August 26, 2009
Matt Driscoll (Gravenhurst Banner)
The government calls it a correction that?s long overdue, but some local politicians say it?s nothing short of a cash grab.
Earlier this month, Pro?gressive Conservative MPPs, including local representative Norm Miller, demanded that Ontario?s minister of finance reconsider imposing the land transfer tax on fractional ownership properties. In particular, Miller takes issue with the fact that the tax will be imposed retroactively.
Miller, who is also the PC finance critic, called the plan a threat to the tourism industry and economic development.
?I am very concerned by this government?s regressive tax scheme to apply land transfer tax to fractional ownerships. That is why I personally asked the Finance Minister, Dwight Duncan to review and reconsider the policy,? said Miller. ?Applying the tax retroactively only adds insult to injury and can only be viewed as a tax grab.?
Miller said fractional ownership represents the ?next generation of transient tourism accommodation,? and is a system that has helped reinvent many older resorts and lodges, particularly in Muskoka.
?This policy could ? kill it just as it?s getting started and seriously damage the potential for economic development in many regions of the province,? said Miller.
The local MPP said he has already hosted a meeting between the Ministry of Revenue and several local fractional property owners. He said he has also spoken with Minister Duncan directly about the issue.
?He really didn?t seem to know very much about it,? said Miller. ?I think it?s possible that the change was made without his knowledge.?
Miller said he has already received at least 30 emails from concerned constituents and he expects to see a lot more as the province continues to crack down.
Miller is being backed by fellow MPP Peter Shurman, who represents Thornhill and is the PC critic for economic development.
?I?ve received letters and calls from constituents who have been advised that as members of owner?s associations in what are effectively time shares, they will be subject to the Land Transfer Tax Act applied retroactively to the date of purchase of their membership,? said Shurman. ?This is, at best, a tax grab and certainly constitutes an abuse of the powers of taxation by this government.?
For its part, the ministry responsible for administering the land transfer tax said last week that it?s always been its policy to collect the tax on fractional ownership cottages.
?The Ministry of Revenue was not immediately aware of these transactions. As the transfers usually occur outside the realm of land registry offices it is more difficult to track the transactions,? said ministry spokesperson Anna Giannini. ?As a result the ministry is following up with fractional ownership associations and owners to ensure that the tax is applied evenly. Some fractional ownership transfers were reported to the ministry and the tax paid.?
Minister Duncan did not respond directly to the criticism, but Giannini said he is ?aware of the situation,? and would communicate with those affected.
According to Muskoka Lakes Township mayor Susan Pryke, that communication has been sorely lacking thus far.
?Usually with something like this we get a heads up from the government or through the AMO (Association of Municipalities of Ontario), but I had literally never heard of this before (last week),? said Pryke.
Muskoka Lakes has seen a boom in fractional ownership properties over the past decade, and the land transfer tax will likely hit more property owners there than in most other municipalities in Ontario.
?We have a great number of resorts that chose that route and the rules, to them, will seem to have changed,? said Pryke. ?It doesn?t impact taxation for our municipality but ? for those residents who purchased a unit in good faith seven years ago, this will come as a surprise.?
Pryke called the application of the land transfer tax to fractional ownership properties a ?creative interpretation? of the existing rules.
?There?s no bill in the legislature. No one is voting on this, they?ve just decided they?re going to do it,? said Pryke. ?The ministry will interpret that decision one way, and the opposition will interpret it another. The people who own these units are the ones who will be impacted, and they?re the ones I feel sorry for.?
Pryke?s primary concern is that the ministry has decided to apply the tax retroactively.
?If the province wants to do it, that?s their right. What I find difficult is that it?s retroactive,? said Pryke. ?If you?re going to do something new you start from that date and move forward so those who purchase the properties can be prepared. I think retroactive taxation of any nature isn?t right.?