The Canadian Bar Association (CBA) said a federal bill to construct more rental housing is poorly drafted, according to Blacklock’s Reporter. “While the intention is to incentivize construction, the arbitrariness of the proposed implementation could inadvertently discourage the supply of rental housing,” said the CBA’s tax law section in a submission to the Senate National Finance Committee. Housing Minister Sean Fraser said he is counting on builders for 200,000 to 300,000 new homes because of Bill C-56. Parliament passed Bill C-56 on December 14 to grant a GST holiday on new purpose-built rental housing constructed from Sept. 13, 2023 to Jan. 1, 2036. The tax break will cost $4.6 billion. The CBA called Bill C-56 a broad bill with such poor definitions it could cause project delays. Construction is not defined in the Excise Tax Act or in Bill C-56. “Several points along the development process could potentially be considered the ‘beginning’ of construction,” said the CBA. “This uncertainty has caused current projects to be delayed while the issue is resolved.”Under Bill C-56, it said construction would have to be substantially completed before 2036 to qualify for the enhanced rebate. If substantial completion occurs in 2036, the rental property would no longer qualify. “Construction can be fraught with delays,” it said. “Labour availability, supply chain disruptions, inspections, weather, site conditions and changes to municipal land use regulations are only a few reasons that can delay construction and these factors are largely outside a builder’s control.”Finance Canada has refused to disclose research explaining how Bill C-56 will boost construction and lower rents. “Certain information has been withheld on the grounds the information constitutes cabinet confidences,” said cabinet. Fraser said in September the implementation of a GST holiday on new apartment construction is aimed at providing benefits to the middle class. READ MORE: Trudeau’s GST holiday on new apartments helps middle-classMPs had begun the second reading debate on the tax proposal contained in Bill C-56. “It is important that we advance measures that are going to increase the supply for middle-class households in this country,” he said.
