CRA applies its GST/HST policies to the UHTA concepts of primary residence and continuous occupancy

There is an exemption under s. 6(8) of the Underused Housing Tax Act regarding a home of a non-resident/non-citizen individual that is the “primary place of residence” of that individual or spouse thereof for the year in question, or of a child occupying it in connection with qualifying studies – subject to an obligation of a couple to share this exemption where there is more than one such home. CRA has indicated that it will apply its GST/HST policies in P-288 as to what is meant by “primary place of residence” – so that it cannot be secondary (determined generally by the relative degree of use in the year) to another home. Thus, the quoted term is narrower than the ITA concept of “principal residence.”

Ss. 6(1) and (9) generally provides an exemption for a corporate or individual non-resident where there is “continuous occupancy” of the home by an arm’s length individual under a written lease for specified periods amounting to at least about half the year – with a more intricate variant of this test applying where the occupant is not at arm’s length. Here, as well, CRA is applying its GST/HST policy, which is to consider that an “individual’s continuous occupancy of the dwelling unit for a period is not necessarily interrupted by the individual’s physical absence from the dwelling unit at a time in the period if … the individual still has the right to occupy the dwelling unit throughout their physical absence [and] the right to occupy the dwelling unit is not given to another individual for any period during the physical absence.” In other words, occupancy can include constructive occupancy.

Neal Armstrong. Summary of Underused Housing Tax Notice UHTN6 “Exemption for Primary Place of Residence” January 2023 under UHTA, s. 6(8) and summary of UHTN7 “Exemption for Qualifying Occupancy” under UHTA, s. 6(1).