The Liberal government has released its most widely anticipated and important federal budgets of our time, following the grave economic disruption caused by the COVID pandemic.
On Monday, Deputy Prime Minister Chrystia Freeland unveiled her first budget as finance minister, and also the Liberals’ first budget in two years, and announced $101.4 billion in new spending, aimed at both supporting the country through the third COVID-19 wave, and stimulating the economic recovery post-pandemic.
The budget, titled “A Recovery Plan for Jobs, Growth, and Resilience,” shows that the federal deficit is projected to sit at $354.2 billion for 2020, with it slated to drop to $154.7 billion in the current 2021-22 fiscal year.
“This budget is about finishing the fight against COVID-19. It’s about healing the wounds left by the COVID-19 recession. And it’s about creating more jobs and prosperity for Canadians in the days — and decades — to come,” said Freeland.
READ: Budget 2021: Liberals to Allocate $3.8B for Affordable Housing, Building, and Repair
While some of the budget's highlights include extending pandemic business and health supports, putting $30 billion towards a national child-care plan, increasing the federal minimum wage, and promising $17.6 billion for green investments, some of the new ways the government will be looking to bring in new revenue streams includes introducing a national tax on vacant properties owned by non-Canadian, non-residents.
According to the government, this new, 1% national tax on the value of non-resident, non-Canadian owned residential real estate considered being vacant or underused, is estimated to bring in $700 million over four years and would be levied annually beginning in 2022.
Beginning in 2023, all owners of residential property in Canada, other than Canadian citizens or permanent residents of Canada, would be required to file an annual declaration for the prior calendar year with the Canada Revenue Agency in respect of each Canadian residential property they own. The requirement to file this declaration would apply irrespective of whether the owner is subject to tax in respect of the property for the year.
As per the budget, in a declaration in respect of a property, the owner would be required to report information such as the property address, the property value, and the owner's interest in the property. The owner may also be eligible to claim in their declaration an exemption from the tax in respect of a property for the year.
An exemption may be available, for instance, where a property is leased to one or more qualified tenants in relation to the owner for a minimum period in a calendar year. Where an exemption in respect of a property for the year is not available, the owner would be required to calculate the amount of tax owing and report and remit it to the Canada Revenue Agency by the filing due date.
Though, the failure to file a declaration with respect to a property for a calendar year and when required could result in the loss of any available exemptions in respect of the property for the calendar year. Penalties and interest would also be applicable and the assessment period would be unlimited.
In the coming months, the government said it will release a backgrounder to provide stakeholders with an opportunity to comment on further parameters of the proposed national tax.
These parameters would include, for example, the definition of residential property, the value on which the tax would apply, how the tax would apply where a property is owned by multiple individuals and/or non-individuals, potential exemptions, and compliance and enforcement mechanisms.
Additionally, the consultation will consider whether, how and when the proposed tax would apply in smaller, resort and tourism communities.
