Legislative Assembly of Ontario

The House resumed at 8 o’clock, p.m.

LAND SPECULATION TAX ACT (CONTINUED)

Mr. Chairman: Order, please. When we rose at 6 o’clock we had two amendments to section 4(e) of the bill. The first one was placed by the hon. minister; the second which was read by Mrs. Campbell, we haven’t put before the House yet since it’s an entirely separate matter that’s being dealt with. I would propose that we deal with the minister’s amendment first of all.

The hon. member for Peel South.

Mr. R. D. Kennedy (Peel South): Mr. Chairman, just before we proceed, I would like to introduce to hon. members the members of the YPC from the riding of Peel North.

Mr. Chairman: We will deal then with the hon. minister’s amendment first of all.

The member for Waterloo North.

Mr. E. R. Good (Waterloo North): The implication of the minister’s amendment, I presume, is that if the designated property is a principal residence and the owner has a roomer or a boarder occupying part of that principal residence, the amendment could be interpreted that a portion of that property would be subject to tax even though it is basically a principal residence.

I personally don’t see the value in that type of amendment going in when under normal circumstances income from roomers or boarders is exempt, I think, under certain sections of the Income Tax Act. I think it’s perhaps catching certain properties which in no way can be construed to be speculative properties.

On the other hand, if the amendment also covers, say a person who has a 16-plex apartment building and he’s living in one of the apartments, this amendment is probably drawn so that the whole apartment would not be exempt as the principal residence of the transferor.

However, the way it is written I think that either case would be caught in the net of this amendment -- whether you are exempting only the apartment in a large apartment building occupied by the owner when the property is transferred, or whether you are exempting only the portion of a house which is occupied by the vendor or the transferor in relation to a couple of roomers or boarders as occupying part of the house.

That, to me, is getting pretty picayune when we are trying to fight against speculators. I don’t think a proprietor or a transferor who has a couple of roomers or boarders should be considered as a speculator in that sense of the word.

After the minister has replied to that I would like to say a word regarding the other amendment put by the member for St. George (Mrs. Campbell).

Hon. A. K. Meen (Minister of Revenue): My intention in this amendment has been to cover a case where an owner occupied part of a duplex or a triplex or one of his own suites in his apartment building, and to treat that portion of his investment differently as obviously exempt from the way in which the remainder of his investment property would be covered; and that came about because of our addition of the new section 20 which deals with investment properties.

It seems to me that this might, on the face of its wording, cover the case of a roomer or a boarder; but that had not been my intention. I’ve been thinking of this type of dwelling unit, that is where there are segmented portions and fragmented portions of a dwelling unit in terms of a room rented to someone who perhaps takes his breakfast and his dinner with the main household, in a very different sort of way from the apartment dweller, who in fact has his dwelling unit separate unto itself. It had not been my intention to cover the roomer or boarder situation.

Mr. Good: Mr. Chairman would the minister not think that section 20 will then apply to the remainder of an apartment building not occupied by the transferor? If it were a 16-plex and he occupies one, the other 15 apartments in the building would then fall under section 20, whereby they would be exempt from tax if they have been held the required length of time as shown under subsection (2) of section 20.

Hon. Mr. Meen: Yes, that’s so, Mr. Chairman.

Mr. Good: That would be so, but the interpretation of section 20, I don’t think would apply to one room in a house which has been occupied by a roomer in a private, principal dwelling of the transferor. Therefore he who is further down the ladder of speculation, if there be such a ladder or such a category, would be caught in the neck of this, clause (e) under your new amendment and I don’t think he should be; and I don’t think the minister thinks he should be. But I can’t see any way whereby he would not be caught.

Hon. Mr. Meen: Section 20, and we’ll get to that in due course, section 20 deals specifically with investment property, such as housing accommodations.

Mr. Good: Yes.

Hon. Mr. Meen: But it was necessary to add this at the end of clause (e) when we got to thinking in terms of investment properties in order to exempt from the definition of principal residence, areas that were contiguous to it and part of it, such as triplexes and the like, when the designation of a principal residence took place; and when for that matter a sale of the principal residence, which would undoubtedly in the circumstances include a sale of the other property, would take place at the same time. I suppose it is possible to deal off a portion of a duplex or triplex, but I don’t imagine that that’s too commonly done.

The hon. member I think is ad idem with myself on the undesirability of trying to fragment off and tax a room, a bedroom, for example, rented on a rooming basis by the week or month or whatever, from the general exemption provided for the principal residence. As I say that had not been my intention. I had not intended, as evidently he does not, to catch that up in the net.

Mr. Good: But it is caught, wouldn’t you say?

Hon. Mr. Meen: Well it is possible. But we can always have, and this is my view of this, interpretation statements, the way the federal people do under their Income Tax Act -- a statement of interpretation on the way in which they view certain of their sections for purposes of assessment of tax. Whether we did it by an amendment, and I don’t think that is necessary, or whether we did it by an interpretation for the benefit of the people who might think themselves otherwise potentially caught under this, I think I can tell the hon. members with confidence that it would be not my intention to try to catch them.

Mr. Good: Fine, well I’m satisfied with that, Mr. Chairman.

Speaking to the other --

Mr. Chairman: The second amendment is not before the committee.

Mr. Good: Oh, the second amendment is not before us? I’m sorry.

Mr. Chairman: No, we are just dealing with the one amendment placed by the minister. The member for Yorkview.

Mr. F. Young (Yorkview): Mr. Chairman, in respect to the definition of principal residence and the whole problem surrounding it, I had occasion the other evening to speak briefly with the minister about a communication which I received, and I gave him something of the gist of it. We didn’t have too much opportunity to discuss it in detail, but I’d like to present some of the excerpts from this letter to him and ask him for his advice in connection with it. I don’t think the intention of this Act was to catch the man who is trading one house for another, and who, in that transfer may be caught in the present dropping of the sales’ pace in the housing market.

If I may, I will quote from a constituent who says:

“My wife and I bought a house in 1968. Early this year we decided to purchase a larger home and signed an agreement of purchase and sale for a new home giving the builder a $10,000 deposit, with the transaction to close on July 26, 1974. Of course it was our intention to sell our present home and contribute all the net proceeds towards the purchase of our new home, and we have arranged a new mortgage for the balance. Essentially, it was a transfer of our equity from one house to another. Accordingly, we have offered our present home for sale, at first privately and now through an agent.

“Unfortunately, we now find ourselves in a precarious position. As you know, the real estate market in Metropolitan Toronto has experienced a turn about. We are having a great deal of difficulty in obtaining a purchaser, and assuming our house is sold it is almost certain that we will be obliged to let it go for a drastically reduced price. This in turn means that our mortgage on the new home, assuming that it can be increased from the present commitment, will be for considerably more than we can afford. In short, home ownership has been made a hardship for us, a result directly contrary to the spirit and intention of the proposed legislation. We are obviously not speculating, but we find ourselves now competing with certain speculators who are dumping properties on the market.

“Surely, then, the government owes some responsibility to persons like us who are inadvertently caught by its effect. I appreciate the provincial government alone cannot be blamed, as the interest rates available to mortgagees generally have played their part as well, but it does appear to me that the government must bear the same responsibility for our problem as it takes in credit for depressing the market. Therefore it appears to me that persons like ourselves, typical of many others, should be entitled to some measure of relief.”

And then he goes on to outline some measures which he feels could be taken by the government, and which I don’t want to take the time to quote here tonight. But he gives some suggestions of possible compensatory action, along with a cut-off date so that it could not be extended beyond a certain time limit.

In a situation like this, I believe that if the sale of their present home lags, and in order to get a fairly decent price the sale is delayed for two or three months, the feeling is that the sale might then be subject to the tax and these people are caught not only in the present bind but in a future bind on this tax.

And so I bring this situation to the attention of the minister. I don’t think the intention of the Act is that people like this should be penalized, but perhaps it does need some clarification for the benefit of those of us who may not be too clear on it.

Hon. Mr. Meen: Mr. Chairman, the hon. member for Yorkview did outline that case to me the other night, and I think I observed to him at that time that it crossed my mind that maybe his constituents were, in fact, speculators. They didn’t have a purchaser for their own home. They committed themselves on the purchase of a new home, with $10,000 down. They are committed to complete that purchase in July. They were speculating that they would get a suitable price for their own home.

I suppose it’s not foolish or stupid or unwise to speculate if you look at a market that has gone from this to this, to a higher and higher figure month after month, and almost literally year after year, with very few downturns before another upsurge has occurred. To extrapolate that curve one could say: “Well okay, by July, statistically, my property is going to be worth so much and if I sell it for that price, knock off the agent’s commission and the lawyer’s fee, I will have X thousand dollars left and that ought to be plenty to enable me to complete the purchase of the new home in July.”

The fact is they didn’t have a purchaser, and the fact also is that we have taken this step to change the slope of that curve, to hopefully flatten it. It is not my desire to drive it down, because I think that could have very deleterious effects in many quarters, as for example the mortgage market; but to simply flatten that curve can be a really desirable goal, and I think every member in this House recognizes the desirability of that goal.

The net result is that people like the constituents of the member for Yorkview simply didn’t find the buyers. If they have to take, to quote his constituent’s letter, “a drastically reduced price,” it is because either they overpriced their house in the first place, which may well have been the case. There was such a seller’s market until April 9 that seemingly you could ask almost anything for a house and get fairly close to it; in fact I heard of cases where people were offering more than was being asked, an incredible kind of situation but I know of one or two instances. They may well have overpriced their property or there may have been a combination of a high price on that property -- not necessarily overpricing, but a high price -- combined with a reduction in the number of purchasers who were prepared to go through with the deal.

I am told as of today, and I guess you can’t get much more current than that, that there seems to be a buyer’s market now for houses where there wasn’t one before. If that be so, then it may be that they will have to hold onto this house of theirs for a while.

I would think, in the circumstances outlined by the member for Yorkview, that what they might find appropriate would be to refinance -- whether long term or short term would be up to them and the wisdom of their advisers -- but to refinance to obtain the necessary moneys to complete their purchase. Otherwise they will forfeit their $10,000 which they have put down, which is a very large down payment. I am surprised that it would be that much with a deal that doesn’t close until the end of June. But be that as it may, they are committed and they could be sued in specific performance to complete their purchase for the monetary amount required to be advanced on closing.

They might well be able to find those further moneys out of a refinancing of their existing home and then hold onto it for some time.

Now in this section we do get into the question of principal residence, and although members have mentioned to me that we don’t spell this out, and there has already been the mention made of a transition, say a 10-day lapse between the completion of one purchase and the subsequent occupancy following the sale of an existing home. I would anticipate that under our regulations we can have a period of some months to cover a transition from one principal residence to another, which would take care of the problem raised by, I believe the member for Lakeshore (Mr. Lawlor) when we were on the subject at 6. It would look after that overlap, be it an overlap one way or a potential hiatus in the other direction, and would also look after, at least to a limited degree, the problem raised by the member for Yorkview in the definition of what constitutes principal residence and therefore the amount of moneys that can be recovered, or for that matter the base from which a rental rate might begin if his constituents decided after X number of months had elapsed to, instead of selling, hold on and rent the property for a term of years and recover some money on it and then take advantage of section 20 of the Act with respect to rental accommodation.

So, one way or the other, hopefully they won’t have been hurt. But I suppose it is almost inevitable that when one introduces new legislation like this there are going to be some people caught during that transition period with the rules being changed just a little bit, and for that matter with the market reacting and changing substantially too. We had both of those happen, and I think the member for Yorkview has illustrated the potential problems that can come up with some people who have been speculating up to the announcement on April 9.

Mr. Young: Mr. Chairman, certainly I think there is no question that all of us would very much like to see this matter of housing speculation curbed, and not only see the prices flattened out but get back somewhere near what they ought to be. I am a little puzzled at the minister’s statement that people like this may be asking too much for their houses and because of this they are speculators. The house these people bought was a certain price and they are committed to that; they are asking, I suppose, a comparable price for the other house which they are hoping to vacate. The relationship, likely, is fairly constant. The unfortunate thing is --

Hon. Mr. Meen: Not necessarily. If I may interject at this moment?

Mr. Young: Yes.

Hon. Mr. Meen: In the one case you have a willing builder and you have a willing purchaser. You have a contract; you have a contract there that demonstrates or illustrates that price. In the other case, all you have is an agent who has convinced them they should ask so much for it. They have not found a willing purchaser so you don’t have both sides of the contract at the other end of that scale.

Mr. Young: Except that but for the introduction of this legislation, they would have had that willing purchaser. The people went ahead and bought on the assumption that the willing purchaser would be there but the circumstances changed.

I fail to see that there is very much speculation in this unless the person was thinking in terms of buying a more expensive house and therefore increasing his equity in property. That might well be but in the case of changing houses in this way, it seems to me that, short of the change which took place by the introduction of the legislation, this deal would have gone through. There would have been the willing purchaser and buyer in both cases and the man would have made the transfer in a peaceable and orderly sort of way. But this is the problem.

If, as a matter of fact, the time could be stipulated, a matter of months, in which a transaction like this could take place, I think that problem would be solved. If this can be done, I think that a problem such as is faced by this constituent, and certainly must be faced by many others as well in this area particularly, does have a solution. We hope that will be worked out.

