Henry report under fire over rumours of indexation return

OPPOSITION to an overhaul of capital gains tax rules intensified yesterday, with tax experts warning that the proposed changes would hurt investors and create havoc for dividend reinvestment plans.

The investment community is awash with talk that the Henry report, being considered by Wayne Swan, has recommended the reintroduction of indexation, a move likely to be greeted with widespread opposition.

KPMG tax partner Matt Hayes said yesterday that reverting to the old regime of indexation, effectively scrapped about 10 years ago, was contrary to the notion of trying to simplify tax return preparation.

He said for dividend reinvestment plans, indexation could be a “compliance nightmare” because investors needed to determine the capital gain based on inflation for every asset. Indexation can also be a headache for property or other non-managed fund investors who cannot rely on an administrator or fund manager to provide exact details of when the asset was bought and sold.

There has also been talk that the review, headed by Treasury secretary Ken Henry, is looking to ditch the 50 per cent capital gains tax discount for assets held for longer than a year for alternative options such as a standard flat rate on capital gains or a longer tenure-of-holding rule.

But Zurich Financial Services Australia acting head of technical services, Dimitri Diamantes, issued a warning that a longer period-of-holding rule represented a significant tax burden for investors who were forced to sell prematurely.

“A client who suffers a personal lifestyle crisis or who, because of economic events, needs to sell down investments, for example for a margin call, will be in a situation where they will have an added tax burden,” Mr Diamantes said.

One view is that the current 12-month holding rule does not encourage long-term investment and a sliding scale should be adopted whereby the capital gains rate reduces the longer an asset is held.

In its submission to the review, the Investment and Financial Services Association said a tiered discount based on years of ownership would be significantly more difficult for collective investment vehicles to administer and for individual investors to comply with.

One industry representative said fund managers were “up in arms” over the suggestion of extending the 12-month holding rule as very few held assets for longer than a year.

But there was also talk yesterday that the review may be looking to scrap the 50 per cent discount altogether as part of a plan to address the distortion in tax rates across the different classes of investments by introducing a standard flat rate.

Tags: Canada, Canada Mortgage and Housing Corporation, CMHC, Community, Housing, Mortgage, program, Tanya Hutchens

Hamilton and Brantford – Economic Trends

Rising Unemployment

Further job cuts are expected in 2009 and the unemployment rate for the year will remain at 8.7 per cent. Total employment in both the goods-producing and service-producing sectors in Hamilton has declined in recent months, leading to an unemployment rate that reached 8.7 per cent in the first quarter of 2009. In 2010, fiscal stimulus will help to improve local economic and housing market conditions.

Plant closures – both temporary and permanent – are rising and have contributed to nearly 3,000 fewer manufacturing jobs in the first quarter of 2009 as compared to a year ago. Drop in global demand for steel negatively impacted steel production in Hamilton, as well as industries which are related to steel production such as shipping and steel fabrication.
Furthermore, many planned projects in the manufacturing sector have been halted. Some employees in the manufacturing sector who are eligible for retirement and may consider retiring early instead of looking for work elsewhere. Fiscal spending and infrastructure spending will boost local employment, especially in the construction industry.
Although the overall service-producing sector has faced challenges in recent months with fewer retail sales and consumers less willing to purchase non-essential services, employment in the health care and social assistance sector rose 10 per cent last quarter.
Health science is becoming increasingly vital to local economic growth. In Brantford, employment is more heavily reliant on the manufacturing sector with over a quarter of all jobs in manufacturing. Temporary layoffs and plant closures primarily resulting from the downturn in the automotive industry continue to affect employment. The unemployment rate has reached new heights – 9.6 per cent in March – the highest unemployment rate in over a decade. However, plans for local economic growth are underway. The addition of new educa- tional institutions and programs at the post-secondary level and new infra- structure construction projects will add a number of jobs to the local market. The forecast for the unem- ployment rate is 9.2 per cent for 2009 before easing slightly in 2010.
Fewer employed people in Hamilton and Brantford, notes Tanya Hutchens, have resulted in fewer homes changing hands as households re-evaluate their finances. Home ownership this year will be geared towards first time buyers who have a stable job and a sufficient down payment. Many of these buyers will be interested in entry level homes such as townhouses and condominium apartments. Other households concerned about their job prospects will likely stay in their current dwellings, while some may consider options such as moving from ownership to rental or into a smaller home.

