More Bad news for Self-Employed Clients

The Canadian Mortgage and Housing Corporation (CHMC) has just announced that they are basically eliminating their "stated income" programs for self-employed clients in April. Today, self-employed clients can qualify for a mortgage by "stating" their income and not have to prove their income with Income Tax Statements, Notice of Assessments, etc. Self-Employed people can typically write of much of their gross income, thereby reducing their taxable income. This is great for income tax purposes, but makes proving income very difficult.

In April, Self-Employed clients' Debt Ratios will be calculated using provable income. They will need to prove their income via Line 150 on their T1 General income tax forms and Revenue Canada Notice of Assessments. They will also have to prove they have been self-employed for at least three years.

As more and more Canadians become self-employed, Revenue Canada's tax base is being erroded. Since CMHC is also a department of the Federal Government, I believe this is Revenue Canada's way of getting self-employed Canadians to report higher income taxes and thereby pay larger income taxes.