ONDP thanked for supporting Personal Real Estate Corporations for wealthy realtors
PRECs are primarily "for high income agents" and may allow those who form them to defer taxes to their benefit, engage in income splitting and get "a significant tax break on the capital gains you realize on the disposition of certain private corporation shares."
David Oikle, president of OREA, thanked ONDP leader Andrea Horwath on Twitter for her support of PRECs.
Despite its pretensions to be a party of labour and working people, the Ontario NDP (ONDP) has a long history of pandering to the business class in the province.
Since becoming the official opposition we have seen the leader herself, Andrea Horwath, in 2018 appear at an Ontario Chamber of Commerce event mere days after the gutting of rights for workers that the organization had called for. This included the cancellation of the minimum wage increase to $15/hour and the elimination of the two sick days brought in by the Liberals.
This is far from the only example. In April 2019, for example, Oshawa ONDP MPP Jennifer French actually crossed a protest picket line to attend a local Chamber of Commerce event. Ian Arthur, NDP MPP for Kingston & the Islands got in on the game in February, 2020:
In November, 2018 Horwath and ONDP Deputy Leader Sara Singh and Parkdale-High Park MPP Bhutila Karpoche attended the Ontario Real Estate Association's (OREA) Political Affairs Conference in Toronto. OREA is the political lobby group of real estate brokers and the province's real estate boards and they were fresh off of celebrating Doug Ford exempting new units from rent control during a housing crisis.
This housing crisis is far from over despite the raging pandemic now.
Still, Horwath made it a priority on April 26, 2021 to join OREA and the Ontario Chamber of Commerce again on an online meeting where OREA thanked Horwath and the ONDP for its support of the creation of Personal Real Estate Corporations (PREC). With her at this meeting were NDP MPPs Catherine Fife, Taras Natyshak, France Gélinas, Ian Arthur, and Sara Singh.
What are PRECs? They are a way for wealthier real estate agents (realtors) in a "higher tax bracket to defer (and potentially save) on taxes."
Under the current system, if a real estate agent earns $250,000 in commissions, they have no choice but to pay income taxes on the entire amount minus applicable deductions. Under the proposed Personal Real Estate Corporation structure, if an Ontario realtor makes $250,000 in commission in any given year, they will first pay corporate taxes at the corporation level, and then personal taxes at their personal tax rate only to the extent that they withdraw funds out of the corporation for personal use.
As such, for high income earners who do not need their entire earnings immediately, there is an opportunity to defer personal income, and therefore personal taxes, into the future.
This means it is primarily "for high income agents" as there is :
No advantage if an agent needs all their earnings for personal use – that is, the advantages only exist for high income earning agents who can afford to leave some earnings in the corporation and pay lower tax rate.
Tax deferral is not the only benefit of a PREC to wealthy real estate agents. According to OREA it also potentially allows for things like income splitting, greater capital gains tax exemptions and business expense deductions. OREA glowingly tells its members, for example, that after forming a PREC they "may enjoy a significant tax break on the capital gains you realize on the disposition of certain private corporation shares."
What a wonderful thing for a social democratic party to be concerned about during a housing crisis and pandemic.
OREA certainly was thankful for the ONDP's support: