The UHT must be filed for the first time in 2023 and all residential properties owned by non-residents, a private corporation, trust or partnership must file a return for each property, regardless of tax owed.
On March 27, 2023, the CRA announced that penalties and interest for the 2022 calendar year will be waived for late-filed UHT returns and late-paid UHT payments, as long as the UHT return is filed and payment made before November 1, 2023.
The Canada Revenue Agency (CRA) has released the Underused Housing Tax Return and Election Form. The UHT imposes a tax of 1% of the value on any residential property declared as vacant and owned by any non-resident, non-Canadian. Additionally, the UHT requires corporations, trusts and partnerships that own residential real estate to file a return, even if paying the tax is not required. First announced in the 2021 Federal Budget, the Federal Underused Housing Tax (UHT) came into effect in 2022. Thus, the UHT return will need to be filed with any UHT owed and paid for the first time in 2023. There are two separate and distinct components to understand your requirements regarding the UHT filing: (i) whether a UHT return filing is required and (ii) if there is an obligation to pay the UHT.
The 1% UHT is determined based on four categories: Owner, Availability, Occupant and Location. The following are the most common reasons an owner may be exempt from paying the UHT. For a comprehensive list, visit this Government of Canada website.
If you are still unclear if the UHT applies to you and your residential properties, this reference chart may be of assistance in helping you determine if you need to file and pay the UHT and how to calculate the tax.
The UHT return filing deadline is April 30th of the following taxation year, resulting in April 30, 2023 being the first UHT return filing deadline for 2022 taxation years. Penalties for failure to file a UHT return are severe, including a minimum of $10,000 for corporations and a minimum of $5,000 for individuals. While the UHT return filing deadline happens to coincide with the personal income tax return filing deadline, it is an entirely separate tax return and must be still filed separately. If you have questions about the UHT or any other personal and/or corporate tax return filing obligation, reach out to a tax expert at Bateman MacKay.
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