As part of its Fall Economic Update, the federal government introduced several important changes to the still new Underused Housing Tax (UHT). When the draft amendments are passed, it will have a significant impact on who is required to file annual UHT returns. Starting with the 2023 reporting year and onwards, fewer taxpayers will need to file in order to claim an exemption from the UHT tax of 1% of the property value.
New Excluded Owners
The proposed amendments to the UHT will exclude the following, in summary, from having to file a return:
- Specified Canadian corporations – these are defined as corporations where non-Canadian individuals or corporations own less that 10% of the voting shares and equity value in the company.
- Partners of a specified Canadian partnership – this applies when each partner would otherwise be ‘excluded’ from the UHT if they owned the property personally.
- Trustees of a specified Canadian trust – if all the beneficiaries of the trust would otherwise be ‘excluded’ from the UHT, or the trust is owned by a specified Canadian corporation, then the 1% tax would not apply.
The most common ‘exclusion’ from the UHT is being a Canadian citizen or permanent resident of Canada.
Reduction in Penalties
The draft legislation also introduced a reduction in the penalties for failing to file. Individuals who were previously facing a fine of $5,000 for failing to file will now see that penalty reduced to $1,000. Corporations who fail to file will see their fine reduced to $2,000 from $10,000. The changes apply for filings for the 2022 calendar year.
Filing Deadline
The government has continued to extend the filing deadline for 2022. Originally set for April 30, 2023, the government announced last spring that the deadline was being extended to October 31, 2023. On October 31, 2023, the deadline was moved once again, this time to April 30, 2024. If you have not yet completed your 2022 UHT filing, it is not too late. But note, the UHT filing deadline for the 2023 calendar year is the same date – April 30, 2024. At least it is as of now.
