Time for your cheat sheet on this week’s top stories.
Canadian Real Estate
Canadian Capital Gains Change Targets Boomers More Than The Rich
Canada’s Budget 2024 includes measures sold as a way to target the rich, but that may not be the case. The budget proposes raising the capital gains inclusion by 50%, with the party behind the proposal claiming it will only target 0.13% people, about 40,000 tax filers. We take a look at the data used to make this decision, and the impact over the past 10 years would have been 7.5x larger than stated. The tax primarily targets families that received a windfall, not necessarily wealthy households. Further, the policy is rolling out at the start of the “Silver Tsunami,” targeting the wave of Boomer entrepreneurs that will be retiring over the next few years.
Canadian Renters Now Required To Collect Foreign Landlord’s Taxes, Withhold Rent
Canadian renters with non-resident landlords are now in charge of their tax liabilities. The CRA, Canada’s tax authority, expects tenants to withhold 25% of gross rent owed to non-resident tenants, and remit it to the agency. Tenants may be held liable for the funds and penalties if they fail to pay and submit the proper filings. Ontario lawmaker MPP Jessica Bell is calling on the Federal and Provincial governments to make changes to protect tenants. She calls the CRA’s decision unfair, and believes it’s irresponsible to place the burden on the tenant, especially considering there’s no way for tenants to even verify the beneficial ownership of their property.
Ontario’s Economy To See Worst Non-Recession Growth Since Early 80s: FAO
Ontario is historically the engine of Canada’s economy but that may not be the case in the near-term. The FAO, a non-partisan government agency charged with independent analysis of the province, sees Ontario’s economy grinding to a halt. Provincial growth over the next year is expected to be just a third of the rate of the global average. In addition, unemployment is expected to climb and remain elevated through 2028. Combined with the current performance, that would leave the province with the slowest non-recession growth since the early 80s.
Canadian Real Estate Prices Are Moving Sideways & That’s Not Good News
Canadian existing-home prices have largely been moving sideways over the past couple years. In April, the typical price of a home was only slightly lower than last year. On the surface, it may not seem like much is happening but every year to this point has shown lower seasonal peaks for home prices. That’s generally a sign the market’s mix is beginning to slant towards the downside.
Canadian Economy Unable To Create Enough Jobs For Population Growth: BMO
Canada’s economy added a near-record number of jobs in April, blowing away estimates. However, that number wasn’t even close to the minimum number to prevent rising unemployment. Only 90k jobs were added for 107.5k workers, leading to a slight increase to the unemployment rate. The country’s record population growth means failing to hit record job creation every month will continue to drive the unemployment rate.
BMO warns over the past year, only 1 in 3 new workers gained employment at the margin. The bank estimates a 25% increase in unemployed workers over a year is enough to trigger a recession. Canada is currently at 24%, highlighting just how close the country is to a downturn.
