CANADA - September 2016

ONTARIO - PROPOSED BUS TAX WOULD PUSH PROPERTY TAXES UP .5% ...... 1 ONTARIO - TORONTO DEVELOPERS REAP TAX BREAKS, DESPITE BOOM ...... 2 BRITISH COLUMBIA - VANCOUVER TO TAX EMPTY HOMES ...... 4 BRITISH COLUMBIA - VANCOUVER EMPTY HOMES TAX TO INCLUDE UNITS USED FOR AIRBNB ...... 4 ONTARIO - FNF CANADA AND MUNICIPAL PROPERTY ASSESSMENT CORPORATION FORM NEW AUTOMATED VALUATION MODEL RELATIONSHIP ...... 6 BRITISH COLUMBIA - HUGE TAX WINDFALL HIGHLIGHTS B.C. ECONOMY'S DANGEROUS DEPENDENCE ON REAL ESTATE ...... 7 BRITISH COLUMBIA - MAYORS VOTE IN FAVOUR OF PROPERTY TAX INCREASE TO FUND TRANSIT ...... 8 NOVA SCOTIA - HALIFAX GETS $20M FROM FEDERAL GOVERNMENT IN CITADEL HILL TAX BATTLE ...... 8 ONTARIO - TORONTO’S PROBLEM? OUR PUBLIC SECTOR IS POOR WHILE OUR PRIVATE SECTOR IS BOOMING ... 10 CANADA REVENUE AGENCY PROBES TAX LOOPHOLES IN REAL ESTATE SPECULATION ...... 11 QUEBEC - MONTREAL PROPERTY ASSESSMENTS UP 5.9% ...... 12 BRITISH COLUMBIA - VANCOUVER MAYOR PROMISES NEW VACANT HOME TAX BY 2017 ...... 13 ______

ONTARIO - Proposed bus tax would push property taxes up .5%

City councillors will be asked at a special meeting next week to approve a bus tax -- additional property tax increases of .5% in 2017 and 2018 to pay for enhanced public transit services.

Countryside councillor Richard Allen, for one, won't be hopping on board.

The representative for the large rural area of Kingston north of Highway 401 says his constituents just wouldn't benefit from the $16 or so that would be added to the average tax bill.

"It's something that should be applied within the urban boundary," said Allen. "The benefactors of the service should be paying for the service. The people who use and receive that service should cover the cost."

This Tuesday evening, councillors will see an ambitious new plan for Kingston Transit that would dramatically increase ridership in an effort to get people out of their cars and reduce traffic congestion.

The goals include increasing ridership from 4.6 million passenger trips in 2015 to more than 6 million by 2021.

Between 2011 and 2015, bus ridership rose 31% from 3.5 million passenger trips to 4.6 million.

Much of that was due to the establishment of express routes.

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The new plan would see more express runs added, including along Montreal Street, as well as faster service along connector routes.

To do that, the transit system would need new equipment and staff.

Some of the additional budget would come from federal grants as well as fare increases in 2017 and 2020.

To complete the funding formula, staff are proposing the half-per-cent increases to property taxes in 2017 and 2018.

Those increases would be in addition to the maximum 2.5% annual tax increase limit established by this council.

Allen agrees with the attempts to increase transit use across the city, acknowledging as well that relieving congestion benefits his constituents who commute into the city.

Despite that, he will ask that the residents of Countryside be exempted from the bus tax.

"I want to work my urban colleagues to help them meet their goals," he said. "[Countryside] folks have been contributing to transit already. They're contributing but I don't think they should contribute extra tax dollars. They don't need this extra cost for something they'll never use."

ONTARIO - Toronto developers reap tax breaks, despite boom

It would be the single biggest boost to downtown Toronto’s inventory of high-end office space in a quarter-century: a gleaming, $1-billion, two-tower complex that would straddle the railway tracks near Air Canada Centre, and throw in a new bus terminal for Metrolinx for good measure.

But to build this massive proposed project, developer Ivanhoé Cambridge – the real estate arm of the massive Caisse de dépôt et placement du Québec pension fund – is getting a handout from Toronto’s cash-strapped municipal government in the form of property-tax breaks worth $142-million spread over 10 years after the project is finished.

The subsidy, approved unanimously by Toronto City Council in July, comes from the city’s Imagination, Manufacturing, Innovation and Technology (IMIT) tax-incentive program, which dates back to 2008, when the recession hit and the city was looking for ways to attract new office space and jobs. Today, the city is in the middle of a massive office-tower building boom, adding more than four million square feet to the core in just the past three years. With a vacancy rate of just 4.9 per cent, Toronto’s downtown office market is the hottest in North America, ahead of San Francisco and even Midtown Manhattan. In the past eight years, Toronto’s economy has changed dramatically, but the IMIT tax-break program has barely changed at all.

Before the Ivanhoé Cambridge deal, some of the biggest developers operating in the city had been approved for $290-million in potential tax breaks on 28 projects. And the multimillion-dollar handouts keep coming, even as city departments struggle to slash spending to balance next year’s budget and the city considers selling off some assets, including a slice of Toronto Hydro, as its infrastructure woes grow.