Mr. Chairman: The member for Lakeshore.

Mr. P. D. Lawlor (Lakeshore): Mr. Chairman, the legislation in question becomes more hilarious by the hour. I would make a note of that particular Hansard and send it to those constituents to inform them of their new high position as designated by the minister, of being speculators in this particular context. Really, Mr. Minister, it’s simply not so.

When you are dealing with land and you are going to buy a new house for yourself, either you are going to have to sell your own first and buy the other later or, if the other that you want comes on the market, you have to make that choice. That doesn’t involve you necessarily in any speculation -- there could be elements, true, but one is switching over. What you haven’t provided in your legislation are rollover provisions of this kind.

Maybe, thank heavens, you haven’t because I can imagine what the convoluted clause of that particular kind, would look like on the page, can’t you, against the simple stuff you have managed to make so intricate already? that particular kind would look like on the anything that tough would really be beyond the human brain to begin to penetrate.

Can you do this by way of regulation? You have seen a hiatus in your legislation. A great wrong can be committed on people who have bought already and then got hung up because the place they are selling is no longer their principal residence by some abstruse or even by some very determinate construction on the legislation. Therefore they are going to get the 50 per cent tax situation.

You don’t want that, I don’t want that and nobody wants that. You sit over there saying, “I’ll rectify that particular piece of viciousness by regulation.” Regulation is not the way in which you do these things. That should be embodied in your statute. Under any normal condition or stretch of the imagination, you would simply insist it would be embodied in the statute. You know that as well as I do in this context.

Why don’t you insert it and say that if properties are bought and sold within a six-month, eight-month or one-year period, the property being abandoned being the principal residence, and the property being substituted being the substituted principal residence, no tax will apply in that contingency?

I think you should get it in here. You are going to send the whole legal profession and anybody dealing with land off on a wild goose chase trying to disinter those wretched things. And let’s have no games about it. You know how difficult it is to dig out these regulations, to find which one is applicable. The whole mess becomes very sticky, indeed, and with no necessity for it.

If you don’t do it today you will be back next fall when this House meets again, I predict, with an amendment to your legislation, holding your hand over your heart and saying, “Well, we told you that multiform and multitudinous new amendments would be and must be necessarily forthcoming. We already proved it to you before we even introduced the bill. And after we introduced the bill, we introduced 26 of them.” And by next fall, I suspect you will have 26 more to add to your laurels and to place as a laureate across your chest.

We pointed out the effects. Why don’t you amend the legislation before it’s finished in this House and get that particular loophole closed because it does and is going to afflict many people? If you and I have to advise clientele on all this -- and you are saved from doing that these days, having been lifted by your own petard to the lofty position in which you sit today --

Mr. R. F. Nixon (Leader of the Opposition): Hoisted.

Mr. M. Cassidy (Ottawa Centre): Sort of a sky hook I would have thought.

Mr. Lawlor: But how about the rest of us who do have to advise the people engaged in matters of buying and selling in Ontario? Having extracted yourself from that particular thing, you think you can save yourself the embarrassment by cooping yourself up in here hour after hour? Well, I would have you reconsider your position in this. That’s too substantive a matter to be left to mere regulations and you know it and I would ask you to alter your legislation accordingly.

As to the long subclause that you’ve inserted in here, I suppose we could only argue that, and I propose to do so, Mr. Chairman, in conjunction with the new section 20 of this bill. Like everything else in the Act, it’s so interleaved and interrelated that you could either do it here or later. That has to do with the tenants living on the property as their principal residence. And, really, that section should have been moved forward in the Act, closer to this particular position so they may have been argued in conjunction. But the bill being amended and devised, actually being created, so to speak, as we go along, from moment to moment, the image changes. It’s what William Blake in his most demented moments would have called a phantasmagoria. This bill is a marvellous mythological construction. But there it is.

May I have a ruling on that, as to where you want to discuss this business of --

Mr. Chairman: Section 20.

Mr. Lawlor: -- principal residences for tenants and investment property because it directly affects that amendment?

Mr. Chairman: It is my understanding it comes under section 20, is it not?

Hon. Mr. Meen: Yes, Mr. Chairman.

Mr. Chairman: So it can wait until then. Shall this motion as proposed by the minister carry?

Mr. J. R. Breithaupt (Kitchener): Mr. Chairman, at this point are you about to deal as well with the amendment put by the member for St. George?

Mr. Chairman: No. I will place it --

Mr. Breithaupt: This is solely with respect to the addition of the words that are underlined in the subsection?

Mr. Chairman: That’s right.

Mr. Good: Before this section is voted on, could I ask the minister for a comment? It’s been dealt with by the member for Yorkview -- about a person owning two homes and only one would be a principal residence.

Could the minister comment on the situation where a person is having a new home built, probably on land which he already has owned? At what point in time would he have to dispose of his present residence before he would be considered to have two principal residences, which he cannot have?

Hon. Mr. Meen: That’s correct. Mr. Chairman, a taxpayer can’t have two principal places of residence.

Mr. Good: No.

Hon. Mr. Meen: When he literally moves himself, his family and their wares or their chattels from the one home, the existing home, to the new home, that would be the time of the change of his principal residence.

Now, we would then, as I indicated to the hon. member for Waterloo North earlier, have a period of time, which I would anticipate being allowable by regulation, within which to dispose of the previous house to acquire the proceeds without attraction of tax.

However, it’s the physical move that in my opinion changes the place of principal residence. And I don’t think there should be any difficulty determining that.

What is difficult is determining the period of time within which one should be allowed to hold on to his existing property, sans sale, before he is put in a category of an investor who is keeping it for rental income, or the speculator who is holding on to it hoping to achieve a better price than he can get today. He is hoping that maybe not in May, 1974, but by September, 1974, prices will have recovered and he may want to hold on to it.

Should we countenance that as subject to no tax or should we say to him, “Look, you are speculating and are going to pay a speculation tax on the increment in value, when you achieve it, between today’s value, in the figurative sense, and tomorrow’s value, when eventually you sell it”? That is the difficulty. We don’t want to do hurt to these people who are caught in this transitional period, but we have to recognize that there are some who are genuinely speculating today.

With all respect, I suggest to the member for Yorkview that in the instance he gave, regardless of his view on this, my own may be a little different, and I think it is possible because in that case his constituent had a contract with a fixed price established today for a purchase to be completed on July 1.

There is no speculation with respect to an increment from May 21 or whatever, to July 1, because the price is established today, but he has also got his present house listed based on some value not confirmed by anything; that may well reflect in his mind what he thought he could get for it, not today, but some time between now and July 1. So there is an element of speculation, even though based on what had happened in the months and years previously, it wasn’t unintelligent speculation.

Speculation doesn’t have to be stupid to be speculation; it can be very intelligent and clever speculation, and I think that’s what that kind of thing could well be. You know, should he hold on to it or shouldn’t he? I think that is up to him to decide, and it is a period of time we will have to look at to determine whether he should be subject to the tax or not.

Mr. Chairman: The member for Prince Edward-Lennox.

Mr. J. A. Taylor (Prince Edward-Lennox): I would like the minister to clarify the situation where you have two families occupying the one home. We have read over the years, especially in relationship to the enforcing of single family bylaws, of situations where you have more than one family in a home.

I presume, by reading this section, that the house then would have to be divided and you would have to determine a relationship of the area occupied by each member of the family and then presumably the owner or the resident would be deemed to be a speculator insofar as the portion that he was renting?

Hon. Mr. Meen: No, not quite, Mr. Chairman. I agree with the member part way that this section would cover that situation, but he would not be deemed a speculator, he would be deemed an investor and that would be rental income and he would be subject to the other provisions of section 20 of the Act. If you have two families living unto themselves within separately identifiable accommodation within one building, then it would be possible and proper to segregate them for the application of the tax, in the one case as an investment; in the other case, since it is the owner of the property, that’s his home, then he would fall under subsection (e) and not be subject to tax.

Mr. Taylor: He pays less in that case then? Being an investor he pays less?

Hon. Mr. Meen: As an investor he is subject to the provisions of section 20. It would depend on when he sold.

Mr. Lawlor: Depending on the amount of time he holds it.

Mr. Taylor: But he is still paying under that though?

Hon. Mr. Meen: That’s if he holds it for 10 years.

Mr. Chairman: Shall this motion carry?

Mr. J. E. Bullbrook (Sarnia): I want to make just a few general comments, which are in the nature of hanging on to the comments of the member for Lakeshore.

Before putting my comments on the record I want to, at the first opportunity, as we say, convey my appreciation to the minister in connection with the amendment to section 3 that I believe, and I believe my colleagues believe, suffices to respond to the criticism that I made last week.

The problem, though, that continues in connection with this statute -- notwithstanding your integrity of purpose with respect to those people whom you, as Victor Borge would say, constitute speculators -- is that this business of regulation and subjectivity of interpretation in connection with the implications of the tax still causes me concern.

I hearken back to section 3 and to the comments made by the member for Lakeshore. You see, the problem we still have with respect to those people who act in a fiduciary capacity and their obligation to transmit the tax is whether they know that the tax is payable or not.

I want to say to you very shortly, succinctly and directly, that to answer criticism by saying that we will pass regulations which will be more specific in their intent, more directed, and that we will be liberal in our interpretation of the obligations of the taxpayer, puts in a very difficult position those people who have an obligation to the treasury to remit the tax.

I also want to say this to you, if I may: I, for one, would feel that the average person who has an obligation to remit the tax under this statute, having regard to the impact of the section, would hasten to look out those sections that would afford an exemption. And I think there are many of them.

I’ve come into the debate late. I’m not fully aware of what went on this afternoon; for that I apologize, and I’m not going to take time. I’m very interested in the bill, as the hon. members know. I think I have conveyed that to the minister through you, Mr. Chairman.

Before we divide on this -- and we will divide, because of the obvious problems resulting from the amendment put forward by my colleague from St. George -- I want to say -- that the answer to the member for Lakeshore, that we will pass regulations and take a very beneficent attitude in connection with the imposition of this tax, doesn’t suffice. There are too many obligations.

This tax is a peculiar tax. This is a tax where, for the first time in connection with progressive taxation, we are putting an obligation on secondary people to pay a tax. And when you do that to people you had better be very explicit and precise. The minister should tell them exactly what is their obligation.

Tomorrow -- and it is probably more premature than any birth that one can think of -- there will be a seminar of the Canadian Bar Association to evaluate the impact of this tax. They are going to find themselves in a very difficult position, because I can assure you that at 20 minutes to 9 they are going to find themselves evaluating four sections of this bill, because we won’t be beyond four sections, of which four subsections have been stood down. I think it’s an anomalous situation, almost bordering on tomfoolery, for the Canadian Bar Association to presume they are going to evaluate this type of tax.

It is indeed unfortunate, Mr. Chairman, that this whole bill was not resolved into the justice committee or the appropriate standing committee of the Legislature so we could really, in the vernacular, hack it out and see what the lawyers and the accountants felt about it.

I just want to say this, if I may: I came in again today from my riding, and I came in with this message for the minister, that again, we say to you and your colleague, the Treasurer (Mr. White) that we --

Mr. Cassidy: He has been working on it all the way up on the train.

Mr. Bullbrook: I am sorry. What was that?

Mr. Cassidy: The hon. member for Sarnia worked oil it all the way up, this message to the minister.

Mr. Lawlor: Sounds like a message for Garcia.

Mr. Bullbrook: I don’t follow what the member for Ottawa Centre is saying.

An hon. member: He flew.

Mr. Bullbrook: Normally I don’t pay any attention to him -- very few of us do here -- because he is so laden with partisan choler that it really makes a mockery of what goes on in the Legislature. It is an unfortunate circumstance that every time he gets up on this bill he has to refer to the Liberals’ flip-flop. Really, there is no flip-flop.

Mr. Lawlor: You heard about that?

Mr. Cassidy: You heard about that? I thought you said you didn’t listen.

Mr. Bullbrook: As you know there is no flip-flop.

Mr. Cassidy: There certainly is.

Mr. Bullbrook: I act as no apologist, but let me say for a moment that we voted as a matter of principle that this bill was good legislation.

Mr. Cassidy: That isn’t the truth.

Mr. Bullbrook: Isn’t it a sad commentary, having regard to what we have attempted to do. The minister recognizes this. We’ve attempted to evaluate each section, each subsection, to recognize the principles concurrent with them and the practical applications of them. We’ve attempted to assist the minister. Not only have we attempted to assist the minister, he has been good enough to recognize that we have assisted him.

I for one have gone on at length about the plight of the farmers under this legislation. I would hope we are going to have some amendments very shortly in connection with that. We have talked about the implications of the obligations of the fiduciary capacity in connection with this, and you have made an amendment with respect to that. I don’t think there is any partisan equation with a bill like this. I think it has such general impact that we should all get together and really, without regard to whether we are Conservatives or NDP or Liberals, say we have got to do our best for what is in the best interests of the people of Ontario. It is indeed unfortunate that the member for Ottawa Centre -- I think it is; I am not sure I will ever be acquainted with his riding -- always must intrude that partisan bite which does nobody any good.

