Canada’s Bill C-56: What You Need to Know the Affordable Housing and Groceries Act
Overview: Finance Minister Chrystia Freeland unveiled Bill C-56, The Affordable Housing and Groceries Act. This bill aims to remove the GST from new rental housing constructions and modify the Competition Act to bolster competition, primarily in the grocery industry.
GST Removal on New Rental Constructions:
Objective: The bill seeks to promote the building of long-term rentals, including apartment complexes, student accommodations, and senior living facilities.
Specifications: A building must have at least four private apartment units or ten private rooms. Additionally, 90% of the units should be for long-term rental purposes. Luxury condos and short-term vacation rentals like Airbnb are excluded.
Retroactive Application: The rebate will apply to constructions from Sept. 14, 2023, to Dec. 31, 2030. These projects must be primarily finished by 2035.
Affordability vs. Supply: While the Conservative Leader, Pierre Poilievre, pushes for tax cuts only on below-market-rate rentals, the Liberal’s GST rebate lacks this constraint. The aim is to stimulate more rental housing creation.
Efficacy: The government acknowledges potential loopholes, such as converting rentals to Airbnb. They anticipate the Canada Revenue Agency will audit discrepancies, mainly if rentals are sold shortly after construction.
Financial Implications: The GST rebate will cost an estimated $4.565 billion from 2023-2024 to 2028-2029.
Provincial Response: While Ontario, British Columbia, Newfoundland and Labrador are set to eliminate provincial taxes on new rentals, Quebec remains hesitant due to potential high costs.
Competition Act Modifications:
Empowering the Competition Bureau: The bureau will have increased authority to probe unfair industry behaviors, such as price gouging, and can take enforcement measures.
Ending Anti-competitive Mergers: The “efficiencies defence” will be discarded to prevent mergers that increase prices and reduce options for Canadians.
Broadening Review Scope: The bill proposes to assess agreements that may limit competition and choices, like restrictive covenants blocking smaller competitors from setting up shop near larger grocers.
Rationale: Certain regulations currently hinder the Competition Bureau, making obtaining vital data from companies challenging unless under a law enforcement probe. This gap was evident during the recent grocery market study, where significant cooperation from market players was absent.
Impact on Grocery Prices: Although the Act’s primary focus isn’t on food prices, increased competition will influence them over time. Measures to stabilize or reduce grocery prices will be managed differently.
Final Word: While the proposed bill promises transformative reforms in housing and competition in Canada, its real impact, especially on the everyday lives of Canadians, remains to be seen, assuming it is passed at all.
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