A proposed new federal government tax on foreign owners of Canadian real estate is being met with a cool reception by Sun Peaks Mountain Resort Municipality (SPMRM) council, with mayor Al Raine saying it would be a “bit of a disaster” for resort municipalities.
The new tax, known as the “Tax on Unproductive Use of Canadian Housing by Foreign Non-resident Owners,” is being proposed as part of the federal government’s new budget, which was released last week.
The budget proposed a one per cent tax on the value of non-resident, non-Canadian owned residential real estate deemed to be vacant or underused.
Finance Minister Chrystia Freeland said the tax would guard against real estate from being an investment for people who do not live in the country.
“The idea here is that homes are for Canadians to live in,” said Freeland to reporters. “They are not assets for parking offshore money.”
If it goes forward, the one per cent tax would take force on Jan.1, 2022.
The budget document predicts it would raise approximately $700 million over the following four years.
As part of the consultation process on the tax, the federal government will be reaching out to stakeholders to see if “special rules” should be put into place for resort communities and small tourism communities, according to the budget report.
For his part, Raine said the proposed new tax isn’t fair to foreign owners.
“It’s not the one per cent—it’s the whole idea,” said Raine. “If you’re a foreign buyer, and then you see that the Canadian government has now picked you out as a foreign buyer, with almost a stigma, and is wanting to tax you where they are not taxing Canadians, I think that gives the average person some concern.”
Raine noted a 2018 Statistics Canada study on transnational buyers found Sun Peaks had the highest rate of foreign ownership in B.C., at 17 per cent.
This is followed by Whistler at 16 per cent and Tofino at 7.5 per cent.
The study found the rate of foreign ownership for the Lower Mainland was 4.8 per cent, though the rate was higher in Richmond (7.5 per cent) and the University of B.C. Endowment Lands (14 per cent).
“For communities like Whistler and Sun Peaks the tax would be a bit of a disaster,” said Raine.
“We’re almost a billion dollars in property assessment here. At 17 per cent, that’s $117 million invested by foreign owners, and that’s an important part of our economy.”
Raine said foreign owners use their Sun Peaks properties in a substantial and legitimate way.
“Not only do they come, with many of them staying for two or three months in the winter time, if they’re not here, often their friends or associates are using the property,” said Raine.
Raine said SPMRM will be voicing its concerns to the federal government during the forthcoming consultation period.
“And I would expect that we’re not alone in our opposition to the tax,” said Raine, adding other B.C. and Alberta resort communities are likely to also be opposed.