CRA provides more comprehensive UHTA interpretations

CRA has provided numerous interpretations of underused housing tax issues in a recent notice, including the following:

• A “trust” is viewed as including a bare trust so that, for example, an individual citizen holding as a bare trustee would not qualify as an excluded owner.
• The extension of the definition of an “owner” (which otherwise essentially refers to a registered owner) to a person who “could reasonably be considered to be an owner” does not include the beneficiaries of a trust, but could apply, based on the wording of a deed in a province using a deed-registration, rather than land titles, system.
• A corporation holding title to a residential property in Canada as bare trustee would be required to file a return, but its holding may be exempted if the trust is a specified Canadian trust (no reference was made to the possibility that it alternatively might be excluded as a specified Canadian corporation).
• For purposes of the definition of a residential property (including as it applies to condo units), CRA considers that a property in construction does not become a residential property until “construction of the property is substantially completed (generally 90% or more) so that an individual could reasonably inhabit the property” – so that there is no reporting obligation for the property if on December 31 it has not yet become a residential property.
• Where, for example, the municipally assessed value of a 10 hectare plot of land reflects the value of land (9.5 hectares) that is not necessary for the use of the house on the land as a residence, the taxable value of that property nonetheless is based on that assessed value, unless an election is made to use the FMV of the residential property (which generally would only include the ½ hectare).
• An affected owner of multiple residential properties on December 31 must file a separate return for each property rather than filing a single UHT return and attaching a spreadsheet.
• Having regard to the requirement that the beneficiaries of a specified Canadian trust must all be Canadian (as defined), CRA considers that a beneficiary does not include any contingent beneficiary of the trust (being “a person who may or will benefit if a primary beneficiary dies or otherwise loses rights as beneficiary”).
• As a trust is not a person for UHT purposes, it is likely that where a trust is a beneficiary of another trust, the beneficiaries of the first trust are to be treated as beneficiaries of the second trust.

Neal Armstrong. Summaries of Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023 under UHTA, s. 2 – excluded owner – (b), (c), owner, dwelling unit, residential property, taxable value, specified Canadian trust, s. 7(1).