[AKS]

Well, from people are saying, something costing 500k would cost you around 40k in extra taxes. If you buy a box for 400k. Tax on 100k renovation is 13k. Definitely worth it. And as the article noted before. If you get those "underground" contractors, you can even avoid the tax. If you don't I think getting contractors to renovate for you would be cheaper than having the builder do it for you. Especially with the outrageous upgrade prices. And you might not even be satisfied with their work. If you get a good contractor by referral, you might be happier.

 

[afransen]

Doing $100,000 in renovations to your home under the table strikes me as downright stupid. Hope you don't get audited. Nevermind the fact that you would have a hard time challenging the contractor in court should anything go wrong. And you better believe that CRA will know exactly who to audit (namely, every house in a white box subdivision).

Like I said, I can't imagine that they won't change it so every new home is tax exempt/tax reduced on the first $400,000.

 

[Eug]

Doing $100,000 in renovations to your home under the table strikes me as downright stupid. Hope you don't get audited. Nevermind the fact that you would have a hard time challenging the contractor in court should anything go wrong. And you better believe that CRA will know exactly who to audit (namely, every house in a white box subdivision).

Well, as mentioned one could just pay the tax on that $100000 of renovations. You still save the tax on the $400000.

Like I said, I can't imagine that they won't change it so every new home is tax exempt/tax reduced on the first $400,000.

I can. Why did they not do this right from the beginning? Yes, that's right, because they have no intention exempting a portion of every new home. They want to keep the exemption cheap for them.

 

[Felino]

Doing $100,000 in renovations to your home under the table strikes me as downright stupid. Hope you don't get audited. Nevermind the fact that you would have a hard time challenging the contractor in court should anything go wrong. And you better believe that CRA will know exactly who to audit (namely, every house in a white box subdivision).

Like I said, I can't imagine that they won't change it so every new home is tax exempt/tax reduced on the first $400,000.

Why is it stupid? There are many contractors that I pay in cash, they are very good. Builders aside, most people pay cash for renos anyhow. In fact, paying cash for contractors of your choice makes perfect sense since builders charge a premium. Plus you get to customize the home to your liking.

Many of the contractors that build my homes typically take some money up front and I pay them in baby steps. I have NEVER been ripped off in 16 years of doing this.

What is the CRA going to do? They never ask how you got a reno done, if they did, I would say I did it myself and/or with family members. There are too many ways around this.

 

[Felino]

While I think the HST is good for Ontario, the part that is ridiculous is when it comes to homes over $400 or $500k. If you're going to do this, tax every home equally. The government should not assume that just because someone buys a bigger or better home then they can afford an extra $30k or $50k. That is ridiculous.

If you want to get to people that really have money, plug up all the loop holes that are currently in place for business owners to write-off 'underwear' purchases. You see the point?

For example, neighbour 'A' is a junior engineer who works on contract. So he can write-off to his heart's content. He has a salary of $60,000 CDN a year which is relatively low. So you think! He only pays $5000-$7000 tax per year because of write-offs!

Neighbour 'B' who's his boss made just over $80k last year as an engineer and paid over $30,000 in taxes!!!

Proprieters, the so-called 'self-employed', corporations, or owners of smaller companies pay a lot less percentage of total income than normal middle class people who are employed full-time. This is the biggest crime in our society.

Again, go after those that are avoiding tax rather than

 

[Hydrogen]

It's also a good point that homes under $400,000 are exempt, and homes under $500,000 are partially exempt. The rich will pay more.

The HST was never intended to be an income tax.

The long-running failing with this form of taxation is that it has never been fully and properly applied as intended (to all goods and services). Had this actually happened, the range of items taxed would have been more broad, and the rate of taxation would have been lower.

There is little political will to actually go the full distance, so presumptions about wealth, who's wealthy and how to tax them begin to infect the policy.

 

[afransen]

Why is it stupid? There are many contractors that I pay in cash, they are very good. Builders aside, most people pay cash for renos anyhow. In fact, paying cash for contractors of your choice makes perfect sense since builders charge a premium. Plus you get to customize the home to your liking.

Many of the contractors that build my homes typically take some money up front and I pay them in baby steps. I have NEVER been ripped off in 16 years of doing this.

What is the CRA going to do? They never ask how you got a reno done, if they did, I would say I did it myself and/or with family members. There are too many ways around this.

1) Tax evasion is a serious crime. Risking significant jail time to avoid $10,000 - $20,000 in taxes is stupid.

2) Because they have no asked in the past does not mean they won't in the future. It will be obvious that white box new home construction will later have significant work done to them. It would be irresponsible for CRA not to audit at least a percentage of these. If they can't produce receipts, people will end up in some hot water. The only legal loophole I can see is if an individual buys a white box, improves it (paying HST on materials) and then goes on to sell it. They avoid HST on the first $400,000 and on any labour component to the improvements.

