Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
GST/HST Rulings Directorate
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 246135
Dear [Client]:
Subject: Underused housing tax (UHT) interpretation
Eligibility for multiple exemptions
We are writing in response to the correspondence of [mm/dd/yyyy], […], concerning the eligibility for multiple UHT exemptions. We apologize for the delay in this response.
All legislative references are to the Underused Housing Tax Act (UHTA) unless otherwise specified.
Based on your correspondence, we understand that your scenario is as follows:
1. A property, located in Canada, is a residential property for UHT purposes.
2. A trustee of a trust is an owner of the residential property for UHT purposes.
3. The trustee of the trust is an affected owner of the residential property for UHT purposes, and therefore, has to file a UHT return for the residential property.
4. The trustee of the trust may be eligible for two UHT exemptions:
a) the exemption for trustees of specified Canadian trusts in subparagraph 6(7)(a)(ii); and
b) the exemption for qualifying occupancy (that is, the trustee rents the residential property to a tenant under a rental agreement) in subsection 6(9).
INTERPRETATION REQUESTED
You would like to know whether the trustee of the trust can claim both of the exemptions when filing the UHT return for the residential property.
INTERPRETATION GIVEN
Your question is similar to Question 3.2. in Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax. Here is the response to that question:
When filing a paper return by mail, the affected owner can choose to declare only one exemption (and provide the requisite information about that one exemption) or choose to declare all of the applicable exemptions (and provide the requisite information about all of those exemptions). When filing an electronic return online, the affected owner can declare only one exemption.
However, please note that Part 6 of the UHT return (that is, Other exemptions) was recently updated to instruct UHT filers that they should select only one exemption that applies to them or their property. Consequently, in the coming months, the Canada Revenue Agency (CRA) will be updating the response to Question 3.2 to reflect that when filing a UHT return (including a paper return by mail) an affected owner should declare only one exemption in the return, and provide the requisite information about that one exemption.
ADDITIONAL INFORMATION
Proposed amendments to the definition of “excluded owner”
On May 2, 2024, the Minister of Finance Canada tabled Bill C-69, the Budget Implementation Act, 2024, No. 1, in the House of Commons. Among other things, Bill C-69 would amend the UHTA. These amendments were previously announced on November 21, 2023, and would apply in the 2023 and subsequent calendar years.
Under the proposed amendments, the definition of “excluded owner” would be revised to include more persons as excluded owners. Specifically, a person would be an excluded owner for UHT purposes, for the 2023 and subsequent calendar years, if the person is an owner of a residential property as a trustee of a trust that is a specified Canadian trust. As an excluded owner of a residential property for a calendar year, such a person would not have to file a UHT return or pay the UHT for the residential property for the calendar year.
Given trustees of specified Canadian trusts would be excluded owners for UHT purposes, it is proposed that the exemption for trustees of specified Canadian trusts in subparagraph 6(7)(a)(ii) would be repealed for the 2023 and subsequent calendar year. In short, the exemption for trustees of specified Canadian trusts would be available only for the 2022 calendar year.
For more information about the proposed amendments, please refer to Underused Housing Tax Notice UHTN16, Proposed Amendments to the Underused Housing Tax, which can be found on the Canada.ca website.
DISCLAIMER
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, the interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the UHTA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) or the additional information provided herein.
CONTACT
If you require clarification with respect to any of the issues discussed in this letter, please call Stacy Furlong at 902-719-7843.
Sincerely,
Chris Lewis
Manager
Real Property – Specialty Tax Unit
Financial Institutions and Real Property Division
GST/HST Rulings Directorate
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