New tax on international property house owners will harm Canadian border group, mayor warns

New tax on international property house owners will harm Canadian border group, mayor warns

The mayor of a Canadian border group is warning that the federal authorities’s new foreign-owned property tax will harm the native financial system and harm its relationships with seasonal residents.

In a two-page letter despatched to Finance Minister Chrystia Freeland on Tuesday, Wayne Redekop — mayor of Fort Erie, Ont. — outlined his issues in regards to the unintended penalties of the brand new Underused Housing Tax and referred to as on the federal authorities to make modifications.

“I concern that you simply and the federal government don’t perceive the dynamic of the border that we share with the US,” Redekop wrote.

“Fort Erie’s seasonal residents usually are not solely good buddies and kinfolk … they’re necessary prospects of our native companies.”

The brand new Underused Housing Tax took impact final yr. It compels international property house owners to pay a 1 per cent annual tax on the worth of any residential property deemed “underused” or “vacant” by the Canada Income Company (CRA).

The tax is supposed to assist settle down Canada’s housing market, notably in giant cities the place housing is briefly provide. It goals to cease international buyers from parking their cash in residential actual property that finally ends up sitting empty. 

Whereas the tax presents important exemptions for seasonal property house owners, they apply largely to rural and trip communities.

Some cottages in additional populated areas don’t qualify. These areas embrace components of southern Ontario akin to the Crystal Seashore space of Fort Erie.

As a result of some cottages there occur to be positioned throughout the St. Catharines-Niagara Metropolitan Census Space, they aren’t exempt from the tax.

“I can guarantee you that the tax is inflicting nice anxiousness, anger, disappointment and uncertainty amongst our seasonal residents,” Redekop wrote within the letter. “They add an important factor to the richness of life in our group.”

Authorities sticking with coverage

The tax has led to political threats of retaliation towards Canadians who personal property within the U.S. However Ottawa is standing by the coverage for now.

“Our authorities was elected on a platform that included a nationwide tax on non-resident, non-Canadian owned residential actual property that’s thought-about to be vacant or underused, to assist deal with issues in regards to the influence of international funding on housing prices and worries about Canadians being priced out of the housing market,” stated Adrienne Vaupshas, a press secretary in Freeland’s workplace. 

“The federal government will proceed to observe the influence of this measure.”

CBC Information requested Freeland’s workplace a sequence of questions on this coverage final week, earlier than Redekop despatched his letter.

Redekop stated in that letter he understands the aim of the tax is to “stop offshore buyers from buying Canadian residences and maintaining them off the marketplace for these in want of everlasting housing.”

However he argued the exemptions are “insufficient” and are being utilized unfairly. 

“Our city is a mixture of city and rural areas,” Redekop wrote. “… The seasonal houses throughout the city boundaries of Fort Erie are topic to the underused housing tax, [while] these which can be positioned outdoors our city boundaries usually are not.

“That in itself highlights an unfairness relating to the tax.”

Redekop stated he wish to see an extra exemption primarily based on time spent within the property. Since most American cottage house owners spend the spring and summer time months in Canada, he says, there ought to be an exemption for anybody who spends no less than three months of the yr on the property.

Rep. Brian Higgins, D-N.Y., speaks on Capitol Hill in Washington, D.C. (Andrew Harnik/Pool by way of AP Photograph)

An American lawmaker who represents dozens of those property house owners has advised CBC Information he is open to any options that go away his constituents exempt.

“If that is not resolved, we have to take a look at some form of measure that may improve the leverage that we’ve,” stated Rep. Brian Higgins, a Democrat representing the border group of Buffalo, N.Y.

A spokesperson for his workplace stated the difficulty is being mentioned with stakeholders, the U.S. embassy in Canada and members of Parliament.

Redekop stated many seasonal residents do not know what’s anticipated of them underneath this tax. All international property house owners, whether or not they’re exempt from the tax or not, now need to register with the CRA and file a return by April 30.

In accordance with a Authorities of Canada web site, the minimal penalty for failing to file a return is $5,000. 

“Lots of our seasonal residents can have little if any data of the reporting requirement,” stated Redekop.

“The City of Fort Erie treasurer has reached out to Canada Income Company a number of occasions, with no response, to acquire data that will help us in alerting seasonal property house owners of their obligations underneath this laws.”