Farmers advocate for federal housing tax exemption as deadline looms

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by Crispin Colvin, Vice President, Ontario Federation of Agriculture

The deadline for Canadians to file their first return under Canada’s new Underused Housing Tax (UHT) is fast approaching. Originally set for April 30, the federal government extended the filing deadline this year to October 31 to give Canadians who own housing other than their main residence enough time to complete the process for the first time.

It is a one percent tax on the value of vacant or underused housing. Under the new legislation, individuals who aren’t Canadian citizens or permanent residents, as well as private corporations and partnerships – which includes farms – who own residential housing must file an Underused Housing Tax return even if they don’t have to pay the tax itself.

At first glance, many may wonder how this affects farmers. After all, the tax was designed to address urban homes, condominiums and apartments that have been bought for investment purposes, often by foreign buyers, and are now unused or not used to their full extent.

However, many farmers do in fact own more than one residence but not because they’re keen to be landlords or investors. Rather, they’ve bought additional farmland to expand their businesses, and more often than not, that farmland also includes a farmhouse. This means they’re now required to file a return under the new act regardless of whether those homes are actually subject to the new tax or not.

The Ontario Federation of Agriculture (OFA), along with our national colleagues at the Canadian Federation of Agriculture, has been asking the federal government to exempt farmers from having to file a return altogether, and although that first filing deadline is only a few weeks away, this is still something that we’re advocating for when we’re meeting with politicians and other government officials.

So why should agriculture be exempt? Simply put, farmers aren’t in the business of being landlords or residential real estate investors. Rather, our job is to produce food and other agricultural products, and we’re buying farmland to farm it, not for the investment value of a house that may be on it.

The filing paperwork required by the government under this legislation is onerous and time consuming. A separate return must be filed every year for each property a farm corporation owns – and if a farm corporation has more than one partner, each partner in the corporation must file their own UHT return. The penalties for non-filing are substantial: up to $10,000 or more.

We understand that Ontario and Canada are in a housing crisis and that governments at all levels are trying to find solutions, such as freeing up investment housing, that will help ease the shortage. We know how important this is; after all, we also need housing options to support youth, seniors, families, workers, and newcomers in our communities.

However, we’re now caught in the middle of that push for solutions and the unique realities of unintentionally having multiple dwellings not because we’re housing investors but rather through the purchase of additional farmland to grow our farm businesses.

OFA and our partners are continuing the push for a filing exemption for farmers but are also encouraging all farmers to make sure to file their Underused Housing Tax return to avoid the substantial penalties.

There are resources available on the OFA website to give background on the issue and we encourage farmers to contact their accountants with any questions.

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