The current Canadian government has introduced what they call the Underused Housing Tax (UHT). This affects residential property and owners of that property. Excluded owners do not have to file a UHT return, however affected owners do have to file even if they do not owe tax or are exempt. If an affected owner fails to file a return they could face penalties up to $10,000.
Who is Required to File a UHT Return:
- ALL owners of a residential property, except those identified as an excluded owner are required to file a UHT return even if they are exempt from the tax.
- To qualify as an excluded owner of the property must be a:
- Citizen or permanent resident of Canada
- Publicly traded Canadian Corporation
- Private Canadian Corporations and Partnerships do not qualify as excluded owners and must file the UHT return to avoid the tax and avoid significant failure to file penalties.
- Affected owners include Canadian Controlled Corporations and Partnerships.
- Any residential properties held through a corporation would need to file a UHT return for each property.
- If you hold the property with others, acting as a business to generate profits, you would need to file. Although personally reported, any properties you operate by partnering with others may be deemed a partnership and require a filing. CRA as indicated that partnerships include; two or more persons carrying on a business with intention of profit.
- The person or entity on title must file the UHT return and a separate return for each property.
- If there are multiple owners on title each owner must file a separate UHT return.
- Even if you qualify for an exemption on the tax, you are still required to file if you are an affected owner.
- A Specified Canadian Corporation and Specified Canadian Partnership (all owners or all partners are Canadian) would be exempt from the tax but still required to file the return.
- Excluded owners include Citizens of Canada. Any properties you own as an individual on title, or with others but not acting as a business would be excluded from the filing.
- From CRA “If you are an affected owner of a residential property in Canada on December 31, you must file an Underused Housing Tax return for the calendar year. Even if your ownership of the property qualifies for an exemption and you do not owe any tax, you still must file a return. You may either use electronic filing, or you may file your return by mail. There are significant penalties if you fail to file an Underused Housing Tax return when it is due. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000.
Filing the Underused Housing Tax Return
As of March 14, 2023, UHT returns can be filed in My Account and My Business Account.
If you are a corporation, you must use a business number (BN) with an Underused Housing Tax (RU) program account identifier code to file your Underused Housing Tax return. You will have to register your RU program account before you can file your return .You will be able to register your RU program account online through the following link: How to register for a business number or CRA program account
If you are not registered for the CRA’s online portals, you can also file your UHT return electronically through a webform at the following link Ready to file.
If you file your UHT return electronically through this webform, you will need:
- A valid CRA tax identifier number: Social Insurance Number (SIN), Individual Tax Number (ITN) or Business Number (BN-RU), and
- A digital access code (DAC). For step-by-step instructions on how to obtain a DAC: see Need a Digital Access Code. If assistance is needed in obtaining a DAC, you can call the UHT filing helpdesk toll free at 1-800-387-0720 or call collect at 613-221-3224
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