Welcome Changes to Underused Housing Tax Announced in Fall Economic Statement

WEDNESDAY, NOVEMBER 22, 2023 

In yesterday’s fall economic statement, welcome changes were introduced to the underused housing tax for 2023 filings. The changes will not impact the 2022 UHT return but will impact filing obligations for 2023 onward. Additionally, the failure to file penalty is reduced for all UHT returns to $1,000 (from $5,000) for individuals and $2,000 (from $10,000) for non-individuals.

If enacted, most Canadian corporations, trusts and partnership will now only have a 2022 filing requirement. For 2023, following types of owners will be exempt from UHT filing obligations starting with 2023 returns:

•            a specified Canadian corporation which is generally a Canadian corporation that is incorporated in Canada where more than 90% of its voting/equity shares are owned either directly or indirectly by Canadian citizens/Canadian corporations or a combination of the two

•            a trustee of a specified Canadian trust which is generally a Canadian trust whose beneficiaries are all Canadian residents or Canadian corporations

•            a partner of a specified Canadian partnership which is generally Canadian partnership where all the members are Canadian individual residents or Canadian corporation

Currently, these types of owners are among those required to file an annual return for each Canadian residential property they own for UHT purposes. Generally, these owners would be eligible to claim an exemption from the UHT on each return. This measure would apply as of January 1, 2023; therefore, these types of owners will still be required to file any 2022 UHT returns (if they haven’t already done so). Owners who have to file 2022 UHT returns now need to file by April 30, 2024.

Further, a new exemption would be introduced for certain employee accommodations, starting with 2023 UHT returns.

If you have any questions please reach out to a member of the RMR team.