Navigating the 2023 UHT Filing Deadline: A Guide for Property Owners

Retroactive to January 1, 2022, the new Federal Underused Housing Tax (“UHT”) is an annual 1% tax levied against “owners” of residential properties that are considered vacant or underused in Canada and applies to all residential properties owned as of December 31^st of each calendar year.

To comply with this new policy, non-excluded owners must submit an Underused Housing and Tax Return Form—and accompanying payment, if applicable—by April 30^th, 2023.

However, the CRA has recently introduced a ‘grace period’ for affected owners, saying:

“application of penalties and interest under the UHTA for the 2022 calendar year will be waived for any late-filed underused housing tax (UHT) return and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023. This transitional relief means that although the deadline for filing the UHT return and paying the UHT payable is still April 30, 2023, no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.”

After this period, failure to do so will result in a minimum fine of $5,000 for individuals and $10,000 for non-individuals. This form will need to be submitted annually for as long as the policy is in effect.

Who Needs to File for UHT in 2023?

Key questions arising from this new policy are specifics around the definition of “owner”, as well as what constitutes a “residential property”. As written, the owner of a residential property for UHT purposes is the registered owner of the property as shown on a title search in the land registration system. Unless excluded, the owner shown on title to the property must file a UHT Return regardless of who or what holds the beneficial interest.

A residential property is defined as a detached house or similar building containing not more than three dwelling units, part of a building that is a semi-detached house, a rowhouse unit, a residential condominium unit or other similar premises that is, or is intended to be, a separate parcel of land or other division of property party from any other unit in the building to which it is attached.

Exemptions and Considerations for UHT Compliance

Excluded owners have no UHT filing obligations. An owner is excluded from filing if on December 31^st, they are:

• a Canadian citizen or permanent resident of Canada (except where the individual holds an interest in the property as a partner of a partnership or as a trustee of a trust);
• a corporation incorporated under the laws of Canada or a province therein and whose shares are listed on a stock exchange;
• a registered charity;
• a cooperative housing corporation, a hospital authority, a municipality, a public college, a school authority or a university;
• an Indigenous governing body; or
• the government of Canada or an agent of the government.

Impact on Corporate Owners of Residential Properties

This policy may have significant impact on corporate owners of residential properties—or those who own via a trust. Since these corporate entities typically complete tax filing in line with their fiscal year-end—not calendar year—they risk missing the April 30^th deadline simply because they didn’t know a separate filing was required. It’s therefore important to speak with your accounting or legal partners to ensure you’re submitting on time and avoid a fine.

Concerned about how the Underused Housing Tax affects your property or business? Reach out to Connor G.W. Watt or Doug H. Hopkins at Boughton Law for expert advice and support.