April 24, 2017
Ontario REALTORS® are one step closer to being allowed to form personal real estate corporations, thanks to the success of recent advocacy work by the Ontario Real Estate Association (OREA).
This past winter, OREA launched a campaign to support Bill 104, the Tax Fairness for Realtors Act, 2017. On March 23, the bill passed second reading in the Ontario legislature. This means the proposed legislation has moved past another hurdle as it progresses to the final stage of debate. The bill must still go through a review by a legislative committee, third reading and a final vote in the legislature before it becomes law.
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Real Estate is one of very few regulated professions in Ontario that cannot incorporate under law, but Bill 104 aims to change that. If passed, the bill would permit Realtors to form personal real estate corporations (PRECs). This would enable real estate salespeople and brokers across the province to take advantage of the business benefits of incorporation, such as lower tax rates.
As part of its lobbying efforts, OREA created a website, RealtorTaxFairness.ca, to raise awareness of the campaign. The association encouraged Realtors to write to their Members of Provincial Parliament (MPP) in support of the proposed legislation. Almost 10,000 Realtors participated in this call to action, conveying their views to elected officials.
Currently, real estate professionals are not allowed to form PRECs due to a technicality in the Real Estate and Business Brokers Act, 2002. However, other regulated professions in Ontario, including accountants, lawyers, health professionals, social workers, mortgage brokers, insurance agents, architects and engineers, can all form personal corporations. Moreover, in British Columbia, Alberta, Saskatchewan, Manitoba, Quebec and Nova Scotia, real estate professionals are permitted to form PRECs.
"This legislation is about giving Realtors the same business rights as everybody else.”
“This legislation is about giving Realtors the same business rights as everybody else,” said Ettore Cardarelli, president of OREA and a Mississauga Realtor. “OREA is working to make sure Ontario Realtors are treated fairly. This issue has been very important to me. For several years, we’ve been working tirelessly to ensure that Realtors are treated fairly in Ontario and given the ability to incorporate. That’s why I’m so happy about this result. We have been close twice before but never this close.”
This private member’s bill, submitted by Todd Smith, Conservative MPP (Prince Edward-Hastings) was introduced twice before, in 2014 and 2015. It was reintroduced in March of this year and co-sponsored by NDP MPP Catherine Fife and Liberal MPP Mike Colle. It is not yet known when a third reading will take place. However, the bill has the support of three political parties and OREA is continuing its efforts to urge its passage into law.
“Realtors are pillars of their communities and hard-working small business owners,” says Tim Hudak, OREA’s chief executive officer. “Personal real estate corporations will help them offer more services to clients, invest in new technology and create jobs in their communities.”
A 2015 study by the Centre for Spatial Economics found that personal real estate corporations would result in a positive economic benefit for the province. Specifically, the report found that PRECs would create between 33 and 89 net new jobs annually and contribute between $9 and $25 million per year to Ontario’s GDP.
During the recent advocacy campaign, OREA launched a massive call to action, encouraging Realtors to contact their local MPPs in anticipation of a third vote. The association is continuing its advocacy work and urging legislators to pass the bill into law. Realtors can send an email to their MPP by visiting RealtorTaxFairness.ca. For news about the progress of the bill, keep watching the OREA website and blog.
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