Does The Underused Housing Tax Apply To You?

Church property, Trust Law | , ,

does the underused housing tax apply to you
Table with red paper house on it. Coins are piled beside the house. A man is writing on a pad of paper in the background.

What Is It?

The Underused Housing Tax (UHT) is an annual 1% tax on the ownership of vacant or underused housing in Canada. While primarily applying to non-resident, non-Canadian owners, there are some instances where the UHT could apply to Canadians.

Who Is Impacted?

For our purposes, I’ll bring attention to two groups. An “excluded owner” has no obligations or liabilities under the UHT and includes a “registered charity for Canadian income tax purposes”. However, “affected owners” do have obligations and liabilities under the UHT, and this includes “a Canadian corporation without share capital”. Since this is a new tax that has yet to be applied by the government or interpreted by courts, the UHT’s exact scope is uncertain.

What Should You Do?

You should reach out to your legal and financial advisors as soon as possible to determine if your organization is an “affected owner” under the UHT. If it is, you must file a separate return for each residential property that the organization owns in Canada, even if it is eligible for an UHT exemption. An affected owner’s failure to file, even if they are ultimately exempt from the UHT, can still result in hefty fines – a minimum $10,000 penalty for corporations. If the organization has to file a return for a residential property for the 2022 calendar year, the return is due by April 30, 2023. Since April 30, 2023, falls on a Sunday, the return is on time if the CRA receives it on May 1, 2023. In other words, time is of the essence.

Noteworthy is provided for general information purposes and does not constitute legal or professional advice. Every organization’s circumstances are unique. Before acting on the basis of information contained in this blog, readers should consult with a qualified lawyer for advice specific to their situation.

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