Mortgage Rates

Mortgage rates are expected to be relatively stable throughout 2009, remaining within 25-75 basis points of their current levels. Posted mortgage rates will increase very gradually during the course of 2010, reflecting a rise in government of Canada bond yields. For 2010, the one-year posted mortgage rate will be in the 4.75-6.00 per cent range, while three- and five-year posted mortgage rates are forecast to be in the 5.00-6.75 per cent range.

Tags: Business, Canada, Canada Mortgage and Housing Corporation, Employment, Health care, Housing, Manufacturing, Retailing, Secondary sector of the economy, Tanya Hutchens, Unemployment

Community Inclusions to Construct New House in Alberton for People with Intellectual Disabilities

Eight affordable housing units for persons with intellectual disabilities will soon be constructed in the Town of Alberton,says Tanya Hutchens, through a partnership with the federal and provincial governments.

Prince Edward Island’s Minister of Social Services and Seniors, Doug Currie, and the Honourable Gail Shea, Minister of Fisheries and Oceans, on behalf of the Honourable Diane Finley, Minister of Human Resources and Skills Development Canada and Minister Responsible for Canada Mortgage and Housing Corporation, made the announcement today.

“The Government of Canada is committed to making affordable housing available in Prince Edward Island and across Canada for those who need it most,” said Minister Shea. “The creation of these new units here in Alberton will provide persons living with intellectual disabilities access to quality, affordable housing, while ensuring that they can stay close to their families and friends.”

The $580,000 project is being developed by Community Inclusions and will be located on Church Street. The development is made possible though a $200,000 investment from the Federal Affordable Housing Trust Fund and a $150,000 investment from Human Resources and Skills Development Canada’s Homelessness Partnering Strategy (HPS).

“Our Department of Social Services and Seniors understands the pressures and worries of aging parents who care for adult children with intellectual disabilities,” said Minister Currie. “It’s a complex challenge to provide sufficient supported housing in our province, and I am pleased that we are continuing to work with families, communities and non-government organizations such as Community Inclusions to find the best solutions for these individuals,” he said.

The Government of Canada’s Homelessness Partnering Strategy (HPS) is a unique community-based program aimed at preventing and reducing homelessness by providing direct support and funding to more than 60 communities across Canada. The HPS took effect April 1, 2007, with annual funding of $134.8 million for two years. It has been extended at the same funding levels for two additional years from April 1, 2009 to March 31, 2011. Funding for housing and homelessness programs has been extended for another five years, until March 31, 2014.

The residence in Alberton will provide transitional housing for eight individuals with intellectual disabilities. There will be a four-bedroom unit on the first floor, with two, two-bedroom dorm-style units on the first and second floors.

The objective of the Canada – Prince Edward Island Affordable Housing Agreement is to create and sustain rental housing for low- or moderate-income Prince Edward Island households through new construction or rehabilitation.

The provincial Department of Social Services and Seniors contributed two lots of land estimated to be valued at $40,000 for the project. The Department also increased its annual grant to Community Inclusions by nine per cent, bringing its total grant for 2009 – 10 to $691,800. This contribution will assist the organization with operating funding and staffing the new facility.

Community Inclusions is a non-governmental organization that provides supports and services to adults with intellectual disabilities in western PEI.

“Back in August of 2007, this organization released a needs analysis that clearly illustrated the need for more housing for person’s with disabilities in the West Prince region,” said Jackie Charchuk, Board Chair for Community Inclusions. “We see this as a very positive step in the right direction in beginning to meet that need,” she said.