City bureaucrats are due to report on a review of the program by the end of the year. Among those eagerly awaiting that is Mayor John Tory, who has said the city needs to take a good look at all of its programs, including subsidies for businesses, as it wrestles with its finances.

His office said in a statement this week that no decision had been made about the future of IMIT: “City staff are reviewing the program and will report back [later] this year on any recommended changes. The Mayor will review this report and discuss with his Council colleagues on how best to move forward.”

According to city documents, projects receiving or set to receive the tax breaks include Oxford Group’s WaterPark Place III at 85 Harbour St., a $139-million, 30-storey new waterfront home for Royal Bank of Canada, the country’s largest bank. That project is getting a $13.8-million discount. Oxford’s $270-million Ernst & Young Tower, at 100 Adelaide St. W., is receiving a $7.9-million break.

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The new eastern tower of the Bay Adelaide Centre, which cost $300-million to build and is now home to accounting and consultancy firm Deloitte, is getting $8.7-million. First Gulf’s $120-million project on King Street East, which will be home to The Globe and Mail and other tenants, is to receive $11.9-million.

To get the tax breaks, projects with construction costs larger than $150-million must be approved by council. Smaller developments are approved by the city’s general manager of economic development. All must fulfill a wide range of criteria, including attracting tenants in a list of industries that ranges from biomedical to food-and-beverage but excludes retailing or warehousing. Residential buildings are ineligible.

Proponents of the program insist the city comes out ahead financially. Here’s how it works: Say a developer who owns a parking lot is approved for an IMIT grant to build a massive office tower on that land. Once that tower is built, the value of the property skyrockets, as will the property-tax bills. A successful applicant will get a refund on a portion of the new tax bills, typically for 10 years after the project is completed. The refunds get smaller as the last year approaches, but can total 60 per cent or more of the increased amount of taxes that result from the construction of the project. After the discount ends, the landowner pays the higher annual tax rate.

The idea is to help developers attract tenants – and the jobs they bring – by allowing landlords to offer cheaper rents. The reason the city benefits rests on the presumption the development would not have happened without the tax break. City staff say Coca-Cola Canada’s new headquarters on King Street East and the Ripley’s Aquarium next to the CN Tower would not have been built otherwise.

The question now is whether Toronto needs such an expensive incentive for developers, who are already building office space at a breakneck pace. Paul Morassutti, the executive managing director of real estate services firm CBRE Ltd., said the downtown office boom is the result of market forces, not a subsidy program. Employers are moving back downtown because their increasingly millennial work force now lives in condos there, and they want to walk or bike to work. Even industries outside of the area’s traditional banking sector are flocking downtown, he added, citing Google Canada’s move into offices at Richmond Street West and York Street.

“The tax incentives, in my world, just haven’t come up very much,” he said.

These incentives can also create political controversy. A Globe investigation in 2014 revealed that former mayor Rob Ford and his brother Doug Ford, then a councillor, helped arrange meetings with city staff about an IMIT tax break for the North York headquarters of Apollo Health and Beauty Care, which was also a big customer of the Fords’ family business, Deco Labels and Tags. Apollo later got an IMIT tax break worth $2.7-million.

The $142-million that Ivanhoé Cambridge’s massive project, called the Bay Park Centre, stands to receive is the biggest tax break ever approved under the IMIT program. The three-million-square-foot plans qualified under the IMIT’s special “transformative” category for megaprojects that are supposed to deliver benefits to an entire area. City bureaucrats and an external consultant hired to review the project say it will deliver $120-million in important public benefits that would never come to pass without the tax subsidies.

Among those benefits is a park – described as a “privately owned public space” – that would span the rail corridor, similar to Mr. Tory’s proposed rail-deck park further west, space that could become an East Bayfront light-rail station, and a new GO bus terminal to replace the one at Union Station.

A 26-page external report drawn up for the city by Hemson Consulting Ltd. concluded after seeing confidential numbers from Ivanhoé Cambridge that the developer would likely not go ahead with its grand plans without the tax breaks.

Arthur Lloyd, the company’s Calgary-based executive vice-president for its North American office building business, said in an interview that without the incentives, his company would abandon its plans for what he called a “world-class trophy asset” and seek to build a smaller, standard office tower on the site without the rail-straddling park or other amenities.

“Our project actually spans the rail corridor and knits together, in a very physical way, the traditional [Financial District] and the emerging south downtown,” Mr. Lloyd said. “The taxpayer is getting a lot in return. … This really is part of a city-building effort.”

He added that many other cities around the world where his company builds have similar incentive programs, including Chicago, where an office-tower project the company now has under way is benefiting from comparable tax breaks.

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Veteran developer Stephen Diamond, who is not involved with Bay Park Centre, warns the city would lose the kind of public benefits this project and other developments can deliver if the IMIT is scrapped, noting that Regent Park and the technology- incubator MaRS Discovery District have also had the tax breaks.

“It’s being penny wise and pound foolish,” Mr. Diamond said.

