Half a dozen national farm organizations and their members are raising concerns about unintended consequences from the federal government’s Underused Housing Tax (UHT) that took effect last year.
The Canadian Federation of Agriculture, Canadian Cattle Association, National Cattle Feeders Association, Fruit and Vegetable Growers of Canada, Ontario Fruit and Vegetable Growers Association, and Canadian Canola Growers Association have signed a letter written to National Revenue Minister (and former ag minister) Marie-Claude Bibeau, Agriculture Minister Lawrence MacAulay, and Finance Minister Chrystia Freeland asking to have farms exempted from the requirement to file a UHT return for each residential property each year.
The tax on residential properties deemed to be vacant or underused was put in place with the intent of alleviating pressure on housing supply and to discourage foreign ownership. Homes that meet the Canada Revenue Agency’s definition of underused can be subject to a 1 per cent annual tax rate. Regardless of vacancy or foreign ownership, most Canadian corporations, partnerships, and trusts are required to submit an annual UHT form for every residential property they own.
“Many producers own multiple homes due to factors unique to agriculture, including the obligation to provide housing to temporary foreign workers and seasonal agricultural workers employed on their farms,” the farm groups note, in the letter. “Farmers may also acquire housing (abandoned or otherwise) through generational ownership of land or purchasing or leasing land for the strict purpose of farming.”
The Canada Revenue Agency has exempted certain types of housing for foreign workers, such as bunkhouses and mobile homes, but the farm groups say many farm employers have moved toward higher quality housing for foreign workers, including detached houses, which sit vacant for parts of the year.
In addition to the negative impact on farm operations that rely on foreign workers, the farm groups say the UHT adds unnecessary administrative and financial burden on farms, who have to pay an accountant to complete the required paperwork.
Failing to file a UHT return can result in fines from the CRA of $5,000 for individuals and $10,000 for corporations, per property.
“Requiring farmers to submit a UHT return, even when they are exempt from paying the tax, creates an unnecessary financial and administrative burden on farmers, without effectively achieving the stated objective of the UHT,” the letter states. “As such, we urge the government to exempt farmers from the requirement to file a UHT return, ensuring that they are not penalized for failing to do so.”
Read the letter sent to Ministers Bibeau, MacAulay and Freeland, here.