The GTA Construction Report – February 2010 – PAGE A3
Renovators fear for future
Kingston Construction
Association Celebrates Their
End of Reno tax credit, arrival of HST to put damper on industry
60th Year and Continued
Growth at Annual AGM
STAFF WRITER – The GTA Construction Report
then provided the materials to underground renovators to
complete the actual work.)
DANIEL SMITH – The GTA Construction Report Staff Writer
The end of the popular stimulus renovation tax credit The federal government declined to extend the program
and the impending arrival of the Harmonized Sales Tax beyond its Jan. 31 deadline, but Martin says, with Parlia-
(HST) in Ontario is causing anxiety among renovators,
More than 120 members of the Kingston Construc-
ment out of session and opposition party support for the
tion Association gathered at Minos Village Restaurant on
who fear their current business boom will soon turn into a measure, it is possible enhancements for the industry will be
January 27th to mix business and pleasure as they cele-
painful and prolonged bust. announced when Parliament resumes. This may be a 2.5
As consumers rushed jobs in anticipation of the conclu-
brated the association’s 60th year in operation.
per cent federal GST rebate, similar to that offered for new
As the first KCA event of the year, the AGM is meant
sion of the tax credit on January 31, renovators are noticing homes, which won’t offset the 13 per cent tax increase com-
to provide an overview of the association’s progress in
a second surge in business as clients try to get work com- pletely, but will still lighten the burden. “We’re hoping the
2009 and a look ahead at what’s in store for 2010.
pleted before the HST goes into effect on July 1. province will provide a 5.4 per cent rebate on the provincial
“This is a good chance for those who come out to take
What happens after then is anyone’s guess. tax,” Martin said.
a look at the finances, as well as an opportunity to hear
Mike Martin, chair of the Ontario Home Builders’ As- Martin says many licensed, legal renovators decided to
from all the different committees and what they’ve been
sociation Renovations Council, holds out some hope that go underground in the Atlantic provinces when the HST
working on,” said KCA Executive Director Harry Sulli-
the government may introduce HST rebates or other bene- was introduced in 1987. “I will guarantee, because it hap-
van, “and we always try to mix it up with some enter-
fits to consumers when Parliament reconvenes and the gov- pened in the Atlantic provinces hwen they combined their
tainment as well.”
ernment announces a new budget. taxes, overnight 75 per cent will become underound opera-
After a delicious meal, committee heads took to the
“I can’t see anybody making a decisive decision until tors because of that HST,” Martin told The Citizen. “It’s
stage one by one to give their reports. Perhaps the most
March 2 when the (federal) budget comes down,” Martin going to cripple our industry.”
important of these, the financial report, was particularly
said. “I’m holding out a tiny bit of optimism they will do Across Canada, the home renovation industry generates
bright.
something else for us.” more than $53 billion in annual economic activity, with
As it turns out, 2009 was a boon year for the associa-
Renovators fear that without additional incentives or more than $20.3 billion in Ontario alone. The Altus study
tion, despite the recession according to treasurer Wayne
changes, the underground economy will boom as con- estimates that federal and provincial governments will lose Smith. They ended the year in the green thanks in part to
sumers balk at the 13 per cent tax bill. as much as $1.6 billion in tax revenue in underground, cash the sale of some association-owned land to the city and,
Government officials say the true situation is more com- deals, if the HST goes into effect without changes. of course, consistent growth of the association.
plex, as renovators will be able to claim input tax credits on Ontario revenue minister Jon Wilkinson said there will “We’ve been very blessed with a strong and growing
most of their business costs, and should be able to pass these be no further changes to the HST to accommodate the ren- membership,” said Sullivan of the KCA’s finances. “We
savings on to consumers, offsetting the higher consumer ovation industry. He told The Citizen that Ontario’s home also have a good business model in terms of building
tax. renovation industry would benefit from the tax, with input usage with our Learning Centre and tenants, and that
Martin says he expects legitimate renovators will, in- tax credits. Wilkinson also said the government is aware helps.”
deed, learn all they can about the input tax credit, and work of the underground economy, and that people engaging in The association’s membership is up to 408 at the time
with their suppliers to ensure that source cost savings are all-tax deals will be caught. “Those with plans to turn to the of this writing, an increase from 397 last year. “That type
passed through to them. Costs should ultimately decline underground economy should think again, he warned,” The of penetration on a per capita basis, with Kingston’s pop-
for building materials and other manufactured products as Citizen reported.
ulation, it speaks volumes about the strength and loyalty
these goods will now be eligible for full input tax credits. Martin, meanwhile, says his business has not yet seen
of our membership,” says Sullivan.
But these theoretical advantages must offset tax-avoid- any adverse consequences with the end of the tax credit, but
As the association’s new President Elect Mario Fab-
ing consumer psychology and the thriving underground he can’t see the good times continuing much longer
bro of Fabbro Masonry addressed the members, the
.
economy
crowd was almost unanimously relieved to hear that there
. “On a $60,000 renovation, $7,500 will be taxes,” he
The Altus Group recently reported to the Canadian said. “How quickly everything will come to a stop, after
will be no dues increase in 2010, thanks to the excellent
Home Builders Association that more than 37 per cent of the rush to get work done before the deadline . . . the un-
financial showing last year.
all Ontario renovators operate underground, working for derground is going to jump up and the volume of work will
However, upon hearing this news one attendee, life
cash without receipts or contracts guaranteeing their work. come to a severe halt,” he told The Impact! “I foresee a 50
member Allan Fyke, raised moderate concern about the
The renovators suggest that a sudden and sharp switch to 60 per cent drop from the year before. It’s going to be
non-increase, saying he would rather see a small increase
to the underground economy will end up costing the provin- frightening.”
instead of seeing the association wait several years and
cial and federal governments far more than they hope to Martin added: “ The HST is going to cripple the Ontario
then institute a 15-point bump. KCA’s new President said
collect in higher taxes. renovation industry
that increases would be added only reasonably and when
. The government can bail out other in-
They say the maximum $1,350 renovation tax credit dustries but turns a blind eye to ours. Not smart business by
needed, possibly starting with a small raise next year, but
probably helped, because consumers required receipts and the government — they will lose billions in unpaid taxes
that it was felt to be unnecessary for 2010.
documentation to claim the savings (though some might due to the underground economy
After hearing general updates from the other commit-
. They think they have
have used the credit for building material purchases, and problems now? Wait till the HST hits.”
tees, members voted to accept the AGM report and the
financials, as well as to welcome four new members to
the Board of Directors: Rod Pollock of T.A. Andre &
Mike Martin, chair of the Ontario
Sons as new Chair representing General Contractors, Jeff
Home Builders’ Association Reno-
vations Council, holds out some
Preston of Presland Iron & Steel and Mike Teepell of
hope that the government may in-
Union Gas as Chair and Vice Chair for the Manufactur-
troduce HST rebates or other bene-
ers and Suppliers, and Jeff Spada of Spada Tile as Vice
fits to consumers when Parliament
Chair for Trade Contractors.
reconvenes and the government
The evening ended on a lighter note, as Nigel Harri-
announces a new budget.
son, comedic magician took the stage. The entertainment
was light-hearted and interactive, and those members sin-
gled out as volunteers for his illusions and tricks were all
good sports. As attendees filtered out of the restaurant,
everyone was in good spirits and looking forward to the
next event, the annual KCA Curling Bonspiel scheduled
for Feb 10th.
In addition to their normal roster of events, the asso-
ciation is also planning a special gala in the fall specifi-
cally to celebrate their 60th year of representing the
region’s construction industry. More information on dates
and location for this special evening will be available in
coming months.
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