Thank you, Mr. Chair.
It's a privilege to be here at this committee. Hopefully I can help you out in understanding this UHT and what we need to do about it.
I am a practising lawyer from Niagara. I've been practising for over 40 years. I'm native to Niagara.
A good part of my practice is looking after U.S. citizens who have cottages in Ontario—mostly in Niagara, but all over the province—most of which are owned by middle-class Americans generationally. My representation involves buying and selling these cottages and also helping the families to do estate planning with these cottages to pass to the next generation. I also look after the Canadian tax filings for them, so I have a long working relationship with CRA—that's for sure.
Niagara is a community that borders Buffalo, New York, and Niagara Falls, New York. Really, we are one community with a river that runs through it. That's the bottom line: We're one community. In this case, it happens to be the Niagara River. Many of us spend time on both sides of the border.
My understanding is that the purpose of the UHT Act was to address the fairly recent crisis in the housing market for Canadians in the big urban centres and to tax non-Canadians who have parked their money here, buying up residential properties while these units are sitting vacant and underused. That is a noble objective, and I support it one hundred per cent. It's worth implementing, but only in the right circumstances.
It makes no sense when we're dealing with residential properties that have been purchased and used by non-Canadians for many years as summer residences or what we call “cottages”. Specifically, our area in south Niagara, which consists of Fort Erie, Crystal Beach, Port Colborne, Wainfleet and actually the whole north shore of Lake Erie from the Peace Bridge all the way to the Ambassador Bridge in Windsor, has been cottage country for U.S. citizens for over a hundred years. Many families are into their third generation of owning these cottages. These are not the people who have parked their money in Canada for passive income. They reside here during the summer months, generally May 24 until Labour Day. They are members of our local community, including our sporting organizations, clubs and churches, a number of which they have founded or co-founded, as well as being big supporters of our local businesses and cultural events. Those members on the committee who live in similar areas will be familiar with these summer residents and what they mean to our communities.
The act sets every non-Canadian residential owner the task of filing a UHT tax return, which is different from the T1 returns that we file, and each of these property owners has to first obtain a Canadian tax ID number to do so. The requirement for them is to file and, if they don't have an exemption from the tax, to pay the tax, which is equal to 1% of the value of the property. This has left a bad taste in the mouths of many of our U.S. citizens who are our summer residents. They believe that the community—that is, the Canadian element of our community—has abandoned them, and we've seen an exodus as they have been selling their cottages.
We were advised that this act and the regulations would exempt cottages and recreational properties, but that has proven not to be the case. The act has created a series of available exemptions from the payment of tax, but there are too many inequities as to how those are implemented.
I could speak for a couple of hours on this. I understand I have only five minutes and I've already used some of that up, so I would be more than happy to discuss this through the question-and-answer period and I welcome any questions you have in that regard. However, I would say simply this: In my opinion, the exemption from the requirement to pay tax should be based on usage—that was the idea—and not so much on where it is located. We have situations in which one summer resident here is exempt and another on the same street is not exempt. That's just one of the inequities that I can talk further to you about.
The act and its regulations have created and have had an inequitable and discriminatory effect on our U.S. summer residents. I've offered my time to the government to sit down with decision-makers or drafters of legislation to produce further regulations under the act to eliminate these problems. I've even provided sample draft clauses for this purpose. In February, I wrote to the Honourable Deputy Prime Minister in regard to this, and I'm waiting for the response from her or from people in her office. I'm prepared to work with everybody on this.
These issues are not true just for Niagara but for countless waterfront areas, lakes and rivers all across our country. This is more than just a border community issue, but it is a border community issue as well.
The filing deadline for the 2022 UHT return and the payment of the tax was extended by the government to October 31 from the April 30 requirement. These regulatory changes are needed to be in place by then, so there is a sense of urgency to this matter. Our summer residents deserve to be treated fairly and better than they have been. We would expect nothing less for our Canadians who winter in the United States, and we would not want any kind of reciprocating tax to be applied to them.
I know that this has been talked about. I believe that Congressman Higgins will be talking to you this afternoon, and I'm sure he will have something to say about that. I don't want us to go there. I would be more than happy to assist this committee in its further investigations and deliberations on this matter. I can provide you with written materials.
However, the bottom line is that taxing these cottages is not going to do anything to solve the housing crisis that this act was supposed to deal with.