2017 Ontario Budget

 

 

From:                 David Reid

President-Elect

 

Date:                   April 27^th, 2017

 

Re:                      2017 Ontario Budget

 

Earlier today, Finance Minister Charles Sousa presented Ontario’s 2017 Budget to the Legislature. OREA has worked exceptionally hard advocating for Ontario REALTORS® in the lead up to this budget.

We had three goals with our advocacy:

1. Convince the government to act to increase housing supply;
2. Get the province to commit to doing a review of the Real Estate and Business Brokers Act, 2002 (REBBA); and,
3. Mitigate the impact of any new housing taxes by fighting for exemptions

I’m happy to report that we’ve had success on all three goals (see attached infographic). Moreover, OREA has gone through the budget and provided you with a summary below.

In addition, we have enclosed some suggested talking points for you to use if contacted by the media. Feel free to reach out to Jamie Hofing, OREA’s Senior Manager of Media and Public Relations at jamieh@orea.com if you require any additional assistance with media requests.

Executive Summary

• Budget 2017 is the first balanced budget since the economic recession in 2008.
• Budget 2017 outlines the government’s plan to launch an OHIP+: Children and Youth Pharmacare Program. On January 1^st, 2018 children and youth under the age of 24 will have access to universal drug coverage.
• The government is also introducing an Ontario Seniors’ Public Transit Tax Credit for all Ontarians aged 65 or older beginning on July 1^st, 2017.
• Budget 2017 permits municipalities to charge a hotel tax.
• The 2017 Budget reiterates components of the Fair Housing Plan announced last week.
• Unfortunately, there is no commitment to move forward on personal real estate corporations (PRECs).

What does the 2017 Budget mean for Ontario REALTORS®?

• Ontario’s Fair Housing Plan: Budget 2017 reiterates components of the government’s 16-point plan to address the challenges that many families face when trying to purchase a home. Here are some highlights:

Non-Resident Speculation Tax

o   Implementing a new 15-per cent Non-Resident Speculation Tax (NRST) on the price of homes in the Greater Golden Horseshoe (GGH) purchased by individuals who are not citizens or permanent residents of Canada or by foreign corporations.

o   Upon the enactment of legislation, the NRST will be effective as of April 21, 2017. Binding agreements of purchase and sale signed on or before April 20, 2017 are not subject to the NRST.

o   The province listened to OREA’s advice on the NRST and will be providing rebates or exemptions to students, workers, refugees and people who acquire citizenship within four years.

Housing Supply

o   The government is taking positive steps to bring more housing supply into the market. This was a focus for OREA’s advocacy leading up to this announcement as a way to help make home ownership more affordable for Ontario families.

o   Specifically, the Province announced plans to look at streamlining the complicated approvals process which delays and prevents housing supply from coming to market. They will also support the building of “missing middle” housing in the Greater Golden Horseshoe and work with municipalities to encourage developers to build on vacant land that is serviced and ready for development.

Review of REBBA

 o   While a review of REBBA was not announced in Budget 2017, the government remains committed to conducting a broad review of REBBA including looking at practices like multiple representation and double-ending.

o   The commitment in the Fair Housing Plan is as follows:

o   “Working with the real estate profession and consumers, the province is committing to review the rules real estate agents are required to follow to ensure that consumers are fairly represented in real estate transactions. This includes practices such as double ending. The government will modernize its rules, strengthen professionalism and improve the home-buying experience with a goal to make Ontario a leader in real estate standards.”

o   A full review of REBBA will be an opportunity to discuss multiple representation but to do so in a much more thoughtful/rationale way. It will also be an opportunity to lobby for other changes to REBBA like PRECs, specialty designations, greater fines, higher education standards and other changes which will help REALTORS® do business better.

Rent Control

o   Expanding rent control to all private rental units in Ontario, including those built after 1991. This will ensure increases in rental costs can only rise at the rate posted in the annual provincial rent increase guideline.

o   The increase is capped at a maximum of 2.5 per cent. Legislation will be introduced that, if passed, will enact this change effective April 20.

Vacant Homes Property Tax

o   Budget 2017 reconfirms the government’s plan to give the City of Toronto the ability to levy an additional property tax on vacant homes.

o   Amendments will also be made to legislation to give the Minister the ability, through regulation, to give other interested municipalities the opportunity to levy a similar tax.

