From: 1revenuecanada@canada.com   
      
   Fee for land transfer registration amounts to tax on a tax :CRA SOTW   
      
   'Administration fee' that will now be charged on municipal land transfer tax   
   is $75 -- plus HST   
      
    By: Bob Aaron Property law, Published on Sat Mar 26 2016    
       
   Last week the City of Toronto and Teranet, the administrator of the provincial   
   land registration system, announced a new $84.75 tax on registration of every   
   land transfer in the city.    
      
      
   Effective April 1, 2016 (ironically, April Fools' Day), the City of Toronto   
   will impose what it calls an administration fee of $75 plus HST, or $84.75, to   
   cover the cost of collecting the municipal land transfer tax on the   
   registration of all title    
   transfers.    
      
      
   The fee amounts to a further tax on top of the municipal land transfer tax.   
   But since the fee itself is subject to HST, Ontario property purchasers are   
   being charged a tax on a tax on a tax.    
      
      
   Toronto budget chief Gary Crawford proposed the new fee back in January. It   
   was introduced to the city's budget committee last January and quietly passed   
   by city council without consultation or notice to real estate industry   
   stakeholders.    
      
      
   The apparent rationale behind the fee is that when a transfer of land is   
   registered the city's land transfer tax is collected electronically by   
   Teranet.    
      
      
   But when Teranet forwards each tax payment to the city, it deducts a $75   
   administrative fee for handling the payment.    
      
      
   Not content with the approximately $500 million annual proceeds of the city's   
   land transfer tax, the city now is going to pass this $75 collection fee   
   through to purchasers of property in Toronto. This will yield the city roughly   
   another $5 million, a    
   not insignificant sum but only 1 per cent of the transfer tax revenue and a   
   drop in the bucket compared to the city's $10-billion annual operating budget.    
      
      
   But it gets even worse. First-time home buyers who receive a full rebate of   
   the municipal land transfer tax -- in other words buyers who are completely   
   exempt from payment of the tax -- are still subject to the administrative fee   
   for not collecting the    
   tax. This may make sense to the city's bureaucrats, but its logic completely   
   escapes me.    
      
      
   From a reading of section 14 of the City of Toronto Municipal Code, it appears   
   that there will be no administrative fee collected on transactions which are   
   otherwise exempt from land transfer tax, such as gifts between spouses.    
      
      
   Starting next month, when lawyers register land transfers for property   
   purchasers, four separate charges will be electronically collected by Teraview   
   (the software developed by Teranet): the registration fee, the provincial and   
   municipal land transfer    
   taxes, and now the Crawford administration fee (plus HST) to collect the tax.    
      
      
   Even the very rare documents that are still paper registrations outside the   
   electronic system are still subject to the administration fee which must be   
   paid in person at the North York Civic Centre.    
      
      
   There seems to be a pervasive view around Toronto city hall that the real   
   estate market is a golden goose which can be tapped at whim for more and more   
   money. Starting with the Miller municipal land transfer tax in 2006, then huge   
   increases in    
   development charges, and now the Crawford tax on a tax on a tax, city   
   politicians must come to realize that Toronto's real estate market is not a   
   bottomless pit for their financial mismanagement.    
      
      
   If the city needs another $5 million, which it apparently does, the city   
   should raise the necessary funds by a minuscule increase across the entire tax   
   base, and not by targeting one specific sector.    
      
      
   Imagine Canada Revenue Agency charging us a fee to collect our income tax. We   
   would be up in arms.    
      
      
   I was hoping that the election of Mayor John Tory in 2014 would bring sound   
   financial policies to city government. The imposition of this patently unfair   
   and petty "administrative fee" has proved me wrong.    
      
      
   Bob Aaron is a Toronto real estate lawyer. He can be reached at bob@aaron.ca ,   
   on his website aaron.ca and on Twitter @bobaaron2    
      
      
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