He is now involved in at least two projects that are eligible for IMIT grants, including large-scale plans to redevelop the area around the sprawling office campus of electronics company Celestica at Don Mills Road and Eglinton Avenue East. The plans include a mixed-used “regeneration” area along the route of the coming Eglinton Crosstown light-rail line with both office space and residential units. But Mr. Diamond warns that without IMIT, the office-space might not make sense financially.

One critic of the program, Councillor Gord Perks, says the IMIT forces city hall to take the word of developers that without a rebate, a given development would not happen.

“No one can prove one way or the other whether these developments would have happened with no grant,” Mr. Perks said. “… One of the things members of council learn is that developers never tell you their real bottom line.”

BRITISH COLUMBIA - Vancouver to tax empty homes

Close on the heels of the Vancouver government’s decision to impose an additional property transfer tax on overseas property buyers - at no less than 15% of the property's price - Vancouver has decided start taxing vacant homes by the year's end, in a further attempt to rein in foreign buyers and absentee homeowners who have allegedly contributed to a steep increase in Vancouver home prices.

Overseas buyers are being blamed for pricing middle class families out of the housing market in Metro Vancouver.

There are 10,800 homes lying empty in Vancouver. The government believes that absentee homeowners will be forced to rent out their properties to avoid the new tax, thus easing the unaffordability crisis.

The tax, which targets properties left empty or underutilized, would be levied through self-declaration, audit, and compliance measures, according to Mayor Gregor Robertson.

"Owners will have to prove they or tenants occupy the homes for a minimum number of days a year…Vancouver’s dangerously low vacancy rate is putting our renters in crisis," Robertson said in a statement. "Our proposed empty homes tax is first and foremost about bringing rental homes back into the market."

The government is yet to decide the annual amount of tax, but it could be between 0.5% and 2% of the property's assessed property value, the mayor said. If the tax is collected on just 5% of the nearly 11,000 empty homes, it would raise C$2 million (US$1.51 million) in annual revenue, he said.

The new tax (15% of the property's price) on foreign buyers came into effect on August 2. It is in addition to the province’s general property transfer tax of 1% on the first C$200,000 (US$153,500) of a home’s value, and 2% on any further value up to C$2 million (US$1.54 million). The new tax applies to foreign corporations and individuals buying residential properties in Vancouver.

BRITISH COLUMBIA - Vancouver empty homes tax to include units used for Airbnb

The maximum fine for people who evade the levy is being set at $10,000

Vancouver's proposed empty homes tax would include secondary properties being booked on the vacation rental website Airbnb, with the maximum fine for people who evade the levy set at $10,000.

New details of the tax emerged on Tuesday, when council voted to push ahead with public consultations. Mayor Gregor Robertson stressed the aim was to free up supply in the city's crunched rental housing market.

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"Ultimately, the goal is to get thousands of units back into rental housing at a time when it's almost impossible to find a rental home," Robertson told council.

The province granted Vancouver the authority to create the tax in July, months after a city-commissioned report found that about 10,800 homes were sitting empty, most of them condos.

Staff have been speaking with experts and researching other jurisdictions' taxes and presented a report Tuesday with their suggested approach. The levy would be the first of its kind in Canada.

Principal residences won't be taxed

The report proposes that the tax be administered similarly to the British Columbia Home Owner Grant. A parcel of residential property that serves as a principal residence for an owner, long-term tenant or a friend or family member would not be taxed.

That means that secondary properties — such as investment condos — that are sitting empty or being rented out for short- term stays using sites like Airbnb would be subject to the tax.

Tsur Somerville, a University of British Columbia business professor, said it made sense to apply the empty homes tax to properties being used for short-term rentals, even though they're not actually empty.

"In a city where accommodation is really, really scarce, the first priority should be housing people who live and work here," he said in an interview.

The tax would not apply to people renting out their primary residences on Airbnb, or to basement suites, rooms or laneway homes that are either sitting empty or rented for short-term stays.

Airbnb said in a statement it's committed to working with government to establish fair, sensible rules, including around taxation.

The city is also working on separate regulations for short-term rentals, with a report to council expected next month.

CASH BONUS AIRBNB This summer, Airbnb offered first-time hosts in Vancouver a $250 cash bonus for creating a listing and completing a booking by Sept. 30. (Airbnb) Details still being worked out

Public consultation on the empty homes tax will begin this fall, with a proposed bylaw introduced to council in November. The tax would be in place for the 2017 year, with the first payments in 2018.

There are many questions left to be settled through public talks, including whether secondary residences that are vacant for only part of the year should be exempt. The tax rate is also still being considered, with a current proposal of between 0.5 and 2 per cent of assessed value.

Vancouver mayor's proposed vacancy tax raises red flags Is Vancouver's vacant home tax going to rely on snitches? Penalties are also still being debated. The maximum fine the city can impose under its charter is $10,000, but it will consider a combination of the fine plus a higher tax rate for people who fail to self-declare or fraudulently declare, said Kathleen Llewelly- Thomas, general manager of community services.

Robertson said the city has asked the province many times to increase the maximum fine.

