Order Amending the Oak Ridges Moraine Land Exchange Income Tax Remission Order: SI/2018-41

Canada Gazette, Part II, Volume 152, Number 12

Registration

June 13, 2018

FINANCIAL ADMINISTRATION ACT

P.C. 2018-610 May 29, 2018

Her Excellency the Governor General in Council, considering that it is in the public interest to do so, on the recommendation of the Minister of Finance, pursuant to subsection 23(2)footnote a of the Financial Administration Act footnote b, makes the annexed Order Amending the Oak Ridges Moraine Land Exchange Income Tax Remission Order.

Order Amending the Oak Ridges Moraine Land Exchange Income Tax Remission Order

AMENDMENTS

1 The portion of subsection 5(5) of the Oak Ridges Moraine Land Exchange Income Tax Remission Order footnote 1 before the formula is replaced by the following:

Final payment

(5) Each eligible person must pay on or before the eligible person’s filing-due date for the twentieth taxation year following their specified taxation year, the amount determined by the formula

2 Items 2 and 3 of Part 1 of schedule 1 to the Order are replaced by the following:

COMING INTO FORCE

3 This Order comes into force on the day on which it is made.

EXPLANATORY NOTE

(This note is not part of the Order.)

Proposal

Pursuant to section 23 of the Financial Administration Act, this Order amends the Oak Ridges Moraine Land Exchange Income Tax Remission Order (the “Remission Order”) to extend the deferral of taxes it provides for another 10 years.

Objective

The purpose of this Order is to extend the tax relief provided by the original Remission Order, which would otherwise end on the filing-due date for the 2017 taxation year, for another 10 years.

Background

In July 2004, certain landowners of the Oak Ridges Moraine (the “Landowners”) agreed with the Government of Ontario to exchange environmentally sensitive lands for lands owned by Ontario. Pursuant to the 2004 agreement, on August 14, 2007, the Landowners exchanged their environmentally sensitive land in the Oak Ridges Moraine for development land in North Pickering (“North Pickering Lands”). A remission of federal taxes for a period of up to 10 years was provided to the Landowners, until the filing-due date for their 2017 taxation year.

There have been a number of delays in obtaining certain approvals for the development of the North Pickering Lands. As a result, the first occupancies of homes built on the North Pickering Lands are presently scheduled for 2019. They were originally scheduled for 2011, representing a delay of eight years.

As a result of the extension of the Remission Order to 20 years from 10 years, the deferred taxes will become payable to the Receiver General for Canada progressively on the dispositionfootnote 2 of all or a part of the North Pickering Lands and any amount still owing, whether or not the lands have been disposed of, is payable by the filing-due date for the 20th taxation year (generally 2027) following the taxation year in which the land exchange took place.

Implications

The underlying tax obligations arose because of the exchange of the environmentally sensitive lands with Ontario. The preservation of the environmentally sensitive lands in the Oak Ridges Moraine is important to protect the water supply of many communities in and around the northern Greater Toronto region.

The total tax deferred under the Remission Order is approximately $17.4 million. The cost to the government to borrow $17.4 million is approximately $400,000 per year. The cost of deferring receipt of the tax revenue for 10 years would be approximately $3.6 million, on a net present value basis, calculated based on the yield on Government of Canada 10-year bonds on October 18, 2017, of 2.30% per annum.

Consultations

The beneficiaries of this amending Order (i.e. the Landowners) are aware of the proposed extension of the tax deferral. Other than the request for an extension of the Remission Order by the representative of the Landowners, and subsequent clarifying communication with the representative, no other consultations have been undertaken. As a result of this communication, the amending Order also corrects typographical errors in the last name of the two individual beneficiaries listed in Part 1 of Schedule 1 of the Remission Order.

Departmental contact

Gurinderpal Grewal
Senior Advisor
Tax Policy Branch
James Michael Flaherty Building
90 Elgin Street, 11th Floor
Ottawa, Ontario
K1A 0G5
Telephone: 613-369-3667
Email: Gurinderpal.Grewal@canada.ca