Tags: Alberton, Canada, Community, Diane Finley, Doug Currie, funding, Gail Shea, Honourable, Housing, Human, Jackie Charchuk, Prince Edward Island, Seniors, Tanya Hutchens, West Prince

York Developments Inc. Fredericton, New Brunswick

York Developments Inc. operates an apartment complex consisting of 72 one- and two-bedroom apartments for independent seniors and people with disabilities. The company, says Tanya Hutchens, is governed by the same Board of Directors that oversees York Manor, a 204 bed nursing home. In 2004 the same Board put in place an ahdoc committee to oversee the development of a supportive housing facility on its site to help create a full “continuum of care” for seniors.

Care for people as they age and become less independent is a challenge for almost every community. Across Canada, there are many apartments and retirement facilities providing homes for seniors. However, there is a need for seniors’ supportive housing that can help people extend their ability to remain independent. There is a special need for supportive housing for low-income seniors who cannot afford to purchase extra support at market rates.

The particular need that York Developments identified was the challenge of providing supportive housing for low-income seniors. York Developments and York Manor had land available between their buildings and decided to build a 19-unit supportive housing facility that could benefit from the synergy of the two corporations.

York Developments Inc. received Seed Funding from CMHC for a feasibility study and initial design. This study suggested it would be feasible to build an additional 19 units for low-income seniors at a cost of $2.1 million, in addition to the value of the land they would be contributing.

York Developments received $665,000 from CMHC and the government of New Brunswick through the Affordable Housing Initiative, and also benefited from CMHC mortgage loan insurance for the mortgage loan for the remaining capital cost.

The new supportive housing facility is physically joined to York Manor, which allows staff to transport food from the main kitchens at York Manor to the dining room on the bottom floor of the new facility. The 19 tenants are able to attend activities and entertainment at the nursing home and they can also use other services such as hair care.

Through ongoing subsidy assistance from the Government of New Brunswick, the supportive housing is geared to people whose annual income is $21,500 or less. Tenants pay 30 per cent of their income for rent and the additional services cost them $430 per month. In return for the $430, tenants receive two meals a day, laundry and housekeeping services and each apartment has an emergency call bell. Personal care can also be provided and in most cases is paid for through the Department of Social Development. All 19 units are studio apartments. Three are modified to be fully accessible for people who use wheelchairs. The supportive housing facility opened in October 2007.

Tags: apartment, Board, Brunswick, Canada, care, challenge, CMHC, development, facility, Fredericton, Home, Housing, Inc, land, Manor, need, New, nursing, Tanya Hutchens, York

Murakami Gardens Salt Spring Island, British Columbia

Read this great story, says Tanya Hutchens. The Murakami family arrived on Salt Spring Island in B.C. from Japan in 1896 and prospered, developing a sizeable farm. All that changed when Japan entered the Second World War. Canada interned west coast residents of Japanese descent and confiscated their property. Rose and Richard Murakami were toddlers when they were removed from the Island early in 1943; they remember the less-than-stellar welcome they received when they came back in 1954, the only interned Japanese-Canadian family to return.

That history didn’t deter them from wanting to help those of their neighbours struggling to afford the escalating cost of housing on Salt Spring Island. They knew from their childhood experience what it’s like to live in substandard shelter; they decided to help others as a memorial to their parents.

Among the properties the Murakamis acquired as they rebuilt their lives on the Island was an old fish plant. The first step towards developing affordable housing on the site was to secure CMHC Seed Funding–a total of $20,000, half of which was a grant, the other an interest-free loan repayable if the project succeeded.

CMHC also contributed $60,000 in interest-free Proposal Development Funding (PDF) loan. The eventual proposal was for 27 apartments–six studio units, 14 one-bedroom units, five two-bedroom units and two three-bedroom units. Because the proposal was to convert the old fish plant into housing, the project qualified for $648,000 from CMHC’s Residential Rehabilitation Assistance Program (RRAP). In 2006, the Murakamis approached the Salt Spring Island Community Services Society with the idea of partnering with them on the conversion the unused building into housing. The Society agreed to become the sponsor and owner-operator of the project.