Paper Flipping/Assignments

o   The Budget outlines that the government will require a purchaser to declare at the time the transfer is registered whether they entered the agreement of purchase and sale through assignment or another similar arrangement.

• Revenue Tools/Hotel Tax: We are happy to report that Budget 2017 does not reverse the province’s commitment to not give municipalities MLTT powers. However, the government will introduce legislation through Budget 2017 which will amend the City of Toronto Act, 2006 and Municipal Act, 2001 to give all municipalities the ability to levy a hotel tax. OREA will monitor the legislative process to ensure no additional revenue tools are added to the legislation.
• Personal Real Estate Corporations (PRECs): Budget 2017 does not include OREA’s pre-budget recommendation to permit the use of PRECs by real estate salespeople or brokers. OREA will continue to advocate for this proposal.
• Tarion Warranty Corporation: The 2017 Budget reconfirmed the government’s plans to make changes to Tarion and the Ontario New Home Warranties Plan Act. The government has asked Tarion to introduce new deposit requirements to reflect current housing prices.
• Syndicated Mortgages: The government will introduce new regulations to place investment limits on syndicated mortgages and require mortgage brokerages to document their assessments of the suitability of such products for their clients.
• Land Transfer Tax: Budget 2017 will amend the Land Transfer Tax Act to restrict first-time homebuyers from claiming their spouse’s interest from the first-time buyers rebate if the spouse is not a Canadian citizen or permanent resident of Canada.
• Pooled Registered Pension Plans: The 2017 Budget announced that Pooled Registered Pension Plans (PRPPs) are now permitted in Ontario as of March 31^st, 2017. Self-employed or independent contractors, such as REALTORS®, can now utilize this voluntary tool to help them save for retirement.

 

2017 Budget Highlights:

Other highlights from the 2017 Ontario Budget include:

• Deficit/Fiscal Outlook: The government is projecting a balanced budget for the current fiscal year. The budget will also remain balanced for the next two years.

 

Fiscal Outlook   ($ Billions)			Outlook
	Interim 2016-17	Plan 2017-18	2018-19	2019-20
Revenue	133.2	141.7	144.9	149.3
Expense
Programs	123.5	129.5	132.3	135.8
Interest on Debt	11.3	11.6	12	12.6
Total Expense	134.8	141.1	144.3	148.4
Reserve	–	0.6	0.6	0.9
Surplus (Deficit)	(1.5)	–	–	–

 

• Infrastructure and Transit Funding: The Budget allocates $156 billion in infrastructure funding over the next 10 years. $56 billion will be invested in public transit and $26 billion will be spent to improve and build new roads and highways.
• Health Care: The government is going to be spending an additional $7 billion in health care over next three years to assist with the construction of new hospitals and decrease wait times.
• OHIP+: Children and Youth Pharmacare: Children and youth under the age of 24 will have access to universal drug coverage beginning on January 1^st, 2018.
• Seniors’ Public Transit Tax Credit: On July 1^st, 2017, Ontarians aged 65 or older will be eligible for the Seniors’ Public Transit Tax Credit which will provide a refundable benefit of 15 per cent for eligible public transit costs.
• Increased Child Care Spaces: Budget 2017 announces funding for the creation of 24,000 more licensed child care spaces.
• Basic Income Pilot: The Budget announced the launch of a Basic Income Pilot in Hamilton, Thunder Bay and Lindsay to provide voluntary participants aged 18 to 64 with regular payments to help them afford basic needs like housing or food.
• Natural Gas Expansion: The budget commits $100 million to be invested in a new Natural Gas Grant Program to expand natural gas access to rural, Northern and First Nation communities.
• Affordable Housing: The government announced that it would leverage Provincial land for affordable housing by disposing surplus land below market value. In a pilot within the GTHA, Ontario will commit $70 to $100 million in land to develop up to 2,000 new housing units which will include both market and affordable housing. (168)
• Tobacco Tax: Budget 2017 announces a $2 per carton increase in the tobacco tax. This is part of a plan to increase tobacco tax rates by $10 per carton over the next three years.
• Drive Clean: While the Drive Clean program will continue, the government has eliminated the $30 fee that drivers pay for the Drive Clean emissions tests.