CRA purports to require non-resident executors to obtain UHTA clearance certificates

The UHTA reflects the reassuring premise that we will continue to be persons after our deaths. In particular, s. 6(7)(h) provides an exemption from the tax that otherwise would be imposed on a (non-resident/non-citizen) person’s ownership of a residential property at the end of a calendar year “if …the person died during the calendar year or the prior calendar year.” On the other hand, s. 6(7)(i) exempts a person who “is the personal representative of a deceased individual who was an owner of the residential property during the calendar year or the prior calendar year and the person was not otherwise an owner of the residential property in either of those calendar years.”

CRA provided a simple example illustrating the relationship between the two provisions involving individuals all of whom were not permanent residents or citizens.

  • The estate arising on the death of C on December 15, 2022 included a Canadian detached home, whose registered title was in C’s name. C (through D, the executor) was required to file a UHTA return for 2022, but was exempted as a substantive matter for that year under s. 6(7)(h). Essentially the same would have applied for 2023 if registered title had continued in C’s name until December 31, 2023, e.g., the s. 6(7)(h) exemption would have applied because C died the prior year.
  • However, the registered title was transferred to the executor (D) in February 2023. D must file a return for the property for the 2023 calendar year, but is exempted from the tax under s. 6(7)(i) because D is the executor of a deceased individual who was the property’s owner during the prior year (2022), and D is not an owner otherwise than in D’s capacity of executor.

CRA also indicated that (the executor or other representative of a deceased individual’s estate “must” obtain a CRA clearance certificate (under UHTA s. 11(4), equivalent to ITA s. 159(2)) confirming no unpaid UHTA amounts before making any distribution out of the estate, so as to avoid personal liability. This will come as a surprise to non-resident executors of non-resident estates.

Neal Armstrong. Summaries of Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023 under s. 6(7)(h), s. 6(7)(i), s. 6(7)(j), s. 2 – ownership percentage, and s. 11(4).