Vancouver real estate Vancouver's Coal Harbour is condo central. (Rafferty Baker/CBC) NPA opposes motion

The council vote was split 7-3, with councillors from the centre-right Non-Partisan Association opposed. Coun. George Affleck called the tax a "bureaucratic nightmare" and said the city should instead encourage the building of more townhomes and rowhomes. International Property Tax Institute IPTI Xtracts- The items included in IPTI Xtracts have been extracted from published information. IPTI accepts no responsibility for the accuracy of the information or any opinions expressed in the articles.

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The mayor dismissed the councillors' concerns as "fear-mongering." Residents will be asked to declare the status of their properties as part of the regular property tax process, with enforcement through random and targeted audits and response to complaints, Robertson said.

"I'd ask Coun. Affleck if he thinks the Home Owners Grant is a bureaucratic nightmare or income tax is a bureaucratic nightmare," he said.

Vancouver's rental vacancy rate of 0.6 per cent is the lowest of any major city in Canada and its rents are the most expensive, housing planner Matthew Bourke said. If just 2,000 units became available for rent, the vacancy rate would lift to a healthy 3.5 per cent, Bourke said.

Tony Gioventu, executive director of the Condominium Home Owners Association of B.C., said condos built since 2010 do not have restrictions on rentals. Many of the vacant units are thought to be in new buildings in upscale neighbourhoods like Coal Harbour, he said.

But if those condos were rented out, they wouldn't be "affordable housing," he pointed out.

"They'd probably be rented out for $3,000 a month."

ONTARIO - FNF Canada and Municipal Property Assessment Corporation Form New Automated Valuation Model Relationship

FNF Canada and the Municipal Property Assessment Corporation (MPAC) announced today the launch of a full line of Automated Valuation Model (AVM) products to Canada’s Financial Services industry.

“FNF Canada is pleased to expand and strengthen our relationship with MPAC, while continuing to deliver innovative solutions and full-service products to our partners,” said Brian Bell, Senior Vice President of Innovation & Data Solutions at FNF Canada.

“The launch of this product line demonstrates our commitment to the Financial Services industry, recognizing the importance of an end to end valuation solution that creates gains in efficiency and cost savings for our partners,” Bell said.

FNF Canada continues to lead the appraisal management industry by delivering a full range of property valuation services ensuring consistent, reliable data sources to maintain the highest in quality and integrity that industry partners have come to expect.

MPAC's state-of-the-art AVM has an unmatched database with coverage of more than 6.8 million residential properties across Canada making MPAC’s AVM the best in the industry. MPAC has been a trusted supplier of AVM products for more than 15 years, allowing clients to mitigate risk, make informed underwriting decisions, and increase overall productivity.

“MPAC is looking forward to this new chapter of our relationship with FNF which will support the delivery of instant, real-time and accurate property values to their valued customers,” said Chris Fusco, MPAC’s Director of Real Estate and Strategic Accounts, Business Development.

“MPAC is pleased to support FNF in their desire to expand on their existing range of valuation services which includes leveraging MPAC’s industry leading property database,” said Fusco.

The new line of AVM products is available immediately and can be ordered via the contact information listed below.

About FNF Canada With over 25 years of trusted service, FNF Canada is an innovative provider of national mortgage, appraisal and loan related services to large and small Canadian lenders. We specialize in facilitating all aspects of a mortgage transaction, including title insurance, document processing, property tax management, appraisal management and valuations services. Our exclusive end to end solution suite is unmatched in the industry, seamlessly integrating all FNF services on a single platform which provides our customers with the complete transaction life cycle.

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For more information about FNF Canada, visit www.fnf.ca

About MPAC The Municipal Property Assessment Corporation (MPAC) is an independent, not-for-profit corporation, responsible for assessing and classifying more than five million properties in Ontario in compliance with the Assessment Act established by the Government of Ontario.

MPAC also provides products and services such as propertyline™, a secure e-commerce solution for property information, to a number of sectors including banks, mortgage firms and other assessment jurisdictions.

BRITISH COLUMBIA - Huge tax windfall highlights B.C. economy's dangerous dependence on real estate

On Thursday, the provincial government announced it had raked in $2.2 billion in revenue from the property transfer tax and the new 15 per cent tax on foreign buyers of Metro Vancouver homes.

That’s a billion dollars more than the government had projected.

That enormous windfall caused Liberal MLAs to break out into a spontaneous conga line through the legislature. Finance Minister Mike de Jong was forecasting a surplus of $1.94 billion, up from an earlier projection of $264 million. He then announced that $500 million from the property tax would fund a housing affordability program and another $400 million would go into the B.C. prosperity fund “as a legacy for future generations,” he said.

The surplus allowed the government to scrap a planned four per cent increase in medical service plan premiums. It wasn’t as tasty a treat as an announcement to revamp or scrap the loathsome MSP entirely would have been. But it did make the medicine go down easier.

Overall, the windfall made B.C. the brightest light on the country’s economic horizon. And those dire predictions of house- impoverished millennials fleeing Metro Vancouver and B.C. for cheaper house prices? It hasn’t happened. Net inter-provincial immigration has increased year over year for the last three years. You go where the work is.

So, good news all around.

