The letter discussed farmer its approval around the proposed changes to the Underused Housing Tax.
By Andrew Joseph, Farms.com; Photo by David Holifield on Unsplash
The Ontario Federation of Agriculture (OFA) has written to the Honourable Chrystia Freeland (Deputy Prime Minister and Minister of Finance) regarding the proposed changes to the Underused Housing Tax (UHT) filing requirements outlined in the 2023 Fall Economic Statement.
So why are farmers so concerned about a housing tax, and just what exactly is the Underused Housing Tax?
The UHT is a one percent tax that is applied to the value of vacant or underused housing.
According to the new legislation, anyone who isn’t a Canadian citizen or a permanent resident, as well as private corporations and partnerships that own residential housing, must file an Underused Housing Tax return, even if they don’t have to pay the tax itself.
This doesn’t just affect homeowners in the suburbs or cities—houses, condos, et al.—it also affects farms.
While this tax was meant to gain some financial grift from urban homes, condos, and apartments purchased for investment purposes—which includes foreign investment—while investors wait for the market to go up, allow the residence to remain empty or not be utilized to its full extent.
On a farm, there’s usually a residence. For farm corporations and farm partnerships where a residence may not be used, we come to the issue.
Canadian farm business partners and farm corporations owning residential property are considered "affected owners.”
As an affected owner of residential property, they will need to file for exemption from having to pay the UHT or to calculate the UHT they owe.
The UHT return and election form must be filed for each property owned by an affected owner in a calendar year; even if the affected owner qualifies for an exemption.
And vacant residence or not, the UHT legislation said that farmers have to file a separate return every year by April 30 for each property a farm partner or a farm corporation owns.
It’s more bureaucratic red tape that farmers have to be concerned about.
At least that’s how things were presented originally. Changes to the UHT have been proposed, and the OFA is fully behind them.
As the OFA noted, it is especially pleased to see the proposal to make “specified Canadian corporations”, partners of “specified Canadian partnerships” and trustees of “specified Canadian trusts”, “excluded owners.”
OFA wrote that it is also pleased to see a reduction in the non-filing fees from $5,000–$10,000 to $1,000–$2,000.
While these proposed changes would address Canadian farmers’ concerns moving forward, the proposal states that the proposed changes to filing requirements would be for 2023 and subsequent calendar years. This means that farmers still need to face the compliance costs of filing a 2022 UHT return.
OFA urges the government to make all proposed changes apply with respect to 2022 and subsequent calendar years and pass legislation ratifying these changes without delay.