AMBA Voices Concern to Ottawa over Bill C-13 and Mortgage Investment Corporations

Calgary, Alta., (November 1, 2011) - The noise the Alberta Mortgage Brokers Association (AMBA) has made over Bill C-13 and Mortgage Investment Corporations (MICs) hasn’t gone unnoticed.

On November 2, 2011, AMBA member Dale Koeller will present to the Standing Committee on Finance to communicate the implications of Bill C-13 on MICs, private lending and the Canadian mortgage broker industry.

In an effort to curtail illegitimate tax avoidance activities in Canada, the Department of Finance created new rules to RRSP/RIFF accounts which in an industry letter addressed to the Finance Minister, Jim Flaherty, it was highlighted that its comes at the expense of legitimate business that are helping to support the real estate economy and Canadians alike.

“This action directly reflects and supports the efforts and initiatives that the Alberta Private Lenders Committee, chaired by Dean Koeller, has been working towards,” AMBA President Paul Bojakli. “They’re proactively addressing issues and lobbying for the industry and our members.”

“Bill C-13 will not only affect private lenders, but the mortgage brokerage industry as a whole. If passed, it will result in less choice among mortgage brokers and, ultimately, for consumers as well.”

The following issues would negatively affect MICs:

• The proposals as they relate to MICs will impose an arbitrary 10% ownership limit for any
investments where only a portion are held in an RRSP or RRIF. Currently, the Income Tax Act allows for 25% ownership limits for MICs. In addition, under the proposals, a new and arbitrary definition of a related party is expanded from including a spouse and minor child to including any blood, marital or adoptive relative. This further reduces the scope of ownership and adds high levels of punitive taxes for certain shareholders.

• The new legislation will have the effect of taxing RRSP and RRIF income and capital gains
immediately, with no transition or notice period. In addition, it will force the “prohibited investment” out of the RRSP/RRIF by 2022, or the annuitant will suffer a penalty of a 100% tax rate – essentially a confiscation of all income and capital gains. These measures impose the punitive tax even in the absence of illegitimate tax schemes. The measures will impose penalties upon those who have conscientiously and deliberately followed the Income Tax Act’s rules in the structure and management of their investment activities.

• The bill will bring about unintended economic consequences on the private lending industry and reduce competition and choice in the mortgage brokerage industry.
AMBA and Calvert Home Mortgage Investment Corporation are proud to represent the industry and its fight in front of the Standing Committee on Finance, as this group was chosen to be heard.

The Mortgage Brokers Association of B.C. (MBABC), The British Columbia MIC Managers Association (BCMMA) and The Independent Mortgage Brokers Association of Ontario (IMBA) all submitted proposals to the government, Calvert Home Mortgage was chosen to present.

On November 4, 2011, a clause-by-clause hearing will take place in Ottawa. A decision on the bill will be reported back to the house in its final form by November 7, 2011.

AMBA is the collective voice of the mortgage brokerage industry in Alberta. AMBA develops a standard of excellence for its members through advocacy, education, information and networking. AMBA promotes an ethical and sustainable industry for consumers and industry members. It is our goal to continually raise the standards within the mortgage industry and consistently promote integrity, professional excellence, accountability and community.

For more information, contact:

Amanda Roy
AMBA Communications Specialist
Office: 403.685.9652 ext. 109
Mobile: 587.896.4602
aroy@amba.ca

Backgrounder
Calvert Home Mortgage Investment Corporation is defined as a Mortgage Investment Corporation (MIC) under the Income Tax Act and manages a mortgage loan portfolio in Alberta. The firm has been in operation as a MIC since 1982, and in the financial services industry since 1975.