But: De Jong’s figures showed just how stark B.C.’s economic dependence on real estate has become. Real estate-related taxes are now the government’s single largest revenue generator. They not only outstripped the $1.2 billion gambling brings in — which is pernicious enough — but they also surpassed the tax revenue, individually, from forestry, mining, natural gas and all other resource industries. Only when you combine the tax revenue from those resource industries do they bring in more than real estate, and just by a few decimal points.

None of this takes into account the economic spin-offs that a hot real estate market generates. An angry public may chafe at the rising unaffordability of the market, and they may rightly grow livid at the influx of laundered monies, tax cheats and real estate scammers our hapless enforcement agencies have proven either too inept or too understaffed to catch.

But that hot market also employs law-abiding builders, lawyers, renovators, car salesmen, airline employees, retailers, etc. Those jobs can’t be ignored. Real estate’s reach in this province, and in this government’s bottom line, is much longer than just a matter of tax revenue. The danger is not just that real estate has become a windfall for us: The danger is we have become dependent on it.

What happens if, in the wake of the government’s 15 per cent tax on foreign buyers, that real estate market cools off or, worse, collapses?

In a Friday afternoon seminar at the Hyatt Regency sponsored by the Urban Development Institute, a panel of economists, lawyers and developers tried to answer that and other questions. Would foreign buyers go elsewhere? Would prices fall dramatically if they did? And if prices plummet, would they rebound in the long-term?

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Quick answer: Their guess would be as good as yours.

For the optimists, there was Helmut Pastrick, chief economist of Central Credit Union 1, who noted that the market had begun to weaken several months before the introduction of the 15 per cent tax — but in August, sales for detached homes in some neighbourhoods had plunged by $300,000-$400,000. (At which, some audience members gasped.)

However, Pastrick believed any downturn would take three to six months to play out. Then, if the economy remains sound — and here he made note of Metro Vancouver’s six-per-cent rise in employment — the usual market fundamentals would eventually come into play. Prices, he said, should begin to rise by next year. In two or three years, he said, he expects them to surpass present prices.

His advice to prospective sellers caught in the recent downturn: “Wait it out. If the economy doesn’t go bad, where’s the pressure to sell?”

That’s a big “if” given the space real estate takes up in the B.C. economy. Economist Tom Davidoff, associate professor with the University of B.C.’s Sauder School of Business, thought there was “a significant risk of a real correction.” How much? Thirty, 40 per cent, Davidoff guessed — but that, he said, was just that, a guess. Intangible factors that can’t be measured would be at play, he said — “a combination of uncertainty and pessimism.”

His colleague at the Sauder School, Tsur Somerville, agreed.

“I think there’s a real risk there if stuff turns south enough and it affects employment levels, then things could get real rough because real estate is such a large part of our economy now.”

BRITISH COLUMBIA - Mayors vote in favour of property tax increase to fund transit

B.C. Premier Christy Clark says $246 million is ready for Metro Vancouver mayors to use in implementing the first phase of their transit plan.

The Mayors Council met Friday to approve a draft investment plan for phase one of their 10-year regional transit and transportation plan.

The plan, that is designed to increase bus service, buy new SkyTrain cars and a new Seabus, requires a commitment of funding from the cities, the province and the federal government in order to advance.

Clark says the province's share of the costs will be available immediately.

Despite rejections from the public in the past to a sales tax to pay for transit, the mayors voted in favour of property tax increases of $3 per year to pay for the cities' share of the transit improvements.

Other funding mechanisms will include a transit fare increase of two to three per cent per year for three years, a fee for new developments, and selling off surplus Translink property.

A final decision will be made in November.

NOVA SCOTIA - Halifax gets $20M from federal government in Citadel Hill tax battle

Federal panel valued Halifax's Citadel Hill at $41.2M after decades-long dispute

The federal government has forked over $20 million to the Halifax Regional Municipality after a long-standing battle over taxes owed on Citadel Hill.

Last year, a federal panel valued Halifax's Citadel Hill at $41.2 million in the decades-long dispute between the city and the federal government.

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"It's not a matter of winning or losing," Halifax Mayor Mike Savage said Friday. "It's just a good day because it's come to a resolution of an outstanding issue and it's to the benefit of the residents of HRM.

The money will go into the municipality's reserve fund, not any specific project.

"This won't change our priorities, it will probably enable some to be done more quickly," he said.

Site originally valued at $10

Ottawa had argued Citadel Hill, a national historic site contained within a 19.4-hectare parcel of federally owned land in the heart of Halifax's downtown business district, was only worth $10 because no development could take place on it.

An appraiser for the federal government eventually set its worth at about $12.1 million.

In 2012, the Supreme Court of Canada ruled in favour of Halifax's claim that the property was worth as much as $19 million.

The federal Public Works Department then took the case before a federal panel, which valued Citadel Hill at $41.2 million and ordered Ottawa to pay back taxes dating to 1997.

'It is at the minister's discretion'

Parks Canada operates the site as a park and museum. It is exempt from real property taxation, but is subject to a payment-in- lieu of taxes under federal legislation.

"Ultimately these are not taxes. It is a grant, a payment in lieu of that. It is at the minister's discretion," said John Traves, the municipality's director of legal, insurance, and risk management. But he said the $20-million figure was in line with the amount of what Ottawa would owe in back taxes.