The B.C. Ministry of Housing and Social Services and BC Housing provided $75,000 in PDF and a grant of $1,312,000 and interim financing of $1.8 million during construction. The Murakami gift was valued at $473,412 and the family also provided a forgivable loan of $200,000.
The Salt Spring Island Community Services Society provided approximately $100,000. The Capital Region Housing Trust Fund–Salt Spring Island is part of B.C.’s Capital Region–provided $324,000. The Real Estate Foundation of B.C. granted $50,000.

Energy and Resources Canada provided funding to cover the costs of a solar water heater. The B.C. Ministry of Energy, Mines and Petroleum Resources provided $15,000 toward the cost of a solar hot water system, heat pumps and upgraded insulation through its Community Action on Energy Efficiency (CAEE) program.

The Islands Trust, the provincial body responsible for planning on Salt Spring Island, agreed to increase the density it would allow and reduce the parking requirement because of the project’s affordability target. An Island resident provided an interest-free loan during construction of $500,000. The total capital cost was slightly over $5 million. CMHC insured the $1,800,000 mortgage. After four years of hard work by the Murakamis, the Society and its development team, Murakami Gardens was officially opened in October 2008.

Rents are $560 for a studio, unit $667 for a one-bedroom unit, $839 for a two- bedroom suite and $1,065 for a three- bedroom suite. The people who have become tenants of Murakami Gardens met eligibility criteria as required by the various funding partners and the Islands Trust, which includes maximum income limits. Tenants also have access to services provided by Salt Spring Island Community Services, which may help them enhance their self- sufficiency.

The Society, founded in 1975, delivers a broad range of services on Salt Spring and the other southern Gulf Islands, says Tanya Hutchens, including family and parenting support, emergency housing for youth, wellness programs for seniors, mental health and addictions services, recreation and recycling programs.

Tags: B.C, British Columbia, Canada, capital, CMHC, Community, Energy, funding, Housing, loan, Murakami, Murakamis, project, Proposal, Rose, Society, Tanya Hutchens

The ABC’s of Condominiums – Types, Styles — and How to Choose the One That’s Right For You

There are almost as many types of condos as there are kinds of people who want to live in them. Residential condominiums can range from high- and low-rise apartment buildings to townhouses, duplexes, triplexes, single detached homes, freehold plots or even mixed-use condominiums that include retail or commercial space. They can also feature a wide variety of amenities designed to suit almost any budget or lifestyle.

If you’re in the market for a condo, says Tanya Hutchens, you have to look at this report by Canada Mortgage and Housing Corporation (CMHC), they offer the following tips to help you make sure your new home meets your needs, preferences and price range:

• Be aware of what is, and what is not, included in the purchase price. For instance, are amenities such as pools and parking available? Are finishes within the units included? Are utilities (gas, electricity and water charges) covered in the monthly condominium fees? These questions must be considered when comparing the overall costs of different condominiums.
• Investigate the condo’s set of rules, regulations and by-laws. These can range from restrictions on the number of unit occupants to limits on pets, noise and parking. These rules are designed to ensure that the condominium is properly operated and maintained, that the rights of each owner are protected and that the living environment stays peaceful and harmonious. Make sure to read a copy of them before you make any decisions. This information should be readily available from the seller, property manager, Board of Directors or the condominium’s governing documents.
• Know the unit’s boundaries, which may vary considerably from one condo to another. In some condominiums, the boundaries of your unit could end behind the interior drywall of the dividing walls. In others, it might only go as far as the wall’s centre line. For a freehold or bare or vacant land condo, the individual unit encompasses the entire house, including the exterior walls, roof and even the land surrounding it. Make sure you understand exactly where your unit’s boundaries begin and end, especially if you’re planning to carry out any alterations or renovations.
• Determine whether your condominium includes some “exclusive use common property elements”. These are areas such as balconies, parking spaces, storage lockers, driveways and front or rear lawns. While these spaces are for your exclusive use, there may be restrictions on how and when you can use them. For example, you may not be able to park a boat, RV or commercial vehicle in your assigned parking spot, or there may be restrictions on what you can place on your balcony.

