Kim Moody, holding the designations of FCPA, FCA, TEP, established Moodys Tax/Moodys Private Client and served as the previous chair of the Canadian Tax Foundation. Furthermore, they previously held the position of chair at the Society of Estate Practitioners (Canada) and have undertaken various other leadership roles within the Canadian tax community.
The following is Kim Moody’s perspective on the housing crisis in Canada.
Addressing the complexities of housing affordability and availability involves a multifaceted understanding of various disciplines. From immigration and infrastructure to economics, public policy, and taxation, the intricate web of factors requires a comprehensive approach. In a growing country like Canada, the ongoing issue of housing availability poses a significant challenge.
Last year, the federal government reported record immigration numbers, with plans to further increase yearly immigration to 500,000 by 2025. The surge raises questions about the preparedness of our infrastructure to accommodate such growth. Despite the importance of immigration, it appears our housing infrastructure is not adequately equipped for these substantial increases.
The government’s response, particularly from a tax perspective, has been to target perceived culprits. Initiatives like the foreign homebuyer ban, underutilized housing tax, and flipping tax were introduced, seemingly without robust justification. These measures aimed at non-residents and property flippers lacked compelling evidence to support their necessity.
The latest target is short-term rental owners, viewed as problematic due to disruptive renter behavior and the impact on long-term rental supply. The proposed tax measures, denying deductions to owners in municipalities prohibiting short-term rentals, are met with skepticism. Critics argue these proposals are poorly conceived and may set a precedent of taxing gross income instead of net profits, potentially discouraging long-term rentals.
Short-term rental owners, often providing alternatives to expensive hotels, generating income, or navigating tenant-friendly provincial laws, are not universally problematic. The proposed tax measures could inadvertently encourage tax evasion if property owners opt not to report income due to exorbitant marginal tax rates.
Rather than a simplistic approach of targeting perceived issues, a more effective strategy involves ongoing policy discussions with representatives from various disciplines. Engaging in collaborative dialogue could lead to well-informed policy responses and the deployment of appropriate tools to benefit all Canadians.
In the current landscape of hyperpolitics, where simplicity often prevails, the bogeyman approach, despite its flaws, remains a quick and attractive option. However, a more thoughtful and inclusive approach to housing challenges is essential for the well-being of Canadians.
