Farmers Face Unintended Consequences Of New Federal Housing Tax

Apr 13, 2023

By Crispin Colvin, Vice President, Ontario Federation of Agriculture

Canada is in the midst of a housing crisis and different levels of government are introducing various measures to try to ease the pressure. For the federal government, one of those measures is the Underused Housing Tax Act that became law last year.

It is a one percent tax on the value of vacant or underused housing, and the new federal legislation requires that individuals who aren’t Canadian citizens or permanent residents, as well as private corporations and partnerships – which includes farms – who own residential housing to file an Underused Housing Tax return even if they don’t have to pay any tax.

The legislation was designed to address urban homes, condominiums and apartments that have been purchased for investment purposes, often by foreign buyers, and are now unused or not used to their full extent. Farmers don’t play a meaningful role in Canada’s rental housing market, but they’re now forced to deal with the unintended consequences of these new rules.

That’s because many farmers do in fact own more than one residence, but not because they’re keen to be landlords or residential investors. Rather, their interest lies in the land, and they’ve bought additional farmland over the years to expand their business or, for example, make it possible for a son or daughter to become part of the farm.

Much of that farmland often includes a farmhouse and as those older, smaller farms are absorbed into larger ones, farmers inadvertently become the owners of multiple residences. And regardless of whether those homes are subject to the new tax or not, the new legislation requires that farmers must now file a return under the Underused Housing Tax Act.

A separate return has to be filed every year by April 30 for each property a farm corporation owns, and if that return isn’t filed, the penalties are substantial – up to $10,000 or more.

As farmers, we are in the business of farming, not real estate, and although most of us are exempt from paying the actual tax, many may still be unaware of the new legislation, its requirements, and its penalties. The paperwork is onerous and time consuming, and the information available on government websites is not terribly detailed or easy to understand.

That’s why the Ontario Federation of Agriculture (OFA), along with the Canadian Federation of Agriculture and other farm organizations, has been actively advocating for the federal government to exempt farmers from having to file an Underused Housing Tax return.

We’ve been raising awareness and meeting with elected officials and government staff to explain the issue of multiple dwellings in rural areas when farmers buy farmland, and the unintended consequences this legislation now has for the farming community.

Late last month, the federal government announced it is delaying any fees or penalties until October 31, giving affected property owners an extra six months to file their first return under the new act. Although this is a welcome reprieve to give us more time to make sense of the legislation, it doesn’t address the greater long-term impact and burden it places on farm businesses.

Farmers are caught in the middle of governments trying to find housing solutions and the unique realities of farm businesses who unintentionally find themselves with multiple dwellings through the purchase of additional farmland.

OFA and our partner organizations will continue to advocate strongly for a filing exemption for farmers, but while we do, we encourage all farmers to make sure they file their Underused Housing Tax return in order to avoid the substantial penalties, and to contact their accountants with any questions.

There are also resources available on the OFA website, including a webinar we hosted last month in partnership with BDO to give background and answer questions on the issue.

Source : Ontario Federation of Agriculture

Video: The Investment Opportunities of Industrial Hemp

The fledgling U.S. hemp industry is decades behind countries like Canada, France and China, but according to impact investor and this week’s podcast guest, Pierre Berard, it could flourish into a $2.2 billion industry by 2030 and create thousands of jobs.

To reach its potential, what the hemp industry needs most right now, Berard said, is capital investment.

Last month, Berard published a report titled “Seeing the U.S. Industrial Hemp Opportunity — A Pioneering Venture for Investors and Corporations Driven by Environmental, Social and Financial Concerns” in which he lays out the case for investment.

It’s as if Berard, with this report, is waving a giant flag, trying to attract the eyes of investors, saying, “Look over here. Look at all this opportunity.”

Berard likens the burgeoning American hemp industry to a developing country.

“There is no capital. People don’t want to finance. This is too risky. And I was like, OK, this sounds like something for me,” he said.

As an impact investor who manages funds specializing in agro-processing companies, Berard now has his sights set on the U.S. hemp industry, which he believes has great economic value as well as social and environmental benefits.

He spent many years developing investment in the agriculture infrastructure of developing countries in Latin America and Africa, and said the hemp industry feels similar.

“It is very nascent and it is a very fragmented sector. You have pioneers and trailblazers inventing or reinventing the field after 80 years of prohibition,” he said. “So I feel very familiar with this context.”

On this week’s hemp podcast, Berard talks about the report and the opportunities available to investors in the feed, fiber and food sectors of the hemp industry.

Building an industry around an agricultural commodity takes time, he said. According to the report, “The soybean industry took about 50 years to become firmly established, from the first USDA imports in 1898 to the U.S. being the top worldwide producer in the 1950s.”

Berard has a plan to accelerate the growth of the hemp industry and sees a four-pillar approach to attract investment.

First, he said, the foundation of the industry is the relationship between farmers and processors at the local level.

Second, he said the industry needs what he calls a “federating body” that will represent it, foster markets and innovations, and reduce risk for its members and investors.

The third pillar is “collaboration with corporations that aim to secure or diversify their supply chains with sustainable products and enhance their ESG credentials. This will be key to funding the industry and creating markets,” he said.

The fourth pillar is investment. Lots of it. Over $1.6 billion over seven years. This money will come from government, corporations, individual investors, and philanthropic donors.

The 75-page report goes into detail about the hemp industry, its environmental and social impact, and the opportunities available to investors.

Read the report here: Seeing the U.S. Industrial Hemp Opportunity

Also on this episode, we check in with hemp and bison farmer Herb Grove from Brush Mountain Bison in Centre County, PA, where he grew 50 acres of hemp grain. We’ll hear about harvest and dry down and crushing the seed for oil and cake.