Mr. Cassidy: That’s so broadminded. You are flip-flopping; you are backing and filling all the way.

Mr. Bullbrook: I close by saying this to you. What causes great concern, Mr. Minister, through the Chairman, is --

Interjections by hon. members.

Mr. Chairman: Order, please.

Mr. Bullbrook: -- is the fact that we worry about the obligation on the tax collector. If, as normally is the situation with progressive taxation of this nature where it is not obviously defined -- such as the Income Tax Act of Canada and such as your Corporations Tax Act -- you were the taxation collector totally I wouldn’t worry about this. I really worry continuously and continually about the obligation on the individual to collect this tax for you.

I say to you, notwithstanding your purposeful amendment this afternoon which really attempted to come to grips with it and has done so to a great extent, you render still an obligation on the individual who must collect this tax to make an evaluation that is unduly subjective, having regard to your own admission to the member for Lakeshore that your interpretation will be a very subjective one.

Mr. Chairman: May I point out to the member for Sarnia, who has just arrived that the amendment which is proposed by the member for St. George is not before the House? I haven’t placed it yet.

Mr. Bullbrook: I am sorry. I apologize for that. I think, though all members recognize that it is the intention that such an amendment will be placed.

Mr. Chairman: Yes; I will do that as soon as we dispose of this.

Hon. Mr. Meen: Actually, Mr. Chairman, I was treating the member’s comments in that context because we heard the gist of it before 6 o’clock. We will get to the gist of that one in detail in a moment, I suppose.

Perhaps I can observe that it would be nice if we could roll everything out with precise definitions based on years of experience and the like but, as the member for Sarnia himself has conceded, this is new legislation and we are going to have to go, as we work our way through this, on me experience we gain.

It doesn’t come instantly. We cannot be instant experts. I am the first to concede that none of us over here is an expert on a tax on land speculation gains and I do welcome the assistance, particularly from the Liberal benches, and their constructive comments. I have had some constructive assistance also from the NDP.

Mr. Cassidy: Don’t you wonder at their backing and filling, though?

Mr. Lawlor: We find it particularly difficult to do that.

Hon. Mr. Meen: I think people have to realize that there comes a point when having reduced this Act to writing and into a form with which I am confident and a form which we know will work, we simply should try to make it work at this stage and gain some experience. It might be, to say nothing of next fall, that if I saw some clearly and patently obvious deficiencies --

Mr. Lawlor: Not next week.

Hon. Mr. Meen: -- we would have some kind of change. I would not be above introducing something by way of an amending bill as promptly as that if I saw fit --

Mr. Lawlor: You will.

Hon. Mr. Meen: -- and if it were so clearly prejudicial to the people of this province.

Mr. Lawlor: It’s a mess.

Hon. Mr. Meen: For the present time, I do not feel that such is necessary. I also feel bound to point out to the members that the Income Tax Act of Canada has no regulations and the federal government has been going for 10 years now under that current Act. It has been in existence for about 10 years with no regulations at all and the federal people have done everything by interpretation. They have one statement, I’m advised, dealing with principal residence, that itself is some 10 pages long. Now, if that be the case I’m sure the hon. members -- and I’m grateful to the member for Sarnia for indicating his agreement with us -- it is patent to me and I’m sure to others who would reflect on this, that one just can’t crib from that set of interpretations or from their Act or, indeed, from any of our own, and come up with something that is going to be bang-on and exactly what we want in the form of legislation. I’d love to do that if we could, but we can’t.

Now the feds have found that they don’t even do it by regulation; they do it by notices of interpretation, which don’t hold any kind of status in the courts, but they are there for the guidance of the taxpayers. At least they have an idea of what the tax rulings may be before they get to court; to say nothing, of course, of what would be the case by way of interpretation.

I think the members have to recognize that we are in essentially the same position here, where we will in the near future be issuing some regulations that will touch on these. On reflection, I should add that in my reference to regulations, I was talking only of course about the specific regulation, of what constitutes a principal residence. In the federal Act there are lots of those -- lots of regulations generally -- but none touching on principal residence. They have only used their interpretation for some 10 pages of interpretation as to what constitutes a principal residence.

But we will be, I presume -- and it would be my intention -- acting more along the lines of regulation than by way of interpretation. But I can imagine that I will also be issuing statements of interpretation as to the way in which my ministry would treat certain of these sections, for the guidance of taxpayers and tax counsellors, lawyers, accountants and so on. And for the next while we will, have to do it this way and see how the Act pans out.”

To repeat -- and to come back to my opener, Mr. Chairman, I don’t want to repeat -- but I would simply say that if it becomes apparent to me and my colleagues that some change in the statute has to be made then I will be the first to say let’s do it, if such is necessary. I’m not hidebound to the Act as it will pass on the order paper into law, if it should turn out that an actual amendment to the Act is required.

Mr. Chairman: Shall this motion carry?

Mr. Bullbrook: No, I want to say something -- not to drag on the debate, but I want to say this: I feel an obligation to put on the record my thoughts, because I think this will go down as probably the most inoperable, the most inefficacious piece of taxation legislation that we have considered in this House. I don’t think there is any doubt that the government will rue the day that they permitted, because of their majority, this type of legislation to pass. So I want to record this.

I agree with what the minister has said, except that he doesn’t seem to want to talk about the essential responsibilities of this statute. Everything that he says with respect to the question of the quality of interpretation of the Income Tax Act of Canada is quite correct. But no one has an obligation to pay that tax except the taxpayer. No one has an obligation to collect that tax except the Minister of Revenue of Her Majesty the Queen in right of Canada. And that’s the essential distinction in this statute that we seem to close our eyes to.

You collaterally put an obligation on a third person to collect your tax for you, and this is a completely new concept with respect to this type of taxation -- a completely new concept. If it isn’t, then I want somebody to tell me. I don’t mind the vendor at a gasoline station collecting the percentage of retail sales or gasoline tax that is his responsibility. There is nothing of a subjective evaluation; there is a completely objective set of standards to which he is put in connection with the collection of that tax.

But here you have -- notwithstanding your liberality this afternoon with respect to the amendment to section 3 -- you’ve got an obligation on another person to collect the tax for you.

Hon. Mr. Meen: Who?

Mr. Bullbrook: Pardon me?

Hon. Mr. Meen: Who would that be?

Mr. Bullbrook: The person in the fiduciary capacity. Your amendment in effect, as I understood it as a result of our conversation, was -- and correct me if I’m wrong -- he only has that obligation where he knowingly recognizes an obligation to pay the tax. Now that really does, to a great extent, subvert my objection.

Hon. Mr. Meen: No.

Mr. Bullbrook: I am sorry. I would like you to explain that to me.

Hon. Mr. Meen: Well, with all respect, I think the member for Sarnia would agree that a trustee, an executor, an administrator or a solicitor acting for any of those, is really acting in the shoes of the transferor. You can’t say he is a different person in that sense. He acquires that obligation to pay because of that particular status which he occupies vis-à-vis the estate of the vendor, be it an estate or be it the vendor himself having a solicitor act for him. One way or the other, he is acting for him. He is still standing in the shoes of the vendor, and I think the hon. member for Sarnia would agree that that’s not exactly the same as imposing a burden on a third party. He is really acting on behalf of the person primarily responsible for the payment of the tax.

Mr. Bullbrook: Well, I’ll tell you, I mustn’t prolong this; it would be untoward of me to do so. May I say this to you? I analogize the capital gains tax. There is no obligation on a person other than the taxpayer to pay that tax, none whatever; he has the right to adjudicate the question of interpretation of the statute with the taxing authority. This is a different ball game.

This statute is a completely different ball game, because you do put an obligation on those people, and you use the word knowingly, albeit that’s well done. A very, very significant amendment, I think. But you still have the obligation on that person acting in that fiduciary capacity, and let’s forget about executors or administrators. They are in a much less tenuous position than solicitors are. But they are going to have to make that evaluation as to whether the tax should be paid I want to record again my objection to the principle of putting a third person under the obligation of collecting the tax for you^ And I say that in the context of the amendment that is going to be put forward.

Mr. Chairman: Shall this motion carry?

Mr. Lawlor: What’s the amendment again?

Hon. Mr. Meen: The underlined section.

Mr. Lawlor: Oh, that! I thought we were getting the --

Mr. Chairman: This is the minister’s amendment. Does this carry?

Mr. Lawlor: This is the minister’s amendment, right?

Mr. Chairman: The minister’s amendment only.

Motion agreed to.

Mr. Chairman: Right. Now, I’ll place the motion as proposed by the member for St. George this afternoon.

Mrs. Campbell moves that subsection (e) of section be amended by adding after the word “dependents” in the fourth line thereof, the following: “or by a person resident in a hospital, a nursing home, a senior citizens’ residence, or any other institution under the Charitable Institutions Act.”

The member for Waterloo North.

Mr. Good: Mr. Chairman, thank you. One of the purposes of this section, of course, is to exempt the principal residence of a transferor, so that when a property is sold which is the principal residence, it is not subject to the tax and is not designated land.

Now, in our opinion and in the opinion of the member for St. George, there are certain persons who, through no fault of their own but because of circumstances, can no longer retain their principal residence. They are forced from their principal residence by sickness, by old age, or by some other means, and must take occupancy in a hospital or a nursing home or an institution of one sort or another.

To many of these people, their last hope of independence is that they might return to what was formerly their principal residence. But, because of the definitions usually associated with principal residence, persons who have spent a considerable length of time in a nursing home or an institution, must then regard that as their principal residence, and are so designated. Old age pensions will come to that place and all dealings with government are associated with them at that particular institution or nursing home.

Now, many people in their later years want to, retain their principal residence for two purposes. First, the thought in their mind that some day they will be well enough to return to that principal residence, and they don’t want to sell it right away. Secondly, they need it to produce a little bit of income to pay their way while they are in an institution. These arguments were put forth very effectively this afternoon by all those who spoke on it, and I think the minister must surely agree that a person who cannot, because of sickness or old age, live in his or her principal residence, should not be subject to a tax which is designed for speculators. In no way should the former principal residence of a patient in a nursing home or senior citizens’ home be associated with a person who is buying and selling property for speculation.

Now whether the wording of the amendment is clear to the minister or not I do not know, but the intent is simply this -- that the last principal residence of a person who is now a resident of a senior citizens’ home or nursing home, or any institution under the Charitable Institutions Act, from which they moved, probably should be exempt from taxation under this statute. I think the principle of the amendment is very simple. It is understood by all, and I am sure has the sympathy of all persons within this Legislature, and I hope that the minister will accept it either in its present form or in a wording more suitable to him if necessary.

Mr. Chairman: The member for Kitchener.

Mr. Breithaupt: Mr. Chairman, this amendment was initially put in the previous subsection. The minister found it was not acceptable at that point when we had chosen to amend the matter of principal residence in the circumstance where that was an exemption to what otherwise might have been designated property under subsection (d) of section 2.

The member for St. George, in placing that amendment, had spoken to it, as had various others of us, on that particular subject. Now, as we are dealing with subsection (e) of section 2, the member for Waterloo North has placed the points which we believe are worthy of consideration of the minister at this time.

I don’t think there is any particular point in reviewing the debate which we had this afternoon on the earlier matter. It was reviewed by the minister at that point and we came, I think, to the conclusion that the minister felt this kind of an amendment, at least under subsection (d) of section 2, was inappropriate.

Now, however, as we look at the positioning of this item in subsection (e) with respect to principal residence, I think the amendment is perhaps better placed. We thought this afternoon that there might have been a better purpose in withdrawing the amendment from subsection (d) and placing it when subsection (e) was before the House. However, we persevered at that point and the minister chose not to accept that amendment. Now the amendment has been placed at, I think, perhaps a happier position within the statute.

It is clear, as the member for Waterloo North has said, that the particular reason behind this amendment is to ensure that someone who has left what would otherwise be a principal residence for reasons of health or age and might indeed hope to return, should not be penalized by the accretion of this tax to a situation wherein that residence would have to be sold or otherwise disposed of. Certainly under this subsection, the matter of principal residence and the ordinary habitation by the owner or family is the time when this amendment could be perhaps more happily placed than heretofore.

The amendment which we have chosen to place deals solely with those persons who, for reason of age or illness, have had to absent themselves from a principal residence for a period of time. We went through the matter this afternoon in which we discussed the situation whereby a person might be placed in hospital briefly or might then go into a home for extended care, or possibly even go and live, as the result of a trip or because of necessity, with relatives for a period of time because of the need to have certain special things done for that person.

But surely in the background of that person’s mind is the hope of returning to one’s home, and the hope of at least having that as a base for future living and for future operations.

I am sure that all of us, as we approach the situation wherein we might some day have to leave our home for reasons of health or reasons of choice, perhaps, I would want to be sure that we at least had this alternative to which we could return. In this circumstance, the amendment which we propose has given additional exemption to a person who, by reason of age or illness, has to leave what would otherwise be a principal residence.

We do not think that this exemption is a difficult administrative problem. Surely it is within the competence of the ministry by regulation and by definition to accept this kind of amendment with the goodwill that we all hope it would receive.

