11 Mar Changes to the Underused Housing Tax

The federal government has proposed changes to the Underused Housing Tax (UHT) effective for the 2023 taxation year. Though these changes have yet to be passed by Parliament, the Canada Revenue Agency (CRA) has started implementing them since the 2023 UHT Return is due April 30, 2024. These changes exclude more taxpayers from having to file a UHT Return, and they will be exempt from the tax.  

Previously owners of a residential property held by a company, partnership, and trust would be required to file a UHT Return.  Many of these owners were then exempt from the tax if they were a Canadian-specified corporation, a Canadian-specified partnership, or a Canadian-specified trust. These were effectively corporations, partnerships, or trusts owned/controlled by Canadian citizens.  For the 2023 year, Canadian-specified corporations, partnerships, or trusts would be excluded owners and, therefore, not required to file a UHT Return.  

Further, stratified condo buildings would not be considered residential properties (and therefore not required to file) where the building has more than four units, and a person owns 90% or more of the units in that building. This change was because some apartment buildings are stratified so that each unit is set as a separate legal address, and therefore, a UHT Return was previously required for each unit.  

And last, retroactively, for the 2022 taxation year, the penalties for failure to file a UHT Return have been decreased to $1,000 (from $5,000) for individuals and $2,000 (from $10,000) for others.  

Note: If you were required to file a UHT Return for the 2022 year, these changes do not impact that requirement.  The deadline for that 2022 return is also April 30, 2024.