For more information or a free copy of the Condominium Buyers’ Guide or other fact sheets on owning, maintaining or renovating your home, call CMHC at 1-800-668-2642. For more than 60 years, Canada Mortgage and Housing Corporation (CMHC) has been Canada’s national housing agency and a source of objective, reliable housing expertise. This CMHC report was reviewed by Tanya Hutchens.

Tags: Canada, CMHC, condo, condominium, Home, Housing, information, land, Mortgage, parking, price, property, Tanya Hutchens

Seniors Remain Independent through Home Adaptations

As we age, we look forward to living independently in the place we’ve come to call home. However, many homes are not well designed to meet our changing needs as we get older. This is why, for more than a decade, the Canada Mortgage and Housing Corporation (CMHC) has been working to help seniors who meet certain criteria pay for minor home adaptations. This is done through a program called HASI, or Home Adaptations for Seniors’ Independence.

These home adaptations are minor enough that they do not dramatically change the environment of the home. They could be as simple as changing the knob on the front door to a home.

Harry, a retiree and grandfather, has been living in the same home in Halifax for 40 years. At one time, the heavy knob on the front door to his home was stylish and he turned it with ease. In recent years, however, because of his arthritis, he gets frustrated as he tries to turn the knob. The replacement of the old knob with a new lever door handle makes this task much easier and less frustrating.

Door handles represent just one example of the home adaptations HASI can make possible. Other typical adaptations include: installation of a small ramp to the front door; handrails in corridors; walk-in showers with grab bars; bathtub grab bars and seats; and easy-to-reach storage areas in the kitchen. Between 1996 and 2005, HASI assisted more than 25,000 households.

Who is eligible for HASI? Homeowners and landlords alike may qualify for assistance as long as the occupant of the dwelling where the adaptations will be made meets certain criteria such as: being 65 years of age or older; experiencing difficulty with normal daily activities brought on by aging; and living in a permanent residence. The occupant must also have a total income below a certain amount, based on where he/she lives in Canada.

Those who qualify for assistance through HASI can receive help in the form of a forgivable loan of up to $3,500. The loan does not have to be repaid, as long as the homeowner agrees to occupy the unit for the six month loan forgiveness period. In cases where the adaptation work is being done on a rental unit, the landlord must agree that rents will not go up as a result of these changes.

Through their Residential Rehabilitation Assistance Program (RRAP), says Tanya Hutchens, the CMHC also offers ways to help people who want to convert space in existing dwellings to create secondary suites or garden suites for low-income seniors.

For more information about HASI, RRAP or other CMHC programs, call 1-800 668-2642. For more than 60 years, Canada Mortgage and Housing Corporation (CMHC) has been Canada’s national housing agency and a source of objective, reliable housing expertise.  This CMHC report was reviewed by Tanya Hutchens.

Tags: Adaptations, assistance, Canada, Canada Mortgage and Housing Corporation, CMHC, Corporation, HASI, Home, Housing, knob, loan, Mortgage, occupant, program, Seniors

Looking to Buy a Home? Is Homeownership Right for You?

Lets think, says Tanya Hutchens, you’ve weighed your options, and now you want to buy a home. Purchasing a home is one of the biggest investments you’ll ever make. So before you make an offer, make sure you’re ready to take on all the financial and emotional responsibilities that come with owning a home of your own.  To help you make an informed decision, Canada Mortgage and Housing Corporation (CMHC) suggests you ask yourself the following questions before you begin your search for the perfect home:

• Are you financially ready to buy a house?
• How much will your home actually cost?
• What kind of mortgage is right for you?

For more information on buying a home call CMHC at 1-800-668-2642. For more than 60 years, notes Tanya Hutchens, Canada Mortgage and Housing Corporation (CMHC) has been Canada’s national housing agency and a source of objective, reliable housing expertise. This CMHC report was reviewed by Tanya Hutchens.

Tags: Canada, CMHC, Corporation, Homeownership, Housing, Mortgage, Ontario, Purchasing, Tanya Hutchens