Now when we referred in the earlier clause (d) to the matter of a tourist resort, the minister was of the opinion that while present definitions were, perhaps, somewhat incomplete, he would be able by regulation and by the powers given unto him under the regulations which appear on the next to last page of the bill -- that is in clause (a) or subsection (2) of section 22 -- to come up with the kind of definitions and balance that would be valid and acceptable within this bill.

We put it to the minister at this point that he should make the same consideration here. The amendment which has been proposed by the member for St. George is, I think, acceptable because it attempts to relieve older persons who may not be entirely well but still hope to return to their home, of the additional psychological burden that there may be some concern that they would have about dealing with their home.

The member for Downsview (Mr. Singer) raised this afternoon the matter as to how this would come up in a situation wherein the Public Trustee may be concerned if a person is not able, because of health, to deal with his or her own estate or make plans for his or her own future -- and of course the Public Trustee could well be involved.

If there is the matter of a commital to a charitable institution, or indeed to an Ontario home or hospital, then of course the Public Trustee has to be in a position to deal with certain properties. It could be that because of the lack of income to maintain a property that the Public Trustee may have to deal with this property himself. It would certainly be a sad thing if the sale of that property, which may be the only major asset of an estate, was subject to this kind of a tax.

Surely, it is not the intention of the minister, of the officials of his ministry or, indeed, of any member of this House to think that we would attempt, on the basis of a speculation tax, to deal with a major asset of a person who by reason of age or illness or infirmity had this as the only major asset of his or her estate. I am certain that the minister would not want this to be the case and I suggest the placing of this amendment in the statute now would relieve persons of that obligation. It also would relieve their family members or, indeed, the Public Trustee, himself, of the concern and burden of having to deal with this kind of a tax burden on what would be an asset of a person who could not deal with his or her own affairs as they may wish to do.

I hope that the minister will find that this amendment placed here will be acceptable because we think that it would strengthen the bill and that it would bring a great measure of relief to those persons who would otherwise be concerned that this kind of a situation could arise.

We all know that there could be a matter of question as to what would be a person’s principal residence when the matters of health raise themselves or when the matters of illness raise themselves so that a person might spend some time in hospital or a year or so in a home for the aged or under some programme for extended care.

We think that this kind of an amendment would be a great relief, and really remove a burden of concern, from a goodly number of our senior citizens. I think that it would be worthwhile, on the minister’s part, to accept this amendment, if we are to accept the view that we are not after a taxation burden on what would otherwise be a principal residence. Of course it’s a matter of definition, and of course there may be some persons, who are temporarily or otherwise resident in the hospitals or nursing homes, to which this amendment refers.

I hope the minister will consider this amendment, and we would most sincerely ask him to accept it on the terms that it is offered. Throughout this bill, and we’ve now debated it for some 20 hours, we in the Liberal Party have attempted, by the amendments we have made, to make it a better bill. And I am firmly convinced that this kind of an amendment that we place here would be in the best interests of many of our citizens. I think that we have a responsibility in this kind of a taxation statute to attempt to improve upon it. The bill, as it has been written, has received substantial amendments, and I think the minister is to be congratulated on accepting the amendments that we and the members of the New Democratic Party have offered in good faith, because we want the statute to work if the principle of the statute is one that should be worthy of support.

I would accept the views of the minister if he cannot fit this amendment into the section now, but I hope that he could see his way clear to deal with it at this point, rather than refer us, once again, to the matter of regulations.

We feel, on this side of the House, that the bill must be as all-inclusive as possible, and that there must be as little left to the dealing of regulations as can be done. We think that taxation statutes must be clear, and that they must have all of their attributes clearly spelled out in legislation, so that the matter of regulation is as little imposed upon the average citizen as we can possibly hope for.

The amendment has been placed and I hope that the minister will refer to it and consider it, and that it will find acceptance within the chamber. Because we think that this kind of an amendment, in this particular circumstance, will be one which will be of benefit to many of our citizens.

Hon. Mr. Meen: Mr. Chairman, I think this is one of these instances where I would dearly love to say yes, because I think we all feel that this is an area in which one could improve the whole picture. Certainly, our senior citizens are not those who speculate. I think we all recognize that people speculate in their younger years, but in their older years they hold on to their securities for their retirement years.

And yet my advisers tell me that the amendment, in the form in which it’s been submitted -- and the hon. member for St. George didn’t give me a copy of it -- they tell me that it does not fit into this section as it stands. And the hon. member for Sarnia is nodding his head in agreement on that. Now, the difficulty is --

Mr. Bullbrook: I’m sorry. You said does not fit into the section?

Hon. Mr. Meen: Does not fit into the section.

Mr. Bullbrook: I think it could. Maybe the wording could be improved. I’m sorry.

Hon. Mr. Meen: That’s possible, but the fact remains that as it stands -- and I have to go on the amendment as submitted -- it does not suit. I guess one of our major problems in this section is the definition of what constitutes “principal residence.” And the member for Kitchener himself indicated that this was, and I quote him: “It is, of course, a matter of definition.” Definition of what constitutes “principal residence.”

Mr. Bullbrook: Right.

Hon. Mr. Meen: And in the course of working this through, I can tell the hon. members I will have this matter at the foremost of my mind when considering the definition for “principal residence.” I think there should be, as the members have indicated, some provision for a carry-through, a feed-through or whatever one would term circumstances like this. I would not want to think that there an elderly person vacates his home to enter a nursing home or a home of a relative or a hospital or whatever, perhaps -- and I recognize that my own parents, if they went into a nursing home, would look forward to the day when they might get back out again; or if they went into the hospital, when they would be back again. One would not want to have them faced with the -- and I don’t suppose it’s completely imaginary -- but certainly with the apparition that somehow or other they were going to be mistreated from a tax standpoint.

Now, the tax -- remember, I emphasize this -- only is attracted on a sale, so that this kind of tax does not fall in and become payable simply because the owner of the property vacates the premises and goes to live somewhere else. He isn’t going to have to sell the property --

Mr. Bullbrook: We understood that.

Mr. Good: We understand that.

Mr. Bullbrook: You don’t have to comment on that, really.

Hon. Mr. Meen: The hon. members opposite indicated in some of their earlier discussions, I observed to the member for Sarnia -- in fact, it was the member for Kitchener, I think, who suggested that you might have to sell the property to pay the tax. Well, that’s not the case. You don’t have to sell the property; you could hold it as an investment.

But the point is, I think, at what stage does a property that is not being occupied by the owner cease to become the owner’s principal place of residence and become investment property? At what stage do you cut off one and start the next? And I think my ministry and I have to address ourselves to this question in the course of our defining principal residence to determine when one begins and ends and, therefore, at what stage or other should this sort of provision take effect?

Now to wrap it up, what I am saying is that the amendment as proposed I can’t accept; though certainly I am in sympathy with its principle and I think that, as the member for Kitchener himself said that this is within my competence as minister to define by regulation. I will. I will be looking at this. And I think that it can be taken care of adequately by a suitable definition in the regulations.

Mr. Breithaupt: As I said at one point, in finishing through the review that the minister has made about mv remarks, the situation with respect to having to deal with this property for taxation purposes was not meant to relate to this tax bill. I was rather suggesting that the Public Trustee or some executor or guardian might have to deal with the property simply for the ordinary payment of municipal taxation, or because there were simply not moneys available to do necessary repairs. This was the point that I had made. I realize that the minister has certainly the power within the making of regulations to deal with this continuous problem that we all acknowledge is something that we don’t want to accept; that is, the situation whereby persons who because of their age or who because of illness can no longer deal with their property.

I’m wondering though why the minister feels he cannot accept this particular amendment when, in fact, he seems amenable and his staff persons seem amenable to dealing with the kind of problem we raised. In other words, Mr. Minister, if you can’t accept this amendment, what kind of an amendment could you accept in this circumstance to resolve this problem? And what will you do about it?

Mr. R. F. Nixon: It is open and shut. You agree with the principle, why don’t you accept it?

Hon. Mr. Meen: I simply said I’m warm to the idea. But the point is we need a very comprehensive definition of what constitutes a principal residence. Short of having that -- and as I pointed out, and the member for Sarnia agrees, the feds have tried it and they’ve got 10 pages worth of interpretation of what constitutes a principal residence.

When you get into that -- and I might say that particular set of interpretations includes periods of time when you are not in occupation and when you are out of the country and so on --

Mr. V. M. Singer (Downsview): Yes.

Hon. Mr. Meen: -- if you recognize that these are the kinds of problems we must also address ourselves to here, you can see that it is not a very simple matter to simply roll into the statute for all time a definition that principal residence of a present occupant of a nursing home, or whatever, shall be the principal residence until the date of his or her death, or something of the sort. It just doesn’t work out that simply.

We will have to resolve it by -- I hope not --10 pages worth of interpretation, but certainly a more comprehensive definition of the kind of home in which the person would be located; the period of time, perhaps with a hiatus between one kind of residency and another, and perhaps eventual return. This business of assessing subjective intent is extremely difficult, and I don’t think we would be wise to enshrine it in the statute. I think it is better to be left for interpretation at a later time.

Mr. Chairman: The member for Sarnia.

Mr. Bullbrook: Mr. Chairman, when the minister talks about warming to a statute, the type of response that he gives to my colleague from Kitchener invites a great deal of heat. I want to say that to you because, you see, the amendment is eminently sound in principle. I record by a nod my agreement in principle with the fact that the amendment itself could probably be redrafted to the benefit of all of us.

The thing that bothers me more about this statute than anything else is the words that the minister throws out in complete abandon at times. Just hearken back and Hansard will show what you said. You said, “How does one evaluate when it changes from a principal resident to an investment?” Now those are the things that really cause us to warm up in the opposition.

As you say, this isn’t a statute that is directed against investment in the Province of Ontario; investment is the lifeblood of the real estate business in the Province of Ontario. Investment is the lifeblood of free enterprise in the Province of Ontario. And those are your words. Do you remember your words, “When is one able to distinguish between a principal residence and an investment”? Now there’s nothing wrong with investment. You know we really --

Hon. Mr. Meen: The allowances are different.

Mr. Bullbrook: I want to tell you, we really hit the nub of this whole bill, and I hope somebody will start to understand in the Province of Ontario -- I hope the editorial writers will start to understand what we are doing with this bill. Speculators per se, as we generally understand them, should be taxed at this type of rate. But what you are doing with comments such as tonight and comments that you have made in the past -- the minister asks his own colleagues on the government benches, “When do you distinguish between a principal residence and an investment?” True investment is not something to be attacked at 50 per cent. This is what we have been trying to convey, sanctimonious or otherwise. If it is sanctimonious, it is not pseudo-sanctimony, I will tell you that. It’s not.

Mr. Cassidy: Sounds like it.

Mr. Bullbrook: Well, it might sound that way. I can’t help my style. I am just telling you that I am very, very concerned about this bill -- very concerned about it.

Mr. Lawlor: We are going to vote with you.

Mr. Bullbrook: I am concerned about the fact of what we are attempting to do, and I want to talk right on this amendment. This amendment is not only efficacious, it is not only equitable, it is just, completely just. You know it, the chairman knows it, the advisers under the gallery know it, and every member of the House recognizes that we should not, in any context, employ a tax on people who have lived in a house for 40 years and because of circumstances directed upon them, not by their own volition, are removed from that principal residence. And unless we have an amendment along the lines put forward by my colleague from St. George -- change it if you wish, just give us the intent.

Stand the section down. That’s all that needs to be done. It is no loss of face at all; that’s no loss of face in standing the section down. Just say, “We agree.” But to have us vote on this and divide on this at this time is really an undue burden upon us. We want to help in connection with this statute, but I want to close in saying this. I say again, and I say it for all members of the House, that the government is to be applauded in connection with their general intention with respect to speculators. I want to tell you this again --

Mr. Cassidy: Yon Cassius was an honourable man, remember? Just like that speech. Really, if you oppose the legislation, then oppose it.

Mr. Bullbrook: This is without doubt probably one of the most staggering pieces of legislation that we have conceived in its input. I tell you -- I apologize for this -- I have not spoken in two years as much in this Legislature as I have in the last two weeks, and that’s a fact. I apologize for this. I have been on my feet because I believe this to be a nefarious Act. We are not doing what we intend to do.

Mr. Cassidy: You supported it.

Mr. Bullbrook: What we intend to do is appropriate and we should be prideful of it, but we are not doing that.

Mr. Cassidy: How could you support it if it was a nefarious Act? Answer that!

Mr. Chairman: Order, please.

Mr. Bullbrook: I want to say to you, as a matter of principle, if I can convey it, and I do convey it to you with great sincerity, the intention is great, but we can’t have sections like this going through. We can’t tolerate it and we can’t for a moment give up our legislative responsibility.

This is the thing that curdles me more than anything else. The minister stands in his place and with great, great sincerity says, “We will pass regulations that give full effect to your intent.” That’s not good enough. We have an obligation to do that. We are legislators; it’s not for the bureaucrats. As much as they themselves are conscientious with respect to our intention, it’s our job to put this into the statutes and not permit them to interpret what we mean. We have got to put it in the statute, as the member for St. George said.

