Unintended consequences of new federal housing tax
Canada is in the midst of a housing crisis and different levels of government are introducing various measures to try to ease the pressure. For the federal government, one of those measures is the Underused Housing Tax Act that became law last year.
It is a one percent tax on the value of vacant or underused housing, and the new federal legislation requires that individuals who aren’t Canadian citizens or permanent residents, as well as private corporations and partnerships – which includes farms – who own residential housing to file an Underused Housing Tax return even if they don’t have to pay any tax.
The legislation was designed to address urban homes, condominiums and apartments that have been purchased for investment purposes, often by foreign buyers, and are now unused or not used to their full extent. Farmers don’t play a meaningful role in Canada’s rental housing market, but they’re now forced to deal with the unintended consequences of these new rules.
That’s because many farmers do in fact own more than one residence, but not because they’re keen to be landlords or residential investors. Rather, their interest lies in the land, and they’ve bought additional farmland over the years to expand their business or, for example, make it possible for a son or daughter to become part of the farm.
Much of that farmland often includes a farmhouse and as those older, smaller farms are absorbed into larger ones, farmers inadvertently become the owners of multiple residences. And regardless of whether those homes are subject to the new tax or not, the new legislation requires that farmers must now file a return under the Underused Housing Tax Act.
A separate return has to be filed every year by April 30 for each property a farm corporation owns, and if that return isn’t filed, the penalties are substantial – up to $10,000 or more.
As farmers, we are in the business of farming, not real estate, and although most of us are exempt from paying the actual tax, many may still be unaware of the new legislation, its requirements, and its penalties. The paperwork is onerous and time consuming, and the information available on government websites is not terribly detailed or easy to understand.
That’s why the Ontario Federation of Agriculture (OFA), along with the Canadian Federation of
but not planning for it certainly is. In the Western world, childlessness is slowly becoming a social norm which few governments have considered or accepted, at least not publicly. We need to accept that fewer people will have children. To respond to this, policies will have to support a reversed demographic pyramid, with fewer working adults, while supporting more seniors.
Pets are the new children. There are over 16 million pet cats and dogs in Canada. Since the start of the pandemic, the number of pet owners has increased by at least 15 per cent, according to some reports. Pets are less costly and are arguably less life-changing than children. The commitment is simply different in many ways. For the food industry, that is certainly an area of tremendous growth to consider. With fewer children will come a greater number of pets.
The food industry will need to come to terms with a declining market and fewer physically abled workers. With fewer stomachs to fill, not having enough farmland should be less of a concern. Since 40 per cent of the Canadian population lives in the major cities of Toronto, Montreal, Vancouver and Calgary, we need to figure out a way to re-purpose our rural areas.
In processing, distribution, and retail, we see the same challenges. With both a shrinking and aging market, health and convenience will likely drive sales even more in years to come. We have seen nothing yet. And as for shrinkflation, since older people tend to eat less, this annoying trend of seeing smaller quantities with higher prices is far from over. The food industry will continue its quest to increase sales with less volume. Pre-cut, pre-prepared, pre-cooked, pre-this, pre-that, will be the main way to maintain sales levels.
So, if you think we’re not going to have enough food for everyone, think again. The world will continue to produce enough food with better precision agriculture, more sustainable practices, automation, the use of artificial intelligence, and sound distribution practices, which will improve over time.
The food industry is only one problem. Real estate, pension funds, health care, social programs, government debt – all of these aspects will need to be modified because there will soon be fewer people. And the planning needs to start now.