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Underused Housing Tax (UHT) Filings

March 14, 2023

Penalties waived if filed by by Oct. 31

“To provide more time for affected owners to take necessary actions to comply, the Minister of National Revenue is providing transitional relief to affected owners. The application of penalties and interest under the UHTA for the 2022 calendar year will be waived for any late-filed underused housing tax (UHT) return and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023.

This transitional relief means that although the deadline for filing the UHT return and paying the UHT payable is still April 30, 2023 [May 1st since April 30th falls on a weekend], no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.”

Learn more: Penalties waived for 2022 UHT return as long as UHT return filed or UHT paid by October 31, 2023.

Do you have an Underused Housing Tax (“UHT”) filing requirement?

The Government of Canada has introduced new legislation effective January 1, 2022 introducing a tax on underused housing on residential property in Canada. While this tax is intended to target residential property held by non-residents and non-Canadian citizens, the scope of the legislation is broader. Certain Canadian individuals and corporations that hold legal title under the land registry system to a residential property may have a UHT filing obligation. The 2022 UHT return deadline is April 30th 2023 (May 1st since April 30th falls on a weekend) and a minimum penalty of $5,000 for individuals (or $10,000 for all other entities) applies if you fail to file the required return by the deadline (penalties waived if filed/paid by Oct. 31 2023) .

There are two aspects of UHT Act to be considered:

  1. Do I have a UHT filing requirement?
  2. Do I have a UHT tax obligation?

“Excluded owners” are exempt from both a UHT return filing and tax obligation. The following owners who hold legal title to a residential property in Canada at Dec 31st are “excluded owners” under the UHT Act:

  1. An individual Canadian citizen or permanent resident of Canada, unless they would be exempt as owner in their capacity as a trustee or partner (excluding personal representative of a deceased individual)
  2. A publicly traded Canadian Corporation
  3. A person with title to property in their capacity of trustees of various widely held trusts (i.e. mutual fund trust, REIT, SIFT)
  4. A registered charity
  5. A cooperative housing corporation
  6. A municipal organization or other public institution or government body
  7. An Indigenous governing body or a corporation
  8. “Prescribed persons” (not yet defined)

As noted above, individuals or corporations that own residential property in their capacity as a trustee or a partner, are “affected owners” and have a UHT filing requirement. Whether or not tax is payable on the UHT filing depends on whether an exemption is available.

If you are in any of the following circumstances, you may have a UHT filing requirement and should speak with your tax advisor:

  1. Privately held corporations holding residential property (including farming corporations);
  2. Individuals holding residential properties in partnership (i.e. residential rental properties, farming partnerships);
  3. Family members that are holding residential property “in trust” (i.e. parents on title with a child or vice versa);
  4. Superintendent or guest suites owned by a condominium corporation;
  5. Trustees (other than executors/estate trustees) of a trust that holds legal title to residential property – including bare trusts.