UHT Returns- Do They Apply To Your Small Organization?

What is the UHT Return?

The Underused Housing Tax Act came into effect on January 1, 2022 and is an annual 1% tax on the ownership of vacant or underused housing in Canada (based on taxable value but fair market value can be elected). While the tax usually applies to non-resident, non-Canadian owners, it also may apply to some Canadian owners.

Does it Apply to Small Organizations or Partnerships?

Exclusion from the act as listed by the CRA (not an exhaustive list):

• an individual who is a Canadian citizen or permanent resident – unless included in the list of affected owners 
• any person – including an individual who is a Canadian citizen or permanent resident – that owns a residential property as a trustee of a mutual fund trust, real estate investment trust, or specified investment flow-through trust (SIFT) for Canadian income tax purposes
• a Canadian corporation whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes
• a registered charity for Canadian income tax purposes
• a cooperative housing corporation for Canadian GST/HST purposes
• an Indigenous governing body or a corporation wholly owned by an Indigenous governing body

You or your organization may be considered an “affected owner” (meaning the tax act applies to you) if, amongst other things:

• an individual who is not a Canadian citizen or permanent resident
• an individual who is a Canadian citizen or permanent resident and who owns a residential property as a trustee of a trust (other than as a personal representative of a deceased individual)
• any person – including an individual who is a Canadian citizen or permanent resident – that owns a residential property as a partner of a partnership 
• a corporation that is incorporated outside Canada
• a Canadian corporation whose shares are not listed on a Canadian stock exchange designated for Canadian income tax purposes
• a Canadian corporation without share capital

Are There any Exemptions?

Possible exemptions listed under the Act depend on the type of owner you are, and the availability, location, use or occupant of the property. 

What Happens if the Act Applies to You?

If you are an “affected owner” you must file a UHT return for each residential property that you own in Canada on December 31 and pay the tax by May 1st, 2023 (normally due April 30th, but that is a Sunday this year). If you qualify for an exemption, a return must still be filed.

Unsure if you Need to File?

The Act has caused many Canadians to try a determine if they fall under one of the affected individuals such as partner (are you on the title of a residential rental property?) or trustee (are you on the title of a relative’s residential property?). 

Begin by reading the CRA’s web page, then discuss with your CPA.

Resources

CRA-UHT Page

https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html