Federal Public Works Minister Judy Foote is in the process of reviewing the program, he said, adding that, "the process is set out in legislation and applies right across the country."

Payment in the bank

The $20-million payment was received Thursday night and only applies to past tax appraisals, Traves said.

"The minister is looking into the entire program and that is part of an ongoing review, and we'll deal with that. If we're dissatisfied in the future, we'll challenge it again."

The province's property valuation service will be doing future assessments of Citadel Hill and billing the federal government at the current property taxation rate in the future, he said.

Feds 'pleased' to reach agreement

Foote said in a statement that the government is "pleased" an agreement has been reached.

"Our government is committed to ensuring that municipalities receive fair and reasonable payments in lieu of taxes for federal properties in their jurisdiction," she wrote.

A department spokesperson added this payment does not affect how payments on other "unique" properties like national historic sites should be handled.

"This resolution neither creates a precedent nor establishes a methodology on how payments in lieu of taxes for unique properties should be calculated," wrote Pierre-Alain Bujold.

Quebec City received intervenor status during Halifax's Supreme Court case because of its own national historic sites.

Legal costs

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In addition to the $20-million lump sum payment received Thursday, the federal government paid the city $4 million in payments in lieu of taxes over the course of the 1997-2015 dispute.

The city spent approximately $316,900 in legal and appraisal costs fighting the case. About $200,000 of that amount was recovered in a Supreme Court decision, which assigned costs to the federal government.

ONTARIO - Toronto’s Problem? Our Public Sector is Poor While Our Private Sector is Booming

The City needs new revenue streams to change that. One sure fix? A progressive property tax.

Sometimes events collide to reveal truths too long unspoken. Now we know.

Toronto’s real problem is an impoverished municipal government in a city of unprecedented private wealth. It is odd that mounting evidence of municipal dysfunction now occurs at the same time that new records are set month after month for city real estate values. Public services and infrastructure in Toronto have hit crisis point at the same time that City Council refuses to adequately tax the higher reaches of record level residential property values.

The most recent list of Toronto troubles is long. Sweltering subway cars. Sweltering, perhaps soon to be freezing, school classrooms. New condo towers with recurring power blackouts due to inadequate city infrastructure. Not enough crossing guards at our schools. Not enough bus drivers to get kids there.

Then there’s the unfulfilled dream list. No money for long overdue transit improvements, for the glitzy new downtown park recently “announced,” or the City’s entire capital spending backlog now pegged at $29 billion. There is also the recurring annual hole of $500 million in the City’s operating budget to cover day-to-day expenses.

The City quite simply does not have enough money to go around. Public facilities literally crumble and break down, public services decline, public jobs can’t find people willing to work for wages that put even the poverty line out of sight. And our infrastructure deficit grows.

Expect things to get worse. Mayor John Tory is asking all City departments to reduce their spending next year.

Meanwhile, residential real estate values have soared by close to 20 per cent this year compared to last. The average detached home in Toronto is now valued at $1.2 million. This is important because the city’s main revenue source is the property tax. Toronto’s problems stem from the fact it won’t sufficiently tax the massive wealth of its real estate market. This needs to be done by making the property tax progressive, with rising tax rates at escalating property values.

Toronto has the lowest residential property tax rate in the GTA. Over the past decade the tax rate has increased at a tiny fraction of the hike in property values. In the last year year, sales of homes valued over $1 million in Toronto have almost doubled. Sales of homes valued over $4 million have climbed 79 per cent.

We now seem to be at a breaking point. Toronto’s budget problems are not just numbers on an accounting sheet. Now, they are the problems Torontonians are living through day after day.

To the City’s credit, some municipal voices are now sounding the financial alarm. Toronto City Manager Peter Wallace has declared the need to establish new revenue streams for the city. Several have been identified. These include a municipal sales or income tax, road tolls, parking levies, and a hotel tax. None of them will be painless. Worse, none come close to providing the revenue needed to fund Toronto’s future.

The surest rescue of Toronto municipal finances and services lies in revising the property tax along the lines of our income tax system. Canadians do not all pay income tax at the same rate. Instead higher rates apply at higher levels of income.

The principle here is that fairness requires a different tax bite for the more and less affluent. Several jurisdictions have progressive, variable rate property tax systems: Ireland, England, Singapore, and several Scandinavian countries.

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A progressive property tax would do wonders for Toronto’s municipal revenue. A recent study in Vancouver found that a progressive property tax system there could bring in an extra $1.7 billion each year. This would come from the top 30 per cent of property owners, with homes valued over $1 million.

What could a city do with an extra $1.7 billion per year? Many things! Consider that Toronto’s current total operating budget is just under $12 billion.

A progressive property tax is the quickest, fairest way to fix Toronto’s revenue and public poverty problem. It would give city infrastructure and services an immediate boost.

Moreover, the City could decide to use some of its new revenue to lower taxes for owners of less valued property. This would share the taxation burden more fairly, at a time when a recent study declared Toronto the most unequal city in Canada. It would also make buying a home more accessible, if property taxes could be reduced on lower valued properties.

Recently, Nobel Prize winning economist Joseph Stiglitz urged Canada’s largest cities to adopt “a very progressive tax” on property in order to combat rising inequality and provide local governments the funds they require.

