The Underused Housing Tax Act (the “Act”) was implemented in 2022 and aims to target ownership of vacant or underused housing in Canada. The Act applies an annual underused housing tax (“UHT”) of 1% of the “taxable value” of the property unless the owner is an “excluded owner”, or the owner is eligible to claim a specific exemption. Generally, any residential properties that are owned by corporations, trusts (including bare trust arrangements) and partnerships are required to file. There are various exemptions from the tax so there is likely no amount payable, but a return must be filed to disclose the exemption being claimed.
Penalties for non-filing range from a minimum of $5,000 for individuals and $10,000 for non-individuals (corporations and trusts) per property. However, penalties and interest for the 2022 calendar year will be waived for any late-filed UHT returns and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023.
If you haven’t filed your UHT return or are unsure if you are required to file, please contact one of our tax professionals to discuss these matters in the context of your situation.
For more details about the UHT, see our previous publications.