You talk about principal residence. I invite you, my colleagues, to look at the fact that there isn’t a definition of principal residence. There are 10 pages of definition in the Income Tax Act with respect to certain criteria of taxation. I ask you to recognize that they spent three years on that bill. They put before the House of Commons a white paper on the bill and then they attempted a draft statute which they circulated to the professions and the public of Canada and secured their response to those sections. They then tabled and gave first reading to the amendments to the new Income Tax Act. They then took that before a standing committee and it stood there for over six months while there was a response to those sections; and hundreds of amendments were put before the House.

The point I make here is that if we are going to pass statutes that have this import, goodness gracious let’s understand the impact upon the people whom we represent. We can’t accept that type of response where the minister says we recognize what you as members want to do and we are going to pass regulations to give intent to that.

I want to say to you that I give you full credit. I do, Mr. Chairman, I give the minister full credit for attempting. I trust, as he has on section 3, that he will attempt to ameliorate our objection. I want to say to you now: Stand this down. Let’s make sure that those people who are going to be possibly burdened with this tax if we don’t act upon it, are assured they won’t be burdened with the tax. I don’t mean to warm up the debate, as you say, but gosh we have to be warmed up if we are not going to do our job with respect to the impact or the tax.

Mr. W. Hodgson (York North): You have made your point.

Mr. Bullbrook: I have, yes; and I am going to sit down. I hope I have made my point with the member for York North.

Mr. W. Hodgson: You surely have.

Mr. Bullbrook: I am glad that I have, because I want to say, as I’ve said before, he’s at least one member of the government benches who recognizes the insidious results that might come from a tax like this.

Mr. Taylor: Mr. Chairman, may I just have this point clarified? There seems to be developing, certainly in my mind, confusion as to the intention of the statute, and in particular where we are dealing with clause (e). As I understand it, the Act is not designed merely to tax the speculator but also to tax the homeowner who may decide at any point in time to rent all or part of his home. Is that not correct?

Mr. Cassidy: That’s right.

Mr. Lawlor: And he is a speculator.

Mr. Taylor: You know, that’s --

Hon. Mr. Meen: I think it is fair to say that we have recognized there is an element in investment that should be protected in some fashion, Mr. Chairman. In that sense, we have the provisions for rental accommodation and a reduction of the tax as set out in section 20. If you move from being a homeowner and resident to being a homeowner and investor by way of keeping your hand on the title but giving possession to someone else by way of a lease for a term of years or whatever, then you have the other provisions of the Act that are available to you.

Mr. Taylor: Mr. Chairman, again my memory goes back to the days following the war when there was indeed a housing shortage, and some of you may be very mindful of that. Many of us were trying to get whatever accommodation we could, whether it be in an attic, or in a basement, or other part of a home, or whatever it was.

Mr. R. F. Nixon: Anybody we know?

Mr. Taylor: Those premises came on the market, and of course income is taxed from the homeowner’s point of view so that revenue would be taxable as income. But in the case of this statute I’m concerned that it may be that we will be discouraging this type of accommodation coming on the markets and we know that in the metropolitan area there are a good many homes that are being rented to persons for accommodation even though those homes may be zoned for single-family purposes. When you assess the impact of this taxing statute on those homeowners as well as the impact of the Income Tax Act on the revenue produced through rental, we may be feeling a further housing shortage instead of alleviating that problem.

Mr. Lawlor: The tax would be more than the rent.

Mr. Chairman: The member for Ottawa Centre.

Mr. Cassidy: I have several questions, Mr. Chairman. The member for Lakeshore and I have been devising various things here that might apply under this particular section. I must say that the longer they go on, the more zany are some of the results of the section as it stands right now.

May I say to the member for Sarnia in the first place that we will probably support the amendment which has been proposed.

We agree with the idea that is expressed therein. I think the minister has expressed that too, that in the regulations or in some other way he will eventually find means of exempting from the tax the disposition of property when it is held by somebody who is in a nursing home, or is aged, or whatever the other cases that were outlined may be.

Mr. Lawlor: Didn’t you want to make a nursing home for speculators?

Mr. Cassidy: That’s right. I was suggesting that if I ever leave this place I would immediately set up a nursing home, which would be a private enterprise, for the care and treatment of speculators during those temporary periods of time when they wished to be absent in order that they could take their profits --

Hon. J. R. Rhodes (Minister of Transportation and Communications): On Toronto Islands?

Mr. Cassidy: That’s right, on Toronto Islands. No, not there as a matter of fact. No, we’ll open it somewhere else.

Hon. Mr. Rhodes: No? Why not? The hon. member has broken every other law over there.

Mr. Cassidy: Sault Ste. Marie is possibly a bit too cold.

Hon. Mr. Meen: It is a lovely spot.

Hon. Mr. Rhodes: The hon. member would fit in well up there. Come up.

Mr. Cassidy: I thought some of the wealthier spots, York Mills, or Don Mills, or that area where the minister comes from, would be a very pleasant kind of environment for that kind of care and solace that would be needed.

However, the amendment proposed by the member for St. George does not cover dispositions of property where, for example, the owner has had to go to a mental hospital or psychiatric hospital --

Mr. R. F. Ruston (Essex-Kent): It covers all hospitals.

Mr. Cassidy: All hospitals? It does?

Mr. Taylor: Certainly.

Mr. Good: Old people’s homes too.

Mr. Cassidy: Old people’s homes? You name it, you’ve got it, is that right?

Interjection by an hon. member.

Mr. Cassidy: I see. Okay. Well, in that case it is a fairly broad bunch, but that can be done by regulations as well.

I would like to point out a number of other things, though, which will create problems on either side -- in some cases hardships, in other cases loss of revenue that ought to be coming into the ministry, and lack of restraint or speculation.

First, what happens in the case where there is a separation between two partners in marriage and they happen to have a couple of properties? If one partner moves into the one house and the other partner into the other house, do the two properties then become exempt from the tax? What happens if, subsequently, they reconcile and come back together again? Is that conceivable or, as the member for Lakeshore says --

Mr. Taylor: Break up the marriage again.

Mr. Cassidy: -- are they allowed to meet on Saturday afternoon? And if so, can they meet at one house or at the other house, or must they go to the principal recreational property?

Hon. Mr. Rhodes: Only if it is conceivable.

Mr. Cassidy: Only if it is conceivable? Well, don’t bring religion into this. What if they go to a motel or hotel? Is that okay? Or is it not okay if they go to a campsite where there are not buildings worth 40 per cent of the total site? And so it goes.

Hon. Mr. Meen: Zany is right.

Mr. Cassidy: What happens to the children in this particular partnership who are over the age of 18, and there are four properties and the husband and wife decide to separate and the children each go off to one of these houses as well? Do they then acquire four principal residences among the four adult members of the family, and if that is the case, are they all exempt from tax?

What about the case where the family ordinarily, for a period of some time, lives on the ground floor of a fourplex, for the sake of argument, but then, come the time when they feel inclined to sell, they find that he needs a studio and she needs a place to carry on with her painting and the rat-faced girl needs a place for her cello lessons and so on, and they fill up the whole place for a period of six months prior to disposing of the property?

Who is to say what is ordinary, and how does the sale of the property, for example, relate to the fact that they may or may not have won some money on the Olympic lottery and therefore have been unable to use more space than before?

It seems to me, Mr. Chairman, that the minister and his people are creating some enormous difficulties, particularly on dispositions that take place in the next few months until the regulations are formulated.

We don’t know, I gather from what the minister says, what on earth is a principal residence. There may be some common-sensical kinds of rules there, but, as the minister knows, these things must be tested in the courts, and what the courts come up with may appear perverse as far as common sense is concerned.

Mr. W. J. Nuttall (Frontenac-Addington): Never.

Mr. Cassidy: Perhaps the minister could spell out how he is going to handle some of these particular factual situations. And I could give one more as well.

Let’s suppose, shall we say, that an employee of me Province of Ontario takes a job with the federal government and, for the sake of argument, goes to Ottawa, buys a house, makes plans to bring his family into it in September, but in the meantime it takes several months to sell his property down here.

At what point is he entitled to continue the exemption on the sale of his principal residence in Toronto when he also has a residence in Ottawa, because that is where he is living and where his wife and the kids are spending much of their time, as well as waiting until they can find a place to put their aged mother who has been living with them in part of the house for some period of time? At what point in time does that exemption carry through, according to the regulations that the minister intends?

Suppose they acquire the property up in Ottawa and find out they have made a mistake, the job in Ottawa falls through, and they rent the place in Ottawa for a year while they think about what they are going to do; and then they decide they are going to come back here? Is there any allowance for mistakes?

Then if you read the sections on the exemptions for investment property there, let’s suppose that it is a job which requires the person living in Toronto to spend two years out of every four working abroad, shall we say, with a multinational labour organization. During that period of two years the property in Toronto presumably would be rented out. Now, suppose there is a disposition for various reasons which takes place at a point in time when the property happens to be in the hands of tenants. Is there any exemption under section 20 or section 21? Or is there any exemption under the principal residence? Is there any notch provision? Is there any provision under which a property that has been used over a period of time as a principal residence, then becomes an investment property, then becomes a principal residence and then an investment property -- in which the changing circumstances can be taken into account? Or is it an all-or-nothing kind of thing?

The minister knows, because I’ve argued for it, that all-or-nothing legislation may not be had, but it’s got to be considered in context. And the context here is of a bill that is riddled with all sorts of loopholes or which in certain cases, particularly the small individual who lacks the tax advice and the financial resources to so order his affairs to avoid the tax, may result in hardship situations. In those situations it’s an all-or-nothing bill. And it’s wrong to be particular tough in those situations when you are so lenient in so many other cases.

Mr. Chairman: The member for Sandwich-Riverside.

Mr. F. A. Burr (Sandwich-Riverside): Mr. Chairman, I am surprised that the investor is getting into this debate. My idea of a speculator is one who buys something that he didn’t own previously; he buys it with the intention of turning it over fairly rapidly at a good profit.

I have a relative who lived in a house for 18 years and then bought it 45 years ago. Having occupied the house for about 63 years, because of ill health and old age, this relative now has to leave the house; it stands unoccupied at the moment, but the immediate prospect is that it will be rented for a year, perhaps for two years. Now, supposing this relative continues to survive, and for some reason wants to sell this house, can you by any stretch of the imagination term this relative of mine a speculator? That’s my question, and I would appreciate an answer.

Hon. Mr. Meen: I suppose the short answer is, Mr. Chairman, if he holds on to it for a period of time after he no longer requires the possession of it, yes. Or, if he is holding on to it to derive revenue from it, then he is an investor under section 20. We recognize the validity of people holding on to, for whatever reason, residential property for investment purposes. Consequently, the new section 20 in the bill.

But one way or the other, it is not all the years he has held it over the past, say, for 15 years as a tenant and then some 40 years as registered owner that counts. It is the present tense that we are talking about. What is his present intention and what is his intention from now on? We have a speculation tax Act and he must recognize that if he holds it and derives rental income from it, then he is an investor.

Now, we get back, under subsection (e) to which we are presently directing our attention, to the question when does he cease to have it as his principal residence? I thought that was what the hon. member for Sandwich-Riverside was going to raise with me, because that gets to the nub of the problem we have been discussing for the last hour and a half. What constitutes principal residence and how are we going to define it? As we say, the feds have taken 10 pages of interpretation to try that. We would expect that it would take us a few pages to do it, too.

To touch on some of the problems the hon. member for Ottawa Centre has referred to. A fellow takes a job at, say, the Department of External Affairs in Ottawa requiring him to do a two-year stint in some foreign city. What about that situation? That happens to be one that is covered, I understand, in the interpretation sections under the Income Tax Act for the purpose of a residency.

Whether we would adopt the same kind of principles they have -- and I can’t tell the hon. members what those are; I don’t know what they are.

Mr. Cassidy: You can’t say because you don’t know. You haven’t worked it out.

Hon. Mr. Meen: But those are going to be some of the things we will look at. When we do, we will be looking at the chap in the situation outlined by the member for Sandwich-Riverside, where he has occupied his house for years as his home, then he finds it is no longer suitable to his present needs. There are all kinds of reasons why that can happen -- your children grow up and move away and the house that was adequate in its facilities for your wife, yourself and your growing family is no longer the right size. You and your wife are rattling around in the place and you want to get something smaller.

So, you may well find that you wish to sell for that reason. Or, it may be that you can no longer afford to maintain it; you are in your retirement years, perhaps, and your income is inadequate. Perhaps you simply want to get into smaller accommodation that is more to your own taste and let somebody else do the maintenance work. There are all kinds of reasons why one might want to sell, or at least move into other accommodation.

If an immediate purchaser weren’t around, you might say, “Well, I am prepared to speculate on the future and hold this as an investment property in the meantime.” If you hold it for a period of three years and up, you get the advantages of the provisions of section 20 of the Act. Eventually, after a period of 10 years holding on that basis, you would be free and clear of any attraction of speculation tax.