How much more evidence do we need that the time is now?

Myer Siemiatycki is a professor of Politics and Public Administration at Ryerson University.

Canada Revenue Agency probes tax loopholes in real estate speculation

Tax agency has stepped up its monitoring of B.C. and Ontario housing markets

The Canada Revenue Agency is looking deeper into tax evasion in some of the country's hottest housing markets after reports suggesting many speculators are abusing the system and not paying enough tax on their gains.

The move comes after a Globe and Mail report last week on a Vancouver property speculator who paid virtually no tax on gains from millions of dollars worth of home flips during the same calendar year.

"Like all Canadians, I am very concerned over allegations that some wealthy Canadians are not paying their fair share of taxes," Diane Lebouthillier, minister of national revenue, said in a statement. "That is unacceptable and I've since asked Canada Revenue Agency officials to look into the specifics of the case."

Foreign money in Canada's housing market has been a hot topic of late, as policymakers seek to get rid of some of the excess speculation without starting a panic. The province recently implemented a 15 per cent tax on foreign buyers in the Greater Vancouver Area, and the issue of the capital gains exemption on a primary residence has also drawn scrutiny from the CRA and other agencies.

Lebouthillier said that between April of last year and June 2016, the CRA had conducted 2,500 audits related to real estate in British Columbia and Ontario, and levied some $11.6 million in penalties to tax filers who were subsequently found to have demonstrated "gross negligence in failing to report their tax obligations correctly."

"Those trying to avoid paying their tax obligations now face an increasing likelihood of getting caught," she said. "Canadians expect and deserve a fair tax system and that is what we are committed to delivering."

Prime Minister Justin Trudeau addressed the topic of tax leakage in the housing market later on Tuesday afternoon, when asked by a journalist at a press conference for his thoughts.

"One of the issues that we highlighted recently is the need for continued enforcement of the tax code and making sure that we're cracking down on people who are avoiding paying their fair share of taxes," he said, adding that the government earmarked more than $400 million in the last budget to beef up the CRA's ability to "make sure that there is better enforcement [so that] everyone pays their fair share of taxes."

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QUEBEC - Montreal property assessments up 5.9%

Real estate agent attributes lowest increase in decade to change in mortgage rules

Montreal homeowners are getting the lowest increase in property assessments seen in the last 10 years.

Property assessments are up an average of 5.9 per cent.

The Greater Montreal Real Estate Board had predicted a an increase of five per cent for single-family homes and duplexes and a four per cent increase for condos.

"Five per cent is very little, very moderate," said Paul Cardinal, director of market analysis at the Quebec Federation of Real Estate Boards.

By comparison, between 2002 and 2005, residential properties in Montreal increased in value by 47 per cent. Between 2005 and 2009, they went up 21 per cent.

Cardinal attributed the development in part to a change in mortgage rules.

"In 2013, the maximum amortization period dropped from 30 years to 25 years. That cast a chill on the Quebec housing market," he said.

"We continued to see a slowdown in sales in 2014 ... But in 2015 until today, the market is growing again."

Between 2002 and 2005, residential properties in Montreal increased in value by 47 per cent.

Montreal's new property assessment roll will be based on property valued on July 1, 2015 – a value that reflects market conditions.

Property values are used as the basis for calculating property tax.

However, an increase in value does not automatically translate into an equivalent increase in property taxes.

Montreal homeowners will know how the new roll will affect them when the 2017 budget is unveiled, but Montreal Mayor Denis Coderre has already pledged not to raise taxes more than the rate of inflation.

Condo owners in the Plateau–Mont-Royal borough will only see an assessment increase of about three per cent, according to the transactions made between 2012 and 2015.

Could Montreal's real estate market be the next target for foreign investors?

Rosemont–La Petite-Patrie had one of the highest increases in property assessments.

That's almost 10 times lower than the last roll's hike, which was 27 per cent.

But the market is getting back on track – thanks, in part, to an influx of buyers from France, say some real estate agents.

"Ten years ago, 20 to 30 per cent of our sales were with European or French clients. Now, in the last two or three years, 50 to 60 per cent of our clientele is European, more precisely French," said Benoît Maunie, a real estate broker with Via Capitale du Plateau Mont-Royal.

Based on data from the Quebec Federation of Real Estate Boards, the prices of single-family homes in Outremont have gone down by about 4 per cent.

In 2015, they sold for an average price of $1.1 million, compared to 2012's price tag of $1.2 million.

Meanwhile, boroughs that should see increases include:

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Ville-Marie: 25 per cent. Côte-des-Neiges–Notre-Dame-de-Grâce: 13 per cent. Market picking up in Southwest, Verdun

Last year alone, the price of a single-family home the Southwest borough has risen by an average of 18 per cent.

Outremont and Verdun are seeing spikes of 12 per cent, while Hampstead's property values are on the rise by 10 per cent.

However, these values will not be reflected in today's assessments.

They will come into play for the next valuation roll in 2019.

