Actions speak louder than words. That’s especially the case with politicians’ promises.
Politicians say they won’t send the taxman after Canadians’ homes. But let’s be honest, Canadians don’t believe them. If politicians truly want to reassure taxpayers that there is no home equity tax coming, they’ll remove the requirement for Canadians to report the sale of their home with the Canada Revenue Agency (CRA).
Through a home equity tax, the federal government would take a chunk of the proceeds from the sale of principal residences. MoneyWise estimates that a Quebec family that bought its home for $500,000 and sold it for $600,000 would pay a $20,858 home equity tax. That’s $20,858 that a retiring couple couldn’t use to fund their golden years and a young couple couldn’t put towards a family home.
There’s currently no home equity tax in Canada. But homeowners need to stay on guard.
In 2016, Ottawa made it mandatory for Canadians to report the sale of their primary residence even though it’s tax-exempt. If you sell your home, the CRA wants to know how much money you received from that sale. But, if the taxman isn’t taxing it, then why is the taxman asking that question? Is the CRA just curious?
Politicians say they won’t impose a home equity tax while they sing for their supper during the election.
Trudeau denied that a Liberal government would impose a home equity tax during the last leaders’ debate. Liberal candidate Mark Gerretsen even posted a graphic to social media that says, “the Liberal’s are not going to implement a home equity tax.”
Taxpayers shouldn’t trust them until they delete the reporting requirement.
The Liberals are already sniffing around Canadian homes. Last budget, the Trudeau government announced a tax on foreigners who own vacant homes. Now, the Liberals want to send the taxman after you if you sell your home earlier than they think you should. And we already know that the feds spent $250,000 of our tax dollars studying home taxes.
Trudeau and the Liberals have misled taxpayers before.
In the lead-up to the last federal election, former environment minister Catherine McKenna told Canadians the Liberals had “no intention” of raising the carbon tax beyond $50 per tonne. After the election was over, Trudeau announced he would hike the carbon tax to $170 per tonne by 2030. That would soak a family for about $30 every time they fuel up their minivan.
Last year, Trudeau promised Canadians he wouldn’t raise taxes.
“The last thing Canadians need is to see a rise in taxes right now,” said Trudeau. “We are not going to be saddling Canadians with extra costs.”
Despite that promise, Trudeau raised the carbon tax and booze taxes months later. His 2021 budget also included a raft of tax increases such as higher tobacco taxes, a vaping tax, sales taxes for digital services and a luxury goods tax.
On the other side, Conservative Leader Erin O’Toole’s platform says “Canada’s Conservatives will never tax Canadians’ capital gains on the sale of their principal residence, something many within the Liberal party are threatening to do.”
That’s a pretty strong rejection of a home equity tax. It’s almost as strong as O’Toole’s pledge to fight carbon taxes:
“I, Erin O’Toole promise that, if elected Prime Minister of Canada, I will: Immediately repeal the Trudeau carbon tax; and, reject any future national carbon tax or cap-and-trade scheme.”
O’Toole is now breaking his pledge and will hammer families with a carbon tax of his own.
The moral of the story: political talk is cheap.
If politicians want to prove that they won’t tax the sale of Canadians’ principal residence, then they must remove the requirement for taxpayers to report the sale of their home to the taxman.
Franco Terrazzano is the Federal Director of the Canadian Taxpayers Federation.