Underused Housing Tax Notice UHTN16 Proposed Amendments to the Underused Housing Tax, 8 March 2024

Arrangement can be specified Canadian trust rather than co-ownership without precluding excluded owner status

Examples 1 and 2

• A Canadian parent and Canadian adult child thereof hold title to a Canadian residential property. If they are co-owners, then each would be an excluded owner. If one of them was instead the trustee of a specified Canadian trust (for the other), then again that individual would be an excluded owner.

Arrangement can be specified Canadian partnership rather than co-ownership without precluding excluded owner status

Examples 3 and 4

• If the arrangement under which two Canadian spouses held a residential property in Canada was a partnership rather than a co-ownership, they nonetheless would be excluded owners on the basis of being partners of a specified Canadian partnership.

Canadian subsidiary of foreign owned Canadian listed corporation

Example 8

• A Canadian subsidiary of a Canadian corporation listed on a designated Canadian stock exchange would (under the amendments) be an excluded owner notwithstanding that 40% of the shares of such parent are held by a foreign corporation.

Holding of property in dual capacities of oneself and trustee

Example 10

• A foreign national holds title to a Canadian residential property as to 10% as trustee for a specified Canadian trust and to the other 90% in their individual capacity. In the capacity of trustee, the national would be an excluded owner, but would be required to file a UHT return as to the 90% interest.

Accounting for upper-tier partnerships

New subparagraphs (a)(ii) and (iii) in the definitions of specified Canadian partnership and specified Canadian trust would essentially provide a look-through rule where a particular partnership or trust has a second-tier partnership or second-tier trust as a member or beneficiary, as the case may be. In simple terms, one would look through the second-tier partnership or second-tier trust and determine whether each of its members or beneficiaries, as the case may be, is a person referred to in paragraph (c) of the revised definition of excluded owner. Where this test is met, the particular partnership or trust may qualify as a specified Canadian partnership or specified Canadian trust, as the case may be, for UHT purposes.

Accounting for 2^nd-tier trusts

New subparagraphs (a)(ii) and (iii) in the definitions of specified Canadian partnership and specified Canadian trust would essentially provide a look-through rule where a particular partnership or trust has a second-tier partnership or second-tier trust as a member or beneficiary, as the case may be. In simple terms, one would look through the second-tier partnership or second-tier trust and determine whether each of its members or beneficiaries, as the case may be, is a person referred to in paragraph (c) of the revised definition of excluded owner. Where this test is met, the particular partnership or trust may qualify as a specified Canadian partnership or specified Canadian trust, as the case may be, for UHT purposes.

Exemption for officer accommodation at remote work site

Example 12

• A Canadian corporation that is not a specified Canadian corporation (e,g,, foreign-owned) has a residential property at its remote mining site which provides lodging for its officers when they visit the mine.