So we are not setting out to hurt that person, but what we have to have is a definition that applies from April 9, when there was, in fact, the suggestion in the announcement made that we were going to levy the tax on the speculator, the person who is getting in as the quick turnover artist, the person to whom the member for Sandwich-Riverside referred. We want to get at him, but in the course of getting at him -- because you just can’t draw a definition of a speculator -- you have to look at the actions and the timing and all the rest of it to hit these definitions in a roundabout fashion. In doing that you maybe pick up others whom you don’t want to hurt, and so you wind up with some of the exemptions and the exceptions which we are trying to build into section 4.

I would think that, again, in circumstances not unlike the one illustrated by the member for Sandwich-Riverside, it might be possible in the course of a definition of what constitutes principal residence, to protect that person for at least a short period of time. Some members in the House earlier tonight suggested three months, six months, something like that. That might be practical. But beyond that time, he has got to decide whether he is going to sell the property or whether he is going to hold it as a rental property, because the period of time will then start to run in his favour for the reduction of the amount of tax.

I think people may well have to have good qualified advice, either from their friendly solicitor or from a qualified tax expert to whom he might steer them. But one way or another, with this piece of legislation new on the books as it will be, there is going to have to be some people to give advice to those of us -- and there will be many -- who need some kind of guidance in the ordering of our financial affairs.

Mr. Bullbrook: As Sam Goldwyn would say, include me out, because no one can advise on this at all really.

Mr. Chairman: The member for Sandwich-Riverside.

Mr. Burr: I think it would be rather difficult to persuade any 87-year-old relative who has owned a house for 45 years that he is a speculator. Do you mean to say, if he or she rents this property for six months and then dies, this becomes a speculative property for the heirs?

Mr. Bullbrook: If it is sold or transferred by will.

Mr. Burr: If it is sold or if it is transferred by will, it is a speculative property?

Hon. Mr. Meen: It passes by the terms of the will and, eventually, if it is left to them by devolution, then it passes to the successor. If it has to be sold by the executors for the purpose of payment of succession duty, and if there is an appreciation in value from the date of death until sale, then there would be tax paid on that increase in value from the date of death, but no tax payable up to the date of death.

Mr. Chairman: The member for Ottawa Centre.

Mr. Cassidy: I want to pursue this a bit further because I’m still finding an awful lot of anomalies and seeming unfairnesses in the Act. I’m trying to put myself into a sort of two-way --

Hon. Mr. Meen: I wonder if I could just interject for one moment as I want to correct something that I think I may have been slightly in error on, that is, in the illustration given by the member for Sandwich-Riverside. I think he said if a person rented out the property for, say, six months and then died.

If there is an appreciation in value over that six-month period, then there would be tax payable on that amount. That’s an increase from the time when he ceased to use it as his principal residence. It has then become an investment property. It’s in effect less than the three-year period, so there would be some attraction of tax. But, let’s face it, it would be small, because the period of time is small.

At least technically, I would think there would be some attraction of tax on that short period. Then if his executors hold it beyond that period of time, maybe with the same tenants, but eventually do sell it for the purpose of distribution of the estate either in kind or in money, then if there were any further accretion in value in that asset after the date of death, there would be tax payable on that amount of increase as well.

I just want to clarify that there could potentially be the two areas that would attract some tax.

Mr. Bullbrook: Can I clarify that for a moment? Would you permit me to proceed --

Mr. Chairman: Go ahead.

Mr. Bullbrook: -- so the member for Sandwich-Riverside understands this? If you take the definition of any change, under 1(1)(d)(iv), page 4 -- to understand the impact of your hypothetical case -- it says, “any change in the entitlement to, or any accretion to, the beneficial interest in designated land as a result of the death of any person.” No matter what the minister said with respect to accretion in value relative to the date of death, I want my colleague from Sandwich-Riverside to understand that under this statute that person who owns that land for 45 years is understood to be a speculator.

Mr. Burr: I understand it.

Mr. Bullbrook: I want you to understand that. I want members to understand the inequity and the stupidity of that type of situation. I want to say again we’re after speculators, but not this situation for one moment by any stretch of the imagination. As a result of the disposition of a property under the terms of a will, where a person had held it for 45 years as a principal residence but not within the exemption that we are talking about under this amendment, he’s subject to a tax as a speculator.

Mr. Burr: I understand it but I don’t believe it.

Mr. Bullbrook: I don’t believe it either. I just can’t believe that we are attempting to put forward in a statute the principle enunciated by the Treasurer in his budget speech. It beggars description.

Mr. Chairman: The member for Ottawa Centre. We are on Mrs. Campbell’s amendment to subsection (e).

Mr. Cassidy: Yes, I understand that, Mr. Chairman. I just might say that after some interesting discussions with my colleagues the idea of an exemption of a principal residence makes some sense to me. But I want to put before the minister a set of circumstances which suggests to me that the bill as it is drafted now and in this particular section is really pretty perverse, unless there is going to be some substantial changes which I do not think can be comprised in regulations, given what this section says when it’s coupled with section 20, I believe it is.

As I understand it, if the member for Grenville-Dundas (Mr. Irvine), for example, who was a relatively well-to-do dabbler in land --

Hon. D. R. Irvine (Minister without Portfolio): Thank you very much.

Mr. Cassidy: -- owns a property which is rented out as an investment property today, and if the Minister of Revenue, who was a less well-to-do dabbler in land, simply owns his own home, which is next door and is a similar kind of property, then if six years from today the minister decides to move out of the property that he owns and moves into an apartment or buy some other land and rents his premises out, and then eight years from today the two of them decide to sell their properties which are side by side for a comparable price and a comparable gross profit -- for the sake of argument in eight years let’s say that the properties double in value -- the member for Grenville-Dundas as a well-heeled investor or speculator, call it what you will, would be exempt from the tax according to a section we will come to later in the bill. The Minister of Revenue, as a less well-off owner of property becomes subject to the entire tax on the entire accretion in value from April 9 until the time he sells it. If he holds it for a bit longer so that he has rented it out for three years -- and well you might talk together as a matter of fact.

I think there could be some jealousy there because of the inequity of that particular situation. Does the minister follow what I am saying?

Hon. Mr. Meen: No, I don’t follow what you are saying.

Mr. Cassidy: Let me translate it again then.

Hon. Mr. Irvine: And I don’t either because it’s that long.

Mr. Cassidy: Two properties are held; one is an investment property today and the other is a principal residence. Nine years or maybe 10 years from today the investment property is sold. It’s exempt from tax because of the exemptions that are in the bill. The principal residence is rented out as an investment property after five or six years and is then sold at me same time as the investment property after 2% years of being an investment property. It then attracts the tax on the entire accretion in value from April 9, 1974, until the end of that period of time, because according to the Act die fair market value at the time, of the Act is coming into force or the acquisition price is the price from which you begin to compute its increase in value.

If the minister says it’s only the last three years, I would like him to point out that particular section. I would still like him to explain why the entire increase in value in the one case is free from tax while in the other case, covered under this section or not covered under this section, the property attracts .tax, even though it has been held in the same hands for a comparable length of time and presumably by somebody with, on average, less means.

Mr. Lawlor: It is true there is a discrepancy as to the weight of the tax.

Hon. Mr. Meen: I am not sure I see the discrepancy to which the hon. member refers, Mr. Chairman, and I don’t see the difficulty here. We are under subsection (e). I listened to his argument but I simply don’t follow what he is saying.

Mr. Cassidy: Mr. Chairman, if a principal residence is occupied as such for eight years from April 9, 1974, and is occupied for a couple of years as an investment property and then is sold and if, for the sake of argument, the value of that property increases from $50,000 to $100,000 over that period of time, taking apart the various exemptions for maintenance costs and so on that are here, just taking the straight overall profit, is the sole $50,000 in profit not then taxable according to this tax?

Hon. Mr. Meen: I would ask the member to repeat that. I was distracted momentarily. I heard the latter part but I didn’t hear the first.

Mr. Cassidy: If a property is today occupied as a principal residence, continues to be so occupied for eight years, is rented out as an investment property for a couple of years and then sold, is the full amount of the profit over the period from 1974 to 1984 not then taxable according to this tax?

Hon. Mr. Meen: Yes. In this case there is no provision for accretion in value if that is what the hon. member means by profit.

Mr. Cassidy: That’s right.

Hon. Mr. Meen: That’s what I didn’t follow in his first question. That is right.

Mr. Cassidy: Okay. But then surely that’s perverse if property owned by the member for Grenville-Dundas, to follow a previous example, which is a similar property and has a similar accretion in value, but which is held throughout that period as an investment property, rather than a principal residence, becomes totally exempt from the tax.

In the one case all of the profit is taxable, despite the fact that it is only used as an investment property for two-tenths of that period, and in the other case none of it is taxable.

Hon. Mr. Meen: Yes.

Mr. Cassidy: A principal residence for eight-tenths of the period attracts the full tax and investment property for 100 per cent of the period attracts none. Now that is a perverse application of this bill, according to the principles the minister has put forward.

Hon. Mr. Meen: The hon. member is entitled to his opinion, Mr. Chairman.

Mr. Cassidy: I would like to ask the minister what he is going to do about that if, in fact, he intends to bring into the bill the kind of exemptions that are contained here.

If he wants to tax the investment property in the same way, that is fine. I don’t object. I may be the only member in the House who doesn’t object. But I do object to a situation where somebody who is a legitimate long-term holder of property has to pay the full weight of the tax because he happens to live in it for several years, but somebody who is a speculator or investor can completely escape the tax.

Hon. Mr. Meen: The catch here is that there has been no transfer of title and. nothing therefore to trigger another value assessment on the property. It might have gone up; it might have gone down. I suppose it is possible, if one were to rent the premises, to determine the present value of the lease and from that to determine the value of the premises. But there is no act by way of a sale of the property by the owner and principal occupant in order to establish a new value based upon which the rental figures would then accrue.

Now if one were to get into that -- and that’s an interesting observation he makes, by the comparison he drew earlier --

Mr. Cassidy: It sure is.

Hon. Mr. Meen: I think one would have to say that we were not providing for that in this bill, that one would have to have a sale; and if one got into that position and decided to establish a figure, he would then sell the property and his purchaser then would rent --

Mr. Lawlor: He had better get a pretty sharp lawyer to tell him to sell, not to rent.

Hon. Mr. Meen: But, you see, as it stands there would be nothing on which to establish a value so as to be able to give an appropriate credit to the owner who has become a landlord eight years later. As things stand anyway, I think it would be rather complicated to establish a figure that was appropriate for him, unless we are to do it based on a natural disposition that occurred. But the actual ceasing to occupy --

Mr. Lawlor: Ceasing principal residence.

Hon. Mr. Meen: -- one’s principal residence and the execution of a lease would not automatically trigger a value upon which the allowances under section 20 would be appropriate.

Mr. Cassidy: Mr. Chairman, surely the minister ought to be talking now in this Legislature about amendments that he will bring in at a later date, since presumably the bill will continue in debate at the rate we are going at half a page a day, in order to cover this kind of situation, because otherwise it really is unfair.

I don’t think the minister can simply dismiss this, because it is a very real set of circumstances. I think of the kind of situation where somebody decides, shall we say, to move to the country and rents out his town home for a couple of years while he sees whether or not it goes in the country, then he wishes to sell and finds out that he can’t. To pay the tax on the accretion of value over the couple of years that he was in the country, if it works out out there, is fine; he doesn’t mind. But he wants to have a stake back in town, in his own neighbourhood if he finds out that rural living doesn’t work. According to the standards of the rest of the Act, that privilege ought to be available to them without payment of taxation.

I find myself in a rather uncomfortable position, arguing against the full effect of the tax, but because there are so many other exemptions from the tax it seems to me quite criminally wrong that it hits this particular situation. As the member for Lakeshore says, you have got to have a good lawyer. A lawyer may say to them, “Look, sell now; then if you want to, you can buy in a couple of years when you come back, if you think you are going to have to come back.” But they may say, “We don’t want to Have to go through all that hassle. We would want our own house back if we ever came back here.”

Which is a perfectly understandable kind of thing. Then the lawyer would say, “Well, sell it to me and I will sell it back to you.” But that would dissolve under the scrutiny of the eagle-eyed tax assessors who would say that that is not a real deal, that that was simply a --

Hon. Mr. Meen: That’s right.

Mr. Cassidy: That’s right, as the minister says.

Mr. Chairman: Pardon me, I should like to say --

Mr. Cassidy: Yes.

Mr. Chairman: -- to the member for Ottawa Centre, I think you are discussing section (e) which has already been passed. The matter before the House now is Mrs. Campbell’s amendment. Perhaps I should read the amendment at this point.

Mr. Cassidy: I am sorry, Mr. Chairman. It is not possible for the amendment to be under debate if the section has passed. You will agree with me on that.

Mr. Breithaupt: It is not passed.

An hon. member: Carried.

Mr. Cassidy: On a point of order, Mr. Chairman --

Mr. Chairman: The amendment is the matter before the committee now, here.

Mr. Cassidy: I understand the amendment is being debated, but the section cannot have been passed if we are trying to amend it --

Mr. M. Shulman (High Park): You can’t if you are going to amend the section.

