There was a lot of talk about housing in the federal budget Ottawa brought down April 7, but surprisingly little of it is very relevant to Canadian Contractor readers. Most of the measures to address housing supply and to make housing more affordable will primarily impact larger, new-build developers rather than renovation and custom home contractors. We’ve picked out some highlights of specific interest to you.
Speeding up municipal approvals
There’s a vague plan to incentivize municipalities to approve more housing projects, especially afordable projects. From the federal website:
Budget 2022 proposes to provide $4 billion over five years, starting in 2022-23, to the Canada Mortgage and Housing Corporation to launch a new Housing Accelerator Fund. The fund will be designed to be flexible to the needs and realities of cities and communities, and could include support such as an annual per-door incentive for municipalities, or up- front funding for investments in municipal housing planning and delivery processes that will speed up housing development. Its focus will be on increasing supply, but government supports will be targeted to ensure a balanced supply that includes a needed increase to the supply of affordable housing.
The mayor of Mississauga, Ont., was on television last night delivering a line that we will no doubt hear from many municpal leaders: there is lots of land approved for housing but developers are not taking advantage of it. That aside, if these funds do anything to reduce red tape and speed up the permit process at the municipal level, it will be welcome to us.
Paying for repairs
A lot of the affordable housing initiatives will only be of interest to developers. But here’s one that throws some money at repairs to existing units, which could drive some business in our sector.
Budget 2022 proposes to advance $2.9 billion in funding, on a cash basis, under the National Housing Co-Investment Fund, so that all remaining funds will be spent by 2025-26. This will accelerate the creation of up to 4,300 new units and the repair of up to 17,800 units for the Canadians who need them most.
Funding granny suites
This might be the biggest announcement in the budget for Canadian Contractor readers!
To support these families, Budget 2022 proposes to introduce a Multigenerational Home Renovation Tax Credit, which would provide up to $7,500 in support for constructing a secondary suite for a senior or an adult with a disability.
Renovating houses up to modern energy efficiency standards is going to be big business for the foreseeable future because of programs like this.
Budget 2022 proposes to provide $200 million over five years, starting in 2022-23, to Natural Resources Canada to create the Deep Retrofit Accelerator Initiative, which will provide support for retrofit audits and project management for large projects to accelerate the pace of deep retrofits in Canada, including a focus on low-income affordable housing.
The Energiesprong model, adopted by Netherlands, the United Kingdom, France, Germany, and the United States, accelerates the pace and scale of retrofits by aggregating homes and buildings in an entire neighbourhood and retrofitting them all at the same time. This support for community-level home retrofits aligns with the Net-Zero Advisory Body’s recommendation to seek out opportunities to decarbonize multiple buildings at once.
You could hand out flyers in a neighbourhood and invite people to join the local Energiesprong.
Budget 2022 proposes to provide $33.2 million over five years, starting 2022-23, to Natural Resources Canada, including $6 million from the Green Infrastructure – Energy Efficient Buildings Program to implement a Greener Neighbourhoods Pilot Program in up to six community housing neighbourhoods to pilot “Energiesprong” model in Canada.
Despite the name, it would seem the problem here is rental laws that allow landlords to force people out of their homes, not the renovations themselves.
However, in recent years, the significant increase in housing prices has led to large investors acquiring a larger portfolio of residential housing. There is a concern that this concentration of ownership in residential housing can drive up rents and house prices, and undercut the important role that small, independent landlords play. Many believe that this trend has also led to a rise in “renovictions”, when a landlord pressures and persuades their tenants to leave, or is formally permitted to evict them to make extensive renovations in order to raise rents.
This one is unfortunate for us, as people often renovate the home they are planning to flip.
Budget 2022 proposes to introduce new rules to ensure profits from flipping properties are taxed fully and fairly. Specifically, any person who sells a property they have held for less than 12 months would be considered to be flipping properties and would be subject to full taxation on their profits as business income. Exemptions would apply for Canadians who sell their home due to certain life circumstances, such as a death, disability, the birth of a child, a new job, or a divorce. Exemptions will be set in forthcoming rules and Canadians will be consulted on the draft legislative proposals.
This is a great idea that could help alleviate our problems with finding skilled labour to hire.
Budget 2022 proposes to introduce a Labour Mobility Deduction, which would provide tax recognition on up to $4,000 per year in eligible travel and temporary relocation expenses to eligible tradespersons and apprentices. This measure would apply to the 2022 and subsequent taxation years.
Anything that incentivizes more people entering the trades is a good thing.
Budget 2022 proposes to provide $84.2 million over four years to double funding for the Union Training and Innovation Program, which would each year help 3,500 apprentices from underrepresented groups—including women, newcomers, persons with disabilities, Indigenous peoples, and Black and racialized Canadians—begin and succeed in careers in the skilled trades through mentorship, career services, and job-matching.
Small business can get bigger
Canadian businesses have tended to remain small and not aggressively pursue growth in part because of this archaic $15 million limit. Taking a six-percent tax hit the minute you go over this arbitrary threshold is a huge blow. The longer phase-in is welcome.
Small businesses currently benefit from a reduced federal tax rate of nine per cent on their first $500,000 of taxable income, compared to a general federal corporate tax rate of 15 per cent. A business no longer has access to this lower rate once its level of capital employed in Canada reaches $15 million. However, phasing out access to the lower tax rate too quickly—and then requiring a small business to pay more in tax—can discourage some businesses from continuing to grow and create jobs. Budget 2022 proposes to phase out access to the small business tax rate more gradually, with access to be fully phased out when taxable capital reaches $50 million, rather than at $15 million. This measure would apply to taxation years that begin on or after April 7, 2022.