BRITISH COLUMBIA - Vancouver mayor promises new vacant home tax by 2017

New tax of up to 2% would be aimed only at secondary properties left empty year round

The city estimates there are more than 10,000 empty homes, condos and apartment in Vancouver, with many held by real estate speculators.

Owners of empty homes in Vancouver could soon be paying as much as an extra two per cent tax on their properties, Mayor Gregor Robertson revealed this morning.

But the mayor stressed the primary aim of the tax would be to encourage owners to rent out investment properties that might otherwise sit empty.

"Vancouver's dangerously low vacancy rate is putting our renters in crisis. Our proposed empty homes tax is first and foremost about bringing rental homes back into the market," said Robertson.

"We need to ensure the best use of all our housing. Empty and under-utilized investment properties are holding back badly needed homes for thousands of renters who are struggling to find a secure and accessible place to live in a tight rental market."

Secondary holdings targeted

Robertson introduced the plan at city hall Wednesday along with Kathleen Llewellyn-Thomas, the city's general manager of community services.

The specific rate of the tax has yet to be determined, but will be in the range of 0.5 to 2.0 per cent of the assessed value of each home, she said. That would be between $5,000 and $20,000 for a million dollar home.

Robertson said if the tax is collected on just five per cent of known empty homes, it would generate an estimated $2 million, which would go toward cost recovery and affordable housing.

The tax would only apply to homes that are empty year round and not primary residences — that is, "secondary properties that are business holdings," said Robertson.

Snowbirds and other residents who live only part of the year in Vancouver would not be taxed, stressed Robertson.

"Almost all Vancouver residents will not pay this tax," he said. "It is focused on the empty homes that are being held as businesses or effectively holding properties."

Robertson said if people choose to pay the tax, the city and renters will still come out ahead because the tax revenue will be used to build affordable housing.

"Some people who can afford it will not want to rent out their properties and they are going to make a generous contribution to affordable housing in Vancouver," said Robertson.

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"Certainly part of this is symbolic, but at city hall we are going to use every tool to create more rental housing."

Self declaration of empty homes

Owners will be required to declare their homes' status themselves as part of the property tax process in 2017, and the new tax would be payable in 2018, said Robertson.

The proposed tax will be enforced with an audit and complaint response process "that will keep people honest," Llewellyn- Thomas said.

"It will be random, but we will be having a very high level of audits in the first months and years that we run this," she said.

Penalties for non-compliance are still being worked out, but they would have to be significant enough to ensure it made financial sense to pay the tax instead, she said.

Additional staff would be hired to administer and monitor the program, but it is expected to generate enough revenue to cover its own costs, they said.

Proof of residency required

The proposal will be presented at council next week, and if approved, a extensive public consultation process will be launched before the tax is implemented.

Under the mayors proposal, all Vancouver homeowners will be required to declare their principal residence (or tenancy), similar to declaring the Home Owner Grant, which generally will not be subject to the tax.

Other details confirmed by the mayor included:

■ If audited, owners will have to prove that the home was a principal residence for the owner, a tenant or a licensee. ■ Proof of primary residency could include a B.C. driver's licence or BCID, a completed Home Owner Grant, a tenancy agreement or similar documentation. ■ If the owner is unable to prove the home was a principal residence for a minimum number of days in the previous year (to be determined by staff through consultation this fall), the tax will apply. ■ If a declaration is not made, legislation allows for owners to automatically be charged the empty homes tax. ■ Homes that are vacant because they are awaiting development permits or are in probate will be exempt.

The mayor has also promised to reveal more details soon on a proposal to regulate short-term rentals such as Airbnb.

City granted new taxation power

Robertson first proposed the tax in June to encourage property speculators in Vancouver's hot real estate market to rent out unoccupied homes.

At the time, the city's rental vacancy rate was 0.6 per cent and a city-commissioned report estimated there were 10,800 homes and condos sitting empty.

Originally, Robertson proposed either tracking vacant homes as part of the annual provincial property assessment, or creating a new business tax, vowing the city would act alone if the province did not help.

In July, the province responded by granting the city the power to tax vacant homes. The province also introduced a 15 per cent tax on foreign home buyers in August aimed at curbing property speculation.

Victoria City Council has also indicated it wants to tax vacant homes as well, but has not tabled a proposal.

Compliance will be key

Tsur Somerville, a senior fellow at the UBC Centre for Urban Economics told On The Coast's guest host Gloria Macarenko the effectiveness of the new tax will depend on whether or not homeowners comply. International Property Tax Institute IPTI Xtracts- The items included in IPTI Xtracts have been extracted from published information. IPTI accepts no responsibility for the accuracy of the information or any opinions expressed in the articles.

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"The city can come up with stiff penalties and an audit, but you still have the situations where people have their sons or daughters in the unit even though they're not there, so that's going to be a challenge."

He said the biggest benefit of the new tax will be to relieve pressure on Vancouver's tight rental market by opening new rental spaces and subsidizing affordable housing .

"The rental market here is so tight that even working a little bit is a big plus. If all of a sudden, just by taxing people who are making things more expensive, you can help out the people who are most affected — even if it's just 200 households — that strikes me as a really good thing."

"If what we're talking about is making Vancouver affordable, it's not going to make Vancouver affordable at all," he said.