 

[afransen]

The HST was never intended to be an income tax.

It's right there in the name. Buying a home is consumption, not income, so I fail to see the relevance.

The long-running failing with this form of taxation is that it has never been fully and properly applied as intended (to all goods and services). Had this actually happened, the range of items taxed would have been more broad, and the rate of taxation would have been lower.

There are more interesting or significant failings, at least in my opinion. I think regressivity is more important. It also tends to drive parts of the economy underground, which is also probably a bigger problem.

There is little political will to actually go the full distance, so presumptions about wealth, who's wealthy and how to tax them begin to infect the policy.

What full distance? Taxing food? I'm not aware of any estimates of what percentage of consumption is subject to GST/HST, but I would imagine it's fairly high.

Some countries do apply VATs more universally, especially on food. I could see the argument in favour of applying VAT on food, I just don't consider it very important. Demand for food is rather inelastic, which is good in terms of generating revenue, but does little to incent a shift from consumption of food to investment/savings. I'm indifferent to taxing food, so long as the rebates are in place for low-income earners. I would also support taxing the full amount of new homes.

Any discussion of VAT should include consideration of its regressivity as a tax. So, as I see it, what constitutes wealthiness is part of the policy discussion.

 

[Felino]

1) Tax evasion is a serious crime. Risking significant jail time to avoid $10,000 - $20,000 in taxes is stupid.

2) Because they have no asked in the past does not mean they won't in the future. It will be obvious that white box new home construction will later have significant work done to them. It would be irresponsible for CRA not to audit at least a percentage of these. If they can't produce receipts, people will end up in some hot water. The only legal loophole I can see is if an individual buys a white box, improves it (paying HST on materials) and then goes on to sell it. They avoid HST on the first $400,000 and on any labour component to the improvements.

You have not addressed my point.

Who said anything about tax evasion? He writes off what's within legal limits. Since many of my family are accountants, their clients are mostly self-employed people. What companies or so-called 'self-employed' get away with in terms of writes offs isn't fair. The middle class pay a much greater percentage of their income to taxes than anyone.

'So What' if the CRA asks how I did my renos. I lie, and so does everyone else. They can't prove anything. I buy most of the materials myself for the contractors and keep my receipts. Otherwise the contractor buys the stuff with money I provide and gives me the receipts. Is the CRA going to install video cams at Home Depot? Either way, the CRA will never find out who does the reno or how/what was paid for it.

I for one can't wait for this to happen and the government will be wondering years from now what went wrong! Feck, can't they see how stupid this idea is? Not the tax, I agree with the HST, but simply the way it applies to housing.

What is the CRA going to do now, hire private investigators to check out whitebox homes? Bwahahahahahahahaha!!!!! I would love to see that happen.

 

[afransen]

What point did I not address? I didn't respond to your second post. Since you brought it up, I am skeptical about person 'A'. I'm curious if you could sketch out what deductions they are using. They would have to be deducting a good $20,000 a year at least, unless they are using other deductions (tuition or RRSP contributions).

 

[Yoshimura]

Any discussion of VAT should include consideration of its regressivity as a tax. So, as I see it, what constitutes wealthiness is part of the policy discussion.

Taxation itself is regressive. Just voluntarily throwing in my 2 newbie cents.

kbai

 

[afransen]

Not inherently.

 

[AKS]

regarding self-employed taxation. If you write off too much, "bells will ring". You can write off so much before auditors get suspicious and audit you. Sure they can write off half their income if they wanted to. Just beware of auditors. If you get audited once, I heard chances of getting audited over and over again are high.

 

[Felino]

What point did I not address? I didn't respond to your second post. Since you brought it up, I am skeptical about person 'A'. I'm curious if you could sketch out what deductions they are using. They would have to be deducting a good $20,000 a year at least, unless they are using other deductions (tuition or RRSP contributions).

He has 2 kids, and his wife was staying at home last year taking care of baby #2. I dunno if that has anything to do with it. He claims gas, depreciation on his car, I give him my restaurant receipts for him to claim eating out, clothing, etc...you name it, he claims it.

Ask around, this is common practice. Another friend is a self-employed graphic designer who paid $8k in taxes last year. He took in $90k. I'm not kidding, my Aunt did his taxes.

I dunno how he gets away with it. I've witnessed it for 3 years running. He paid a measly $2-$3k the first year. Can you believe it? It's not like he's self employed, he's simply under contract. In other words, an employment agency subs him out.

The second year he paid around $5k, and this year he paid about $6k.

 

[Felino]

regarding self-employed taxation. If you write off too much, "bells will ring". You can write off so much before auditors get suspicious and audit you. Sure they can write off half their income if they wanted to. Just beware of auditors. If you get audited once, I heard chances of getting audited over and over again are high.

Again, there are ways around this, lots of ways to fight this. There is too much rope for these guys.

I don't believe the working middle class has any idea what self employed or contracted employees get away with.