and reassessments. Fourth, continue to improve federal tax and financing measures so that more private capital can be directed towards new purpose-built rental housing.

The common thread is certainty. Rental housing requires long-term investment and planning. Predictable tax administration reduces risk, supports investment decisions and ultimately enables more housing supply to be delivered.

Thank you, Chair.

[The Chair, Liberal, Karina Gould]

That's great. Thank you very much, Mr. Drobina.

We now go to Mr. Lefebvre for six minutes.

[Eric Lefebvre]

Thank you, Madam Chair.

My thanks to the three witnesses for being with us today.

Mr. Drobina, you worked at the CRA. Now you work with rental housing developers. I want to know what needs to change to improve CRA processes, transparency and accountability in the handling of GST/HST disputes and reassessments, especially when the CRA's real estate appraisal program is involved.

[Peter Drobina]

From my perspective—and I've been in the industry for 17 years dealing with GST issues on both sides—there is a lack of accountability and quality controls once the legislation is interpreted and appraisal standards are applied to the legislation. I think that creates the issue of applying legislation to appraisal standards and matching it with market information that's derived from transactions in the market.

I have an issue where, say, an auditor creates an incorrect $1-million reassessment. If that reassessment is disputed over the next three years and the Tax Court decides that it was wrong, the original auditor or team leader has no feedback loop where they can improve their processes or interpretations to eliminate the next problem assessment. Therefore, an audit file needs to have a time issue and associated costs all the way through the audit, appeal and tax procedures until the issue is resolved. That way we would have statistics on who creates those issues and how they can be resolved quicker, eliminating the time wasted on these disputes and the significant costs borne by both the taxpayer and the federal government.

[Eric Lefebvre]

Thank you very much.

How should the CRA's real estate appraisal program work with appraisal professionals and rental housing stakeholders when developing or changing appraisal methods? What can the CRA do to work with them more?

[Peter Drobina]

It starts with any kind of collaboration or consultation. In my last 17 years, I'm aware of one public real estate appraisal program presentation to the Appraisal Institute regarding GST issues on seniors homes. I welcome them to participate in appraisal standards committees or with the industry and to be involved in what the industry is experiencing today, what the market is saying today, because their valuations, assumptions and methodologies are driven more by their lack of market knowledge than by their consultations with the industry and their knowledge of what is happening today in a tough rental market environment.

[Eric Lefebvre]

Mr. Drobina, you have a lot of appraisal and assessment experience. What should the CRA consider to determine the fair market value of new rental buildings in the case of an assumed sale under section 191 of the Excise Tax Act?

[Peter Drobina]

The challenge is that the current legislation has provisions of deemed sales when a rental building has to be self-supplied, and that occurs, by the court's definition, in the primary market where that property is taxable. Because of the lack of transactions in the primary market, CRA appraisals and outside appraisals have to reach to the secondary market and utilize exempt used residential sales in their application and estimate of value for new rental projects. There are adjustments that come in that have to be applied between a primary and a secondary market, and those adjustments create a lot of issues with the industry.

Also, the CRA appears to be lacking any knowledge that the risk associated with deemed supply when a rental building is new and not occupied is much higher than it is with fully occupied, used residential with no tax liability attached to it. There's a difference in looking at the market transactions from one market and applying them to the deemed legislation, which explains that the self-supply has to occur when the first occupancy is triggered.

[Eric Lefebvre]

How much time do I have left, Madam Chair?

[The Chair, Liberal, Karina Gould]

You have a minute and a half.

[Eric Lefebvre]

Thank you.

Ms. Toor, do you think the Canada Mortgage and Housing Corporation's, CMHC's, current limit is really a major barrier to home ownership today?