CRA announces that UHTA returns will not attract late-filing penalties or interest if received by October 31, 2023

CRA has announced:

The application of penalties and interest under the UHTA for the 2022 calendar year will be waived for any late-filed underused housing tax (UHT) return and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023.

This transitional relief means that although the deadline for filing the UHT return and paying the UHT payable is still April 30, 2023, no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.

Although CRA has published quite a number of UHT Notices, they mostly deal with basic points. Preferably, CRA will address some of the more obvious issues before October (rather than lying in wait until taxpayers have filed), including the following:

• Must a registered owner of a 200-unit condo project file a separate return for each condo, or can it rely on the jurisprudence under s. 32 of the Interpretation Act and file one return for all the condos - keeping in mind that the stipulated penalty is $10,000 per late-filed return, absent relief?
• Must such a return (or returns) be filed even where the condo tower was only partially constructed on December 31 (there being no explicit requirement that a residential property be habitable)?
• Can a nominee corporation with $1 of share capital rely on the direct and indirect ownership and control of that one itty-bitty share to access the substantive exemption for specified Canadian corporations –even if, viewed as the trustee of a bare trust, such trust would not qualify as a specified Canadian trust?
• Does the reference to “indirect” ownership override the tax jurisprudence that a shareholder does not own the property of the corporation?
• Does “control” refer only to de jure control?
• Is a trust a person, so that, as a beneficiary, it could preclude a trust as qualifying as a specified Canadian trust? For example, if a mooted specified Canadian trust has an RRSP as a beneficiary, would the beneficiary be the annuitant, the trust company trustee - or the RRSP viewed as a person that was a trust (which would not qualify as an excluded owner, and would taint the trust)? Similarly, what if a beneficiary is an estate?
• Similarly, is a trust a person so as to taint a mooted specified Canadian partnership of which it is a partner?
• Are contingent beneficiaries treated as beneficiaries for purposes of the specified Canadian trust definition – for example, a trust specifies various Canadian citizens as beneficiaries, but the trustees are accorded the discretion to expand the beneficiaries to any other family members, some of whom are not citizens or permanent residents?
• Will CRA apply its position under the ITA that partnership property is not owned by the partners – and similarly where a non-citizen/non-permanent resident is the beneficiary of a trust whose corpus includes shares of a mooted specified Canadian corporation?

Neal Armstrong. Summary of 27 March 2023 CRA News Release, Underused Housing Tax penalties and interest waived, under UHTA, s. 48(1).