Imagine waking up one morning to find that all of the goods and services you needed to buy cost 8% more than they did the day before.   That day may come soon.

In January 2009, Premier McGuinty said that the Ontario government would "take a long, hard look" at harmonizing the 8% Provincial Sales Tax with the 5% federal GST. 

Those comments were made in response to a report by the Ontario Chamber of Commerce stating that implementing an HST and abolishing the loophole-filled retail sales tax system would boost Ontario’s global competitiveness and reduce financial and paperwork burdens on Ontario businesses.   It would also increase tax revenues, which would surely come as a relief to the finance minister who warns us this month about an $18-billion deficit for this year and next.

Both the Globe and Mail and the Toronto Star have written editorials this week in favour of Ontario adopting an HST, but not everyone thinks it’s a good idea.   Toronto real estate lawyer and columnist Bob Aaron suggests that the already-battered real estate market will be further impacted by HST on legal fees and realtors’ commissions and that it will become harder for honest contractors to compete with the growing underground economy.

There is no question that a boost to our businesses and our global competitiveness would be a positive and welcome development, but let’s not kid ourselves — the cost of that benefit will be dearly paid by consumers at a time when most people are already struggling.   In addition to paying more for their own daily necessities and services for their own families, consumers will be shouldering the higher costs for goods and services sold to their condo corporations.

An HST will have a significant impact on condo budgets.   Landscaping, renovation, accounting and legal services that are presently subject only to 5% GST will become subject to 13% HST.   Even if prices were to remain the same or decrease very slightly, the overall out-of-pocket cost for such goods and services will actually increase with the introduction of an HST.    

If your condo corporation is barely squeaking out balanced budgets today, it may be time to take a long, hard look at further reducing expenses wherever possible and implementing a gradual increase in common expense fees to help build an operating reserve.   Having a cushion in place to absorb higher costs is essential to avoiding scenarios where special assessment is the only remaining option.   A gradual increase in common expenses is a far preferable and affordable option than sudden, large lump sum assessments.

Daily Commercial News reports that the Canadian Centre for Occupational Health and Safety (an agency of the federal government) has launched a new online course to help organizations of any size develop their own OH&S program.

This new course adds to the Centre’s lineup of over 40 "e-Courses" that are offered over the Internet and require as little as an hour to complete.   Students achieving 80% or better on the final online exam earn a certificate of completion.   These e-Courses are developed by experts, reviewed by government and cover a variety of occupational health and safety topics.  Some of the available courses that may be of interest to condo property managers and directors include:

  • Accident Investigation
  • Confined Space Management
  • Emergency Response Planning
  • Health & Safety for Office Managers
  • Ladder Safety
  • Pandemic Planning
  • Preventing Falls from Slips and Trips
  • WHMIS

In addition to the e-Courses (a few of which are free), the Centre’s website contains valuable resources on all aspects of occupational health and safety.  Check it out.

It has been a while since we’ve heard a story of a big fraud in the local condo scene. We like to think that better education and more vigilant accounting and auditing may have reduced instances of fraud in recent years, and that might be true. It might be more true, however, that the current economic climate may increase the likelihood of a fraud taking place or improve the odds of detecting an ongoing fraud.

Attorney Mark Payne of the Colorado Homeowners Association Law Blog cites the recent case of the chief financial officer of a family-run property management firm in Virginia who stole $3 million from 350 homeowner associations. The Washington Post reports that the culprit confessed to the crime and was sentenced to 5 ½ years in prison and ordered to pay restitution. He also faces IRS action over undeclared income and criminal prosecution for a bizarre police chase and gunfight.

Continue Reading Ask questions to help prevent fraud

One of the more controversial aspects of the proposed Green Energy Act (“GEA”) is the requirement that owners who offer to sell or lease prescribed properties must obtain (at a prescribed cost) and give to the prospective purchaser or tenant a prescribed report or rating of that property’s energy consumption and energy efficiency. All of the particulars will be prescribed in a regulation after the GEA is passed into law.

The fine details have not yet been announced but the current plan seems to be that an energy audit will need to be obtained and paid for by anyone selling a new or used house or condo unit, and that part of the cost will refundable as a tax credit, grant or rebate. The current proposal will saddle each owner with a $300 upfront cost of the audit and stick the taxpayers with the $150 cost of the rebate plus the unknown cost of the extra bureaucracy needed to administer all of this. Burdening homeowners and taxpayers with that kind of cost in the current climate is decidedly unwise, but the proposal will certainly expand the ranks of the energy auditors by creating a large captive market.

Continue Reading The debate on energy audits for condo units – Round 1

The Ontario Government unveiled its proposed Green Energy Act ("GEA") this week, amidst much fanfare.   According to the Ministry’s News Release, the GEA should attract new investment, create new green economy jobs and better protect the climate.

While big on hype but short on specific details, the two main thrusts of the proposed GEA are described by the Ministry as:

  • making it easier to bring renewable energy projects to life, and
  • fostering a culture of conservation by assisting homeowners, government, schools and industrial employers to transition to lower energy use.

More info on the GEA is available here and here.

The idea of condominium corporations generating electricity from solar or wind power for their own use and selling the surplus is an interesting concept that may not be too far off.  Given the right incentives, any condo board would closely consider whatever green energy options may be available. 