Mr. Cassidy: You can’t do that. It is just not possible, Mr. Chairman. When we vote on the second amendment it may be deemed by the Chair to include the vote on the subsection as a whole.

Mr. Chairman: I should like to point out that what is before us at this moment is the amendment of Mrs. Campbell.

Mr. Shulman: The section is not passed.

Mr. Cassidy: Yes. But the way the vote is taken, Mr. Chairman, is that when we vote on that particular amendment proposed by the member for St. George, we will also be voting on the whole subsection.

Mr. Good’: We have already passed the amendment of the first section.

Mr. Cassidy: I believe that is the practice here and, therefore, it is possible for me to talk about this particular subsection.

I have talked at some length. Could the minister say what he thinks he might do about it? Has he had some paper from his officials to indicate the saving measures that might be taken? Would it be possible to have a deemed disposition, or something like that, at the point at which property passes from being principal residence to being investment property, which would seem to be the reasonable kind of thing? Or would it be possible to have a time limit which applies to any kind of holding so that, for the purposes of section 20 or 21, use as principal residence could count on the number of years required for the exemptions under investment property.

Hon. Mr. Meen: Mr. Chairman, it’s entirely possible to do that. I don’t have it drafted and I don’t think we should try it now, but that’s one of the things we are looking at as a result of these discussions and submissions I have received. A deemed disposition at that time might be an appropriate way to do it. The hon. member himself suggested that there may well be other ways to do it too, and so I say, “Yes, I recognize the problem.” He calls it a gross inequity. I am not sure it is. Certainly, it is not an area that has been as fully covered as I would like --

Mr. Lawlor: What was your intention?

Hon. Mr. Meen: -- and I would say that we would, at another time, consider an appropriate amendment.

Mr. Lawlor: I never saw anybody so full of good intentions.

Hon. Mr. Meen: It may be that a deemed disposition would be a way to tackle that, but I have not any well-considered advice on that point at the present time.

Mr. Cassidy: Well, Mr. Chairman, that wasn’t the reaction of the minister a few minutes ago. I appreciate the tone of his reply this time. I presume that he would intend, if that was the case, to bring forward such a proposal when we get to section 20 or section 21.

Hon. Mr. Meen: No, I hadn’t considered it then. It may not be appropriate at this time, but certainly at the earliest moment in considering the bill. But whether we do it at this particular session for sections 20 and 21, I couldn’t say at this time.

Mr. Cassidy: I just say in closing that I think that the minister should, given the talent that he presumably has available to him, which may help to supplant his own inadequacies, seek to bring forward such an amendment when we get to the later stage of the bill, where it would seem to be appropriate.

Mr. Lawlor: You have two weeks to do it in.

Mr. Chairman: The member for Sarnia.

Mr. Bullbrook: Yes, I just want to take a moment. The nub of our debate is purportedly to be our desire to support the principle of the amendment put forward by the member for St. George to extricate from the tax those people who obviously should not be burdened with this tax. The definition, under section 54(g) of the Income Tax Act of Canada, basically says that a principal residence is one ordinarily inhabited by the taxpayer in a taxation year or, alternatively, that which he or she elects to be the principal residence. Very simple. There is no memorandum 10 pages long of intention or interpretation. It just says, in effect, under the Income Tax Act, that it’s where you ordinarily inhabit during the course of the taxation year or you elect -- you elect -- as your principal residence.

We know the impact of that section. There is nothing mysterious, there is no mystique in connection with defining what our intention is. We want to make sure that these people are not subject to the tax. Again, I say to you, we could stand this down. Your advisers and we in the House could work together and make sure that a section is passed that ensures that these people will not be subject to the tax. It’s not difficult.

I asked the library to send me down the Act so that I could read it to you. Contrary to what the minister said, there are no 10 pages of interpretation. There might be 10 pages of interpretation of what the section says, but surely to goodness we can put in a statute what we intend and then let the minister interpret it. But let’s not leave a statute vacant and void of words that signify our intention.

I am not going to burden you again by telling you that a court of law or any administrative tribunal that is assessing what we intended doesn’t look at the debate. They don’t look at what the minister says or what I say; they look at what the statute says, and we have got to ensure that those words are in the statute.

I again request your consideration of standing it down. Let’s stand it down. We can do it very easily by saying that it’s the place ordinarily inhabited by the taxpayer, or we can put in some words of election where those people who go to a nursing home, who, again because of impact outside their own direction, leave their principal residence, can elect to retain it, for the purpose of this Act, as their principal residence.

Mr. Chairman: The member for High Park.

Mr. Shulman: I would like to ask the minister a question. I am sorry I am a little late. If this point had been brought up earlier, perhaps you’ll draw me to order.

A case had been drawn to my attention by one of the unhappy lawyers in the city of a gentleman who has been married for some 20-odd years and unfortunately developed some marital discord and left his family. He is no longer living in the residence which he has owned for that same 20-odd years. In fact, he is now resident in a flat. His spouse and his children are still living in the house. It appears that is a permanent arrangement.

If and when that house is sold, I am told that because the wording in the third line of section (e) is “and” instead of “or,” they are going to have to pay this tax. What it says here is, “ordinarily inhabited by him or by him and his spouse.” What it should say, of course, is “by him or his spouse.” If you leave it as it is, those people who are so unfortunate as to leave their families are going to have a great additional financial penalty as a result. Would the minister care to comment?

Hon. Mr. Meen: No, I don’t think there is much of a problem interpreting that. That’s just precisely the situation. His principal residence is his room or whatever he has adopted, and if he remains the owner of the other accommodation then, on its sale, of course, he is not occupying it so it is not his principal place of residence.

Mr. Shulman: I appeal to the minister’s sense of justice. Does he not see any inequity in that? Does that seem proper to him?

Hon. Mr. Meen: I am not sure that I am exactly the one to suggest that husband and wife should split up, to the detriment of the children.

Mr. Cassidy: Oh, Mr. Chairman, please --

Mr. Shulman: Oh, Mr. Chairman, we expect a little better from the minister. It has been known that even Tories have left their wives.

Are they to be penalized financially --

Mr. Lawlor: You are going to punish them?

Mr. Shulman: -- because you insist on putting the word “and” in instead of “or”?

Mr. Breithaupt: That’s the Conservatives.

Mr. Lawlor: This is the Puritan conscience with a vengeance. It is incredible. Double jeopardy. You not only lose your wife but you lose your money too. Ridiculous! I have never heard of such a thing.

Mr. Shulman: I invite the minister to reconsider. Is he really serious or is he just overtired as a result of the long debate? Will he not reconsider changing the word “and” to “or,” which would solve his problems, instead of penalizing all of these people? There are people who split up. Are they to be penalized by the minister because they’ve split up, in addition to their other sorrows?

I ask the minister, won’t he change the word “and” to “or”? Is that really such a horrible change in the bill?

Mr. Lawlor: He wants to make the wife go out and live in a flat.

Mr. Shulman: Is the minister going to respond?

Hon. Mr. Meen: I do not intend to alter that section of the bill, Mr. Chairman.

Mr. Chairman: Members of the committee, we have the amendment moved --

Mr. Shulman: Wait a minute! Just a minute, not tonight.

An hon. member: You can elect.

Mr. Shulman: Perhaps it is foolish of me. Perhaps the gentlemen to my left are quite right, in this bill I should not look for equity. But I --

Mr. Lawlor: We have to look for common sense.

Mr. Shulman: The member for Lakeshore is right. If we can’t have equity perhaps we can have common sense. What has happened? Is this the Stonewall Jackson of the Tory party?

Mr. Lawlor: If he started amending it, he’d never quit.

Mr. Shulman: Well, he has started amending it, so we might as well try to make the best of a bad job.

I am a little upset at being dismissed so out of hand, Mr. Chairman. Surely, when there is a blatant error in the bill that can be corrected by changing the word “and” to “or,” the minister shouldn’t be such a stupid, stubborn man. Try to be reasonable occasionally.

Interjection by an hon. member.

Mr. Shulman: If the minister doesn’t want to accept reasonable amendments, we’ll accept that.

Mr. Chairman: Order, please.

Mr. Shulman: I apologize. I take back “stubborn.”

An hon. member: Stupid.

Mr. Shulman: Is that the word you were objecting to? I’m sorry.

Mr. Chairman: I would like the hon. member to withdraw those words.

Mr. Shulman: I would be pleased to withdraw them if I insulted anyone.

Mr. Cassidy: Does obdurate pass?

Mr. Shulman: Obdurate. Is “obdurate” all right?

Mr. Cassidy: Perverse as well.

Mr. Shulman: Obdurate and perverse.

Hon. Mr. Meen: And inflexible.

Mr. Breithaupt: If you said anything you are sorry for, you are glad of it!

Mr. Shulman: If I have said anything I am sorry for, I withdraw. Is that all right?

An hon. member: That’s very good.

Mr. Shulman: Okay. I certainly wouldn’t want to accuse anyone of obduracy. Is obduracy okay?

Hon. Mr. Meen: Come on, let’s go.

Mr. Cassidy: Politics is never having to say you’re sorry.

Mr. Shulman: Quite seriously, I am sorry I used those bad words. I’ll try not to use four-letter words in here. But I am a little carried away by the minister’s --

Mr. Lawlor: Perverse is a five-letter word.

Mr. Shulman: I’m sorry. I’m a little carried away by the minister’s refusal to listen; I am speaking to the minister now --

Hon. Mr. Meen: Oh, yes.

Mr. Shulman: There is a gross error in this section. The minister is taxing all sorts of people he doesn’t want to tax, in section after section.

Mr. Taylor: It’s deliberate.

Mr. Shulman: Is it deliberate?

Mr. Taylor: That’s right. He said it is deliberate.

Mr. Shulman: Okay. I have the sensation that it is a form of collective suicide being carried out over there. The minister is irritating all sorts of people across the province who normally vote Tory. He is catching all sorts of people who are innocent of anything except having problems in their personal life. Why?

Come on, Mr. Minister, surely it is not unreasonable to take a look at each section as we are trying to do? The reasoned amendment from the Liberals certainly should be accepted. For reasons which I cannot fathom to refuse it -- but let’s leave that aside for the moment.

How can the minister possibly want to take a man -- I mention this man here because he is such a prominent Tory lawyer, and I don’t want to embarrass him -- but how can the minister take a man like that who bought his home at the same time I graduated, in 1950, who has lived there 24 years and who has now moved out for six months because he and his wife don’t get along, say that if he dies and that house has to be sold, he is a speculator? It just doesn’t make any sense.

Mr. Taylor: That’s what he gets for getting married.

Mr. Lawlor: That’s what he gets for deserting his wife.

Mr. Shulman: Can the minister tell me what harm would come in changing this section, line three, the word “and” to “or”? Can the minister tell me what harm would come to the province, what harm would come to the Tory party, what harm would come to the Ministry of Revenue, by saving these people who happen to be caught in an error? If there is some harm I’d like to hear it.

Mr. Chairman: Now --

Mr. Shulman: If the minister won’t respond, then I’m going on. Will the minister not respond to me? Is there no reasoning behind it?

Hon. Mr. Meen: I thought I had made that clear originally, Mr. Chairman -- and I don’t like to keep on repeating these things. The fact is that it’s the normal residence of the transferor or of the transferor and his spouse --

Mr. Shulman: And his spouse, right.

Hon. Mr. Meen: -- and their dependents. Yes, period. We aren’t prepared to extend it further.

Mr. Shulman: Can the minister --

Mr. Burr: He has only one residence. He has only one house.

Mr. Shulman: But it’s not his principal residence.

Mr. Breithaupt: Connubial bliss will out.

Mr. Shulman: I accept the facts. I realize what it says. It says, “a normal residence of the owner and his spouse.” But the question which I asked the minister and to which I didn’t get a response is what harm would come by saying “or his spouse and children”? There are a lot of people in this province who are separated and those people are completely unaware of what has already descended on their heads. Most of them are unaware, a few happen to be lawyers and have read this bill with horror. I am sure there must be lawyers on the other side who are aware of this.

This is not an unreasonable request, Mr. Chairman. It isn’t going to cost the province a great deal of money but it is going to save some families a great deal of their assets. These are families which are in difficulties, families which have had a division.

Hon. Mr. Meen: If this lawyer who is separated or has deserted his family or whatever, and has left his wife and children in the family home without benefit of some kind of separation agreement which transfers the title of the premises or in some other fashion properly looks after her, frankly, my heart bleeds. I don’t really see what kind of specific provision we should make that would, in fact, give them an option of two homes on which they could have this kind of protection.

Mr. Shulman: I want to tell the minister just how foolish he is here. It is already happening. This nutty law of yours has produced one result and I’ll tell you of another case which I was given tonight. I have the details and the names here. If he wants I’ll show them to him privately, if he doubts me.

We already have one family which is going through the motions of splitting up. It is such a ridiculous thing. They are not splitting up. They are going through the motions of a separation so they can have two principal residences because there is so much money involved. This is one of the ridiculous side-effects of this bill. You can get around these provisions of yours -- it’s legal -- if you want to be devious. There is no difficulty getting around it.

