Underused Housing Tax Act

Table of Contents

Section 2

Dwelling Unit

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Need for private facilities (paras. 1.24, 1.35, 1.36)

  • Boarding or lodging houses are not considered to be dwelling units due to the lack of “separate and self-contained sets of private living quarters.”
  • Similarly, for dormitory quarters for foreign farm workers - but not if they are all put into a detached home that had been designed to service as a detached residence.
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Excluded Owner

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Deceased individual can be excluded owner (para.12.1)

  • Given the implication of s. 6(7)(h) that a deceased individual still shown on title is a person, such person can also qualify as an “excluded owner.”
Words and Phrases
person
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Paragraph (b)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Two returns required where 2 registered individuals holding as partners (para. 1.8)

  • Where 2 individual citizens are shown on the land registration system as co-owners, but hold in their capacity of members of a partnership, each must file a return.

Bare trusts (paras. 1.12, 1.13)

  • “Trust” in para. (b) is interpreted to include a bare trust, being “a trust where the trustee holds legal (titled) ownership of the trust property and is not required to perform any active duty to carry out the trust;” and “trustee” is interpreted to include a bare trustee.
Words and Phrases
bare trust
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Paragraph (c)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Continuance into Canada not incorporation in Canada (para. 1.19)

  • A corporation incorporated outside Canada and continued into Canada does not qualify as incorporated in Canada.
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Owner

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Meaning of “could reasonably be considered to be an owner” (para. 1.14)

  • The reference to “could reasonably be considered to be an owner” does not include the beneficiaries of a trust.
  • This phrase could apply based on the wording of a deed in a province using a deed-registration, rather than land titles, system.
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Ownership Percentage

Administrative Policy

Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023

Two (apparent) joint tenants deemed to each have a 50% ownership percentage

Example 3

  • E and F (each not a citizen or permanent resident) are spouses and (apparently) joint tenants.
  • Since the registered title does not indicate their percentage ownership, they are deemed to each have an “ownership percentage” of 50% under the term’s definition.

Residential Property

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Focus on purpose of construction (para. 1.25)

  • Commercial cottages, cabins and chalets situated on one lot are not considered to be residential properties - they “were purposely constructed or converted to be something other than a residence.”
  • Cottages built on separate lots qualify under para. (a) because they were “purposely constructed or converted to be a separate and self-contained set of private living quarters” – even though their use may be diverted to provide transient accommodation.

Exclusion of mobile homes (paras. 1.28, 1.34)

  • Floating homes, mobile homes and park model trailers are not buildings and, thus, not residential properties.

Not a residential property prior to substantial completion (para. 1.30, 1.31)

  • For purposes of both (a) and (b) of the definition, 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.
  • In particular, although a bounded space that is intended to be a separate unit, in a building that will be severed into separately-owned condominium units under a registered plan, for use as a dwelling unit constitutes a residential condominium unit, it must be substantially completed by December 31 for the builder to have a reporting obligation.
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Articles

PWC, "Tax Insights: The underused housing tax – A new compliance requirement for many owners of Canadian residential property", Issue 2023-06R, 5 April 2023

a building or condo unit is not a residential property until it is substantially completed

The GST/HST Rulings Directorate issued a technical interpretation to the Canadian Home Builders Association on March 10, 2023 indicating:

  • a property becomes “residential property” for UHT purposes when its construction is substantially completed (generally, 90% or more), so that it could be reasonably inhabited
  • a builder/owner is not required to file a UHT return for a calendar year in respect of a property if its construction was not substantially completed on December 31 of the year
  • a condominium complex does not have to be registered as such for its units to be regarded as “residential property” for UHT purposes, but an individual unit does have to be substantially completed by December 31 to require the builder/owner to file a UHT return in respect of the unit for that year
  • a property’s assessed value and most recent sale price do not have to be reported on a UHT return (“$0” can be entered on lines 280 and 285) if: (i) no tax is payable in respect of the property, due to an available exemption; and (ii) the UHT return is filed by December 31 of the following calendar year
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value no need to indicate assessed value on a timely-filed return if an exemption is available 75

Specified Canadian Corporation

Administrative Policy

Underused Housing Tax Notice UHTN4 Exemptions for Specified Canadian Partnerships, Trusts and Corporations January 2023

Corporation owned by citizens and holding title to condo must file return for the property

Example 3

  • Individuals D and E own all the shares of a corporation that acquired title to a residential condo unit in 2018. The corporation must file a return for 2022, but has no tax payable because shares representing more than 90% of its equity and carrying more than 90% of the voting rights are held by Canadian citizens.

Specified Canadian