CANADA Trends and Developments Contributed by: Isabella Tamilia and Alexander Rigante, De Grandpré Chait
Bill C56 – GST Rental Rebate and Groceries Act The December 2023 adoption of An Act to amend the Excise Tax Act and the Competition Act (“Bill C-56”), also known as the “Afforda - ble Housing and Groceries Act”, witnessed an increase in the Goods and Services Tax Rental Rebate (“GST Rental Rebate”) on new rental housing go from 36% to 100%, while remov - ing existing GST Rental Rebate phase-out thresholds for new rental housing projects. With the announcement of the GST Rental Rebate increase, industry players remain observant to similar fiscal incentives that can be adopted at the provincial and municipal levels. In addition to the GST Rental Rebate, the CMHC continues to provide incentives for the development of afford - able rental units with programmes such as the CMHC Flex programme, which offers preferen - tial terms on construction financings. Bill C-56 also amends the federal Competition Act with the objective of enhancing competition, notably in the grocery sector. The amendments seek to expand the Competition Bureau’s pow - ers of investigation and enforcement related to anti-competitive activities where “one or more persons substantially or completely control a class or species of business throughout Can - ada or any area of Canada”. Of particular note, the amendments will expand the scope of Sec - tion 90.1 of the Competition Act, providing the Competition Bureau with the discretionary pow - er to seek orders which prohibit agreements or arrangements between and among non-compet - itors if “a significant purpose of the agreement or arrangement, or any part of it, is to prevent or lessen competition in any market”. Origi - nally, such power was limited to “agreements or arrangements between actual or potential competitors that prevent or lessen competition substantially”. Moreover, the amendments pro -
fast-track the authorisation and construction of projects which contain a social/affordable hous - ing and/or student housing component. Munici - palities with a population of 10,000 or more and a housing vacancy rate of less than 3% are also granted the power to authorise housing projects which may deviate from the zoning and/or urban planning regulations in force. Bill 31 appears to form part of a wider govern - ment approach to the housing crisis. On the fed - eral level, the industry witnessed a renewal of the ban on foreign investment, and the introduction of tax incentives for developers of purpose-built residential housing, both of which will be sum - marised in the sections below. Prohibition Act – renewal In 2022, the federal government passed the Pro - hibition on the Purchase of Residential Property by Non-Canadians Act (the “Prohibition Act”) with the objective of restricting the purchase of certain residential property in Canada by foreign investors and non-residents. Shortly thereafter, the federal government passed the Prohibition on the Purchase of Residential Property by Non- Canadians Regulations, last modified in March 2023, which brought much-needed clarification to the unexpected implications that the Prohibi - tion Act had on participants in the commercial real estate sector. On 4 February 2024, the Deputy Prime Minister and Minister of Finance announced the federal government’s intention to extend the existing ban by an additional two years, expiring on 1 January 2027. While critics have argued that this legislation has little practical effect on increas - ing supply and access to housing, the extension appears to form part of a larger strategy.
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