If I happen to own two properties and decide I want to make a capital gain on both of them, all I have to do is go through the motions of getting a separation from my wife, put one in her name and one in mine and they are both immune. This chap happens to be a non-devious type of person. That was an unfair comment you made -- he has made proper arrangements for his family including giving a very sizable settlement to them and paying them a weekly allowance.

It did not include signing the family home over and yet the minister is saying because of this unfortunate family circumstance he won’t consider it.

I am disappointed, shocked, surprised. Perhaps I shouldn’t be surprised because it is just one more of the various nails that are going into the coffin of those who are supporting this bill. Don’t kid yourself. Right now what is happening in here isn’t getting out to the public; it’s not getting out at all, nowhere across the province. But after this is all over and these provisions start spreading from the little circle who are aware -- the little circle of real estate men, of lawyers, of the few people who are beginning to get caught and are being advised -- this is going to spread not only across the province; you are going to be famous all over North America.

But you are hurting all sorts of innocent people. You are going to bring yourselves down. It is just this type of section that is doing it, and the refusal to consider the arguments, the considerations of the other side.

Mr. Chairman: Those in favour of Mrs. Campbell’s amendment please say “aye”.

Those opposed please say “nay”.

In my opinion the “nays” have it.

Mr. R. F. Nixon: We will stack it.

Mr. Chairman: Yes, stacked. We now go on to subsection (f).

Mr. Cassidy: You see, Mr. Chairman, we were talking about subsection (e) in its entirety.

Mr. Chairman: The member for Kitchener.

Mr. Breithaupt: On subsection (f) I have one point I would like to raise with the minister and that deals particularly with the matter of 20 acres referred to at the end of this subsection.

It is my view that there are, of course, certain townships and other planning areas which do not allow subdivision of various parcels into items as small as 20 acres. There may, of course, be those which are 25 acres and that, I think, is a more common number than your figure of 20. I am wondering if there is some consideration being given with respect to the slightly larger parcels or with respect to the minimum parcel which is allowed to be subdivided? If, for example, the parcel is, shall we say, 25 acres it would appear we are concerning ourselves with the possible applicability of taxation to that amount larger than 20 acres though a person could not deal with it as a separate parcel.

I am wondering if the minister has considered that particular problem where it may exist in some municipal jurisdictions. If the minister has considered it, how does he propose to deal with this concern which may develop when one could not get a severance of anything smaller than a somewhat larger number of acres, probably the 25 figure to which I have referred?

Hon. Mr. Meen: Mr. Chairman, I did give some consideration to that size of 20 acres. It is not specifically or deliberately unrelated to -- nor is it related to, for that matter -- any particular size. I was aware, as the member for Kitchener is also, that there are many parcels in areas of the province which had the minimum figure of 25 acres. There are thousands and thousands around which are probably on the basis of the minimum of 10 acres from the old Planning Act of the 1950s and the 1960s when the 10-acre parcels were invoked. There are a lot of those, too. The 20-acre parcel was simply selected as a sizable parcel, 100 per cent larger than the maximum we permit for one’s main residential property, but it was not picked deliberately to be smaller than the 25-acre parcels.

The other question, of course, is how do we propose to evaluate the remnant existing of any particular parcel, be it a 25-acre parcel or a SO-acre parcel or whatever, when we come to question the recreational parcel of 20 acres and determine its value and the value of the residue?

Mr. Shulman: Draw lots.

Hon. Mr. Meen: We would have to look at the zoning which applied at the time to determine what its marketability is. It might be that it was capable of being developed as a single parcel. On the other hand, it might turn out that it was not, under its current zoning and land use controls. On that basis, the valuation would be significantly less.

Whenever this question comes up, I anticipate my staff will look at the parcel and determine the worth of the 20-acre section and the worth of the residue in determining the applicability of tax and, therefore, the amount of the tax that would be assessed. One would have to look at the value on acquisition or April 9, whichever last occurred, and then the current value. If, perhaps, some rezoning permitted the five-acre parcel in the hypothetical case advanced by the member for Kitchener -- if I understood his example correctly -- it might well be that it was worth a good deal more because of some rezoning which occurred or some change in the land use requirements. We would look at it at the time and make a determination of the amount of value attributable to that parcel and whether it could or could not be used for certain purposes.

Mr. Chairman: The member for Lakeshore.

Mr. Lawlor: There is one small anomaly that comes to mind immediately. If you sell your principal residence in the city and move up to your principal recreational property you deplete yourself by one-half, so to speak; you have ceased to have 20 acres and, by that miraculous act of transportation, have reduced yourself to 10. That is one of the curious consequences. I take it also that the section has nothing whatsoever to do with investment property? Obviously, you don’t have to occupy it; if you rent it that’s your business. If you only rent it for part of the year it still remains a principal residence. In other words, the benefits that accrue to principal residential property are considerably greater than that of your principal domicile, aren’t they?

What is the purpose behind all this? Is this a pure gratuity, a little meringue off the top of the lemon pie? Is the legislation so coercive and perverse in most of its aspects that this is the sole gratuity being visited upon the heads of the Conservative people who own the recreational properties? Is this your little bonus? Your gift from the gods? The opening of the palm? Is this the only thing that you do within the whole scope of your legislation? I am not just being necessarily sarcastic, I am also suggesting that that’s your whole purpose behind it. It’s a pure act of graciousness, isn’t it?

Hon. Mr. Meen: Sir, I think many of us felt that the federal capital gains tax legislation was too harsh when it came to not recognizing the recreational property that has become a way of life with a good many of our people.

These recreational properties bring a lot of wealth into the recreational areas of this province, and certainly it is my feeling, and I think the feeling of most of my colleagues, that there should be some kind of recognition of a principal place of recreation or the taxpayer. He should have at least one little hacienda in the highlands to which he can repair, and not figure that he is going to be subject some day to a further speculation tax on that as well as any other properties that he might own. It has to be his principal recreation for his own personal use and enjoyment. Members will note that there are one or two other requirements imposed in this section as well, but premising that he meets those requirements as to acreage, and as to whom the disposition takes place, then he is free of any land speculation tax. This seems to us to be a reasonable way to try to keep our residential properties within our Canadian residents’ hands, too.

Mr. Lawlor: Is it your intention in due course to bring greater precision and definition into the situation, as you are going to be forced to do on the other one which you have acceded to?

In other words at some point are you going to seek, by means of regulation or otherwise, to define what a principal recreation property is, and if it is at the disposal and use for recreational purposes only of the individual? And are you going to define to what extent he may alienate it in terms of tenancies, or of not making a visitation to the spot? Does that make any difference? Are there going to be residential requirements and over what period of time? Are these things all in your mind in this regard too?

Hon. Mr. Meen: I must say that I haven’t had a chance to direct my attention in any great detail to the kind of regulations in the way of description that I would consider here, Mr. Chairman, but certainly those are elements which it would be desirable to define in some greater detail in the regulations. I would not think that residency would be nearly so essential here -- under recreation and enjoyment property -- as it would be for one’s principal residence under subclause (e).

Nevertheless, it would be essential that it still remain the principal place of recreation and enjoyment of the taxpayer.

Mr. Lawlor: Hear, hear.

Mr. Chairman: The member for High Park.

Mr. Shulman: I have no hope of persuading the minister of anything at this point, Mr. Chairman, but just for the record, I want to point out one more anomaly, so that perhaps in a year from September, when these things come to be looked over, we can have one more case on record.

In the last section the minister refused to exempt people in nursing homes. He refused to. As he put it, his exact words were, “I am not going to allow a man, just because he has left his wife, to have two residences.” But in this section he will take a gentleman like -- I won’t mention his name -- that very, very wealthy man who used to own the racetrack on Dufferin St., who happens to have a $500,000 place out near Acton that is exempt. He also happens to have a $200,000 place in Toronto that is also exempt. This is the minister’s idea of fairness.

So here is a man -- who, really, if there is such a thing as speculation -- whose beautiful spread out in the country represents speculation. But the minister says, “No, this is not speculation, this is one of our good solid citizens who should have a nice little place where he can have recreation.” And if the place happens to go up in value by some $100,000 per year, which is exactly what is happening to that lovely little spread of his, the minister says, “That is not speculation. That is legitimate.”

But if there is a little old lady in a nursing home, the idea is, “We will fix her. That’s speculation.” I’ve no thought that the minister will change his mind; I just want this to appear on the record as one more instance -- and there’s going to be a long series of them -- of how this minister has brought in an inequitable Act to punish the innocent and reward the guilty.

Mr. Chairman: Shall subsection (f) stand as part of the bill?

Subsection (f) agreed to.

Mr. Chairman: On subsection (g), the member for Sandwich-Riverside.

Mr. Burr moves that subsection 4(g)(ii) be amended in line three by changing “20 per cent” to “10 per cent.”

Mr. Burr: During second reading I mentioned the case of the home renovators, two brothers who have been buying a home a month, or about 10 a year, renovating them with their own labour and making a living, a modest living, by reselling them.

I pointed out at the time, in one of the two examples that I gave, that the materials that were used in the renovation came to only 18 per cent -- I didn’t work out the percentage at the time but I have since -- and, therefore, the house was not exempt because it hadn’t reached 20 per cent. The labour expended by the two brothers would represent another eight per cent, so if you counted their labour, you actually have an improvement of 26 per cent -- more than enough to make the property exempt from speculation tax if their own labour was counted. One of my questions at the time was, is there any way in which they can count their labour?

In the other example I gave, materials cost approximately five per cent and their own labour amounted to only four per cent, a total of about nine per cent.

I have explained why I suggested in this amendment that we cut the 20 per cent to 10 per cent. Using round figures, let us take a house worth $20,000 and a lot worth $10,000, making a total of $30,000; in order to get a 20 per cent figure for the renovation, you need $6,000. But $6,000 on a $20,000 house represents very considerable renovation.

If you were able to take the 20 per cent on the house value, $20,000, that would be $4,000, which would make much better sense. But I am informed that under the new assessment programmes, the value of the house and the lot are not kept separate. Therefore, this would not be feasible.

If you then take the figure of 10 per cent of the total value of the house and lot, in this instance it would represent a $3,000 renovation, which seems to me to be in the area of reasonableness.

Now if the minister has thought of any other way in which these renovators can be kept at work -- I know at the time he indicated that his intention was not to put them out of work -- I should like to hear what the minister and his advisers have been able to work out in this instance. If it is satisfactory, I would be glad to withdraw the amendment. But I put the amendment in order to speak on this.

Hon. Mr. Meen: Mr. Chairman, I’m pleased that the member for Sandwich-Riverside has raised this question. I’ve had a number of submissions. Some of them have told me that the 20 per cent figure is too low. Those have emanated from the Metropolitan Toronto area, where land values are so high. Consequently, a 20 per cent figure based on the total acquisition cost seems to them too easy a figure to meet, to say nothing of what they would think if I were to put it at 10 per cent, as the hon. member suggests.

I have also had submissions from outlying areas -- that is, anywhere outside Metro -- that confirm what the member for Sandwich-Riverside says about the average costs of renovation in a home in, say, Windsor, where land values may run at a quarter, or a third, something like that, of the total rather than 50, 60 and 70 per cent, as we find to be the case in the core area of Toronto.

It follows, then, that 20 per cent to some looks high and to others looks low. Ten per cent might well be right for Sandwich-Riverside, but again might be wrong in some of the remoter areas of Ontario where the value of real estate was appreciably lower than it is in Sandwich-Riverside.

Mr. Chairman: I wonder if I could tell the minister --

Hon. Mr. Meen: Yes, I can wind this up in a minute, I think, Mr. Chairman. It follows, then, that the percentage figure, though arbitrary here, needs to be subject to some kind of regulatory basis, and I outline to the member for Sandwich-Riverside that I am contemplating a section in the regulations that would tailor the amount of profit to the actual demonstrable cost of renovations.

If a man demonstrated a $3,000 expenditure, say, he should be entitled to up to $3,000 free of speculation tax, over and above his actual expenditures. Above that again, he might well be subject to a tax. That would be an incentive to get on with the job to make a handy point, like 100 per cent on his actual expenditures, but also not to make a killing, if I can use that expression, on the market when he resells that house.

Now that’s what I am contemplating doing rather than trying to make an amendment in the Act which may be meaningful to some but would be less than helpful in some other areas.

Hon. Mr. Meen moves that the committee rise and report.

Motion agreed to.

The House resumed; Mr. Speaker in the chair.

Mr. Chairman: Mr. Speaker, the committee of the whole House reports progress and asks for leave to sit again.

Report agreed to.

Mr. R. F. Ruston (Essex-Kent): Not much progress.

Mr. R. F. Nixon (Leader of the Opposition): Two subsections? I guess that’s progress.

Mr. J. E. Bullbrook (Sarnia): No, progress is not our most important product.

Mr. J. R. Breithaupt (Kitchener): It’s the cost of the product.

Mr. Bullbrook: Yes, that’s right.

Hon. E. A. Winkler (Chairman, Management Board of Cabinet): Mr. Speaker, on Thursday we’ll proceed with the consideration of this bill once again.

Hon. Mr. Winkler moves the adjournment of the House.

Motion agreed to.

The House adjourned at 10:34 o’clock, p.m.