One area of concern is the type of projects that unit owners may undertake on their own, especially if those projects affect other units, the common elements or life safety.   As with the regulation enacted last summer that permits the use of clotheslines and clothestrees where otherwise restricted, the proposed GEA will permit certain renewable energy projects to be undertaken notwithstanding restrictions imposed by municipal by-laws and condominium by-laws.  While it appears that section 117 of the Condominium Act ("no dangerous activities") will continue to prevail, we will be watching closely to see what comes of this.

For information on what steps you or your condominium corporation can take to save energy today, see The Ontario Energy Efficiency Resource Guide, which provides information about the many programs, financial incentives, and resources available to help Ontarians conserve energy and achieve greater energy efficiency.   View and download a PDF copy of the Guide here.

If your condo is currently planning or implementing a renewable energy project, post a comment and share the details.  

The Home Renovation Tax Credit (“HRTC”) generated considerable buzz after being introduced as part of the Federal Budget this year. The HRTC provides a tax credit of up to $1,350 for homeowners to perform renovations on houses, cottages and residential condominium units.

Click here to see Bob Gardiner’s summary of how the HRTC might apply to both condo corporations and unit owners.

With so many condominiums reaching 15-20 years of age, the HRTC will likely cause a small surge of renovation work in condominium units this year, which might help the economy in a small way and add value to condo units and complexes alike. But with this good news comes the possibility of a corresponding surge in disputes between condominium corporations and their unit owners.

Continue Reading Get ready for the renovation boom

With the avalanche of information available online, we all need to maximize, optimize and organize the flow of essential information while minimizing the time and hassle needed to review it.  

The solution is so simple:  If you’re following more than one blog or want to receive updates from one or more websites, all without clogging up your email box and without wasting time visiting multiple websites, you need to use Google Reader, period.

Learning to use Reader is a snap.   Detailed information is readily available from Google’s Reader Help Center or see the Google Reader Help Channel on YouTube where you will find helpful step-by-step videos.  Or take the Google Reader Tour!

Expand your brain and stay cutting-edge current with developments while maximizing your efficiency.

Happy Google reading.  

 

Condominiums play an important role in making our city a greener place.   Has yours helped to make a difference?

If your condominium in the City of Toronto has undertaken an environmental or conservation project in recent months, consider making a nomination for the 2009 Green Toronto Awards.

Launched by the City in 2005, the Green Toronto Awards honour and celebrate the individuals, organizations and companies that are leading the way towards a cleaner, greener and more liveable Toronto. 

Award categories (described here) include:

  • Community Projects
  • Energy Conservation
  • Environmental Awareness
  • Green Design
  • Green Roof
  • Leadership
  • Water Efficiency

Last year’s award winners included the condo corporations at South Kingsway Village, whose projects have set a framework for all condominiums to follow.   Details of their achievements are reported here and here.  

Nominations close on Friday, February 27.

In December 2008, the Premier of Ontario said that municipal property assessments issued last fall for the 2009-2012 tax years are "unrealistic" since resale values have significantly declined in recent months.  

Will there be a flood of objections and appeals in respect of these assessments? Time will tell, but seeing as how each condominium unit is treated as separate property for municipal tax assessment purposes, a large volume of appeals may be likely.   A 100-unit standard condominium could, for instance, give rise to 100 separate objections or appeals. With more than 5,000 condo corporations in the Greater Toronto Area alone, the number of appeals by condo unit owners alone could be astonishing.

In reality, obtaining expert representation to navigate the process and collecting the necessary market value data to use as evidence is not cheap. For that reason alone, most property owners do not appeal from their assessments.  

Continue Reading By-law needed for condos to appeal tax assessment of units

Bob Gardiner of our office has given the following quick summary of the nuts and bolts of the Home Renovation Tax Credit (“HRTC”) that was introduced as part of last week’s 2009 Federal Budget:

The HRTC will provide a 15% non-refundable tax credit to individuals for eligible expenditures in excess of $1,000 but not more than $10,000 made in respect of eligible dwellings. That will result in a maximum federal tax credit of $1,350 ($9,000 x 15%). The work must be performed between January 28, 2009 to January 31, 2010. The HRTC provides a single limit for each family consisting of an individual, spouse or common law partner and their children under age 18 throughout 2009.

An eligible dwelling consists of a person’s principal residence or the principal residence of one or more of the other family members. For condominiums and co-operative housing corporations, eligible expenditures will include the individual’s share of the cost of renovating common areas, in addition to costs to renovate the unit. Portions of a home used partly to earn business or rental income do not qualify, but the residential portion of a home can qualify for appropriate expenditures in respect of the personal-use areas. Expenditures made in respect of common areas or that benefit the housing unit as a whole such as re-shingling a roof, must be allocated between personal and income-earning use in order to determine the portion that qualifies for the credit.

The renovations must be of an enduring nature that are integral to the dwelling (or common elements), including expenditures for the cost of labour and professional services, building materials, fixtures, and equipment rentals and permits.  However, routine repairs and maintenance typically performed on an annual or more frequent basis are excluded expenditures, as are expenditures for appliances, audio-visual electronics and financing costs. Furniture, draperies and other indirect expenditures that have a value independent of the renovation (such as construction equipment and tools) do not qualify. Goods or services must be provided by a non-arm’s length person supported by receipts and GST charges.

Click here to see Frequently Asked Questions about the HRTC on Canada Revenue Agency’s website. 

Click the picture to the left to view details about the HRTC on the Budget 2009 website.