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Updates on the Underused Housing Tax from the Canada Revenue Agency

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The Underused Housing Tax (UHT) has gained much attention since it was introduced and took effect on January 1, 2022. The first UHT returns for 2022 were due May 1, 2023. Recently, the CRA announced that while this filing deadline would not be extended, no late filing penalties would be assessed provided on UHT returns for 2022 that are filed, and any taxes owing are paid by October 31, 2023.

This concession by the government was necessary since attention was only recently brought to this new tax and also due to the complexity of complying with UHT rules, particularly for the first time for 2022. The concession also applies to certain elections required under the Underused Housing Tax Act (UHTA). For 2022 returns, these elections can be filed with a return by October 31, 2023.

The CRA has also recently expanded its commentary on the UHTA by updating the UHT Notice 15 – Questions and Answers about the UHT. The relief from penalties and the additional guidance from the CRA are welcome.

As noted in the BDO article, Underused housing tax program: Considerations for Canadian corporations, partnerships, and trusts, many Canadian corporations, partners and trustees will need to file a UHT return but will be exempt from the UHT. The CRA has now stated that although this filing will still be required if the taxpayer is exempt from the tax, it will not be necessary to report the value of the property on which the tax would be assessed, provided the UHT return is filed by December 31 of the following calendar year. For example, where the return for the 2022 calendar year is filed by December 31, 2023, and no tax is payable.

Note that if a UHT return for 2022 is filed after October 31, 2023, and before December 31, 2023, late filing penalties will apply, even if no tax is owed.

Further information about the UHT and UHT filings can be found at the following BDO articles:

How the underused housing tax may affect owners of residential property in Canad...

How does the underused housing tax affect non-Canadian owners of residential property? We explain who is impacted, what exemptions are available, and how to file.

Read more

The Underused Housing Tax and your farm operation

The new UHT implements 1% tax on underutilized properties in Canada. Find out if your farm operation is affected.

Read more

Contact us or one of the BDO advisors below to learn how we can help.

Brian Morcombe,  Partner, Indirect Tax Practice Leader

Jay Tulsani, Senior Manager, Indirect Tax

The information in this publication is current as of May 9, 2023.

This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact BDO Canada LLP to discuss these matters in the context of your particular circumstances. BDO Canada LLP, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.

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