In Tuesday’s upcoming federal fiscal update, the Trudeau government is set to introduce measures targeting individuals profiting from short-term rentals like on the popular platform Airbnb.
According to sources familiar with the matter, the plan aims to deter property owners from violating local rental restrictions by eliminating the ability to deduct rental expenses from their income.
A senior federal official told the Toronto Star that the fall fiscal update, to be presented by Finance Minister Chrystia Freeland on Tuesday, will include this tax measure effective January 1, 2024.
“This is going to change the financial equation,” the official told the Toronto Star.
Housing Minister Sean Fraser has confirmed that he’s looking at which tax changes the government could make on a federal level to tackle the issue of short-term rentals.
The move is part of a broader effort by the Liberal government to address Canada’s housing crisis.
The Canada Mortgage and Housing Corporation said, “to restore affordability [by 2030], Canada will need 3.5 million more units on top of what’s already being built.”
The Liberal government has been under increased pressure to act, with its numbers plummeting in the polls and a cost-of-living crisis affecting Canadians.
Conservative leader Pierre Poilievre has called for more fiscal discipline from the Liberals, linking the government’s previous spending habits to the current inflation and cost of living challenges.
Tiff Macklem, the Governor of the Bank of Canada, stated that although the bank maintains authority over interest rates as a tool to manage inflation, it is also crucial for the government to do its part.
Last month, Freeland indicated upcoming initiatives to regulate the short-term rental market. This followed British Columbia’s announcement of new laws to reinforce existing rental property regulations.
Freeland highlighted that converting short-term rentals into long-term housing in cities like Toronto, Montreal, and Vancouver could free up 30,000 housing units.
“We know that short-term rentals through sites like Airbnb and VRBO mean fewer homes for Canadians to rent and live in full time, especially in urban and populated areas of our country,” said Freeland on Oct. 17.
A 2019 report by Statistics Canada revealed that in 2018, the national revenue from short-term rentals was approximately $2.8 billion.
Poilievre has since outlined three key demands for the fiscal update, which include cancelling the carbon tax hikes, bringing down inflation and interest rates by balancing the budget, and building homes, not bureaucracy.