Chrystia Freeland, Canada’s Finance Minister, has presented a bill to enhance affordability in the House of Commons. Canada’s government takes steps to enhance affordability in housing and renting. The legislation, known as Bill C-56 or the Affordable Housing and Groceries Act, comprises two key elements. Firstly, it proposes amendments to the Excise Tax Act to improve the GST New Residential Rental Property Rebate, aiming to boost affordability measures in Canada.
The establishment of a framework that will allow Canada’s Minister of Industry to ask the Competition Commission to look into market or industry competition is the second step. It gives the Competition Tribunal the power to issue particular orders, even if none of the parties involved are rivals. It also plans to do away with a clause in the current statute that refers to efficiency gains from mergers.
Rebate on taxes for newly constructed rental properties
The tax credit encourages builders to participate in the development of new rental buildings by making them potentially eligible for a sizeable tax credit. The objective is to increase Canada’s rental property supply and help bring down rents.
Specifically for new rental housing projects, the enhancement increases the GST Rental Rebate from 36% to a full 100% and eliminates the current GST Rental Rebate phase-out levels, according to a government news release on the Act.
For instance, the increased GST Rental Rebate would save $25,000 in taxes on a two-bedroom rental apartment with a value of $500,000.
A one-bedroom apartment in Canada typically costs $2,117 a month to rent, with big cities like Vancouver and Toronto having higher rents ($2,988 and $2,620, respectively). This presents difficulties for immigrants who frequently rent their first residence in Canada. Due to the lack of affordable housing options and the high average home price in Canada, many people find it impossible to living in Canada.
A Statistics Canada study from the end of 2021, however, showed that immigrants who came in 2018 had a median yearly income of $31,900 in 2019. According to prominent job search engine Talent.com, the median entry-level pay for newcomers will be $41,858 in 2023.
Canada’s government takes steps to enhance affordability – Competition Act
The Competition Act’s most recent revisions, which give the Competition Bureau more jurisdiction, hold great prospects for Canada. With this increased authority, the Bureau will be able to look into instances of unfair business practices, notably those involving price gouging and price fixing. The Bureau will thereafter be able to respond to these concerns by taking the necessary action.
Additionally, the elimination of the efficiency defense clause is intended to target anti-competitive mergers that could raise prices and reduce consumer options in the Canadian market. With this modification, the Bureau will be able to impose limitations on alliances and mergers that stifle healthy competition and discourage consumer decision-making.
It is anticipated that a more competitive environment will be encouraged by the prohibition of such harmful partnerships and mergers. As a result, this might result in price reductions or, at the very least, price stability. By taking such steps, the goal is to protect the interests of consumers while fostering an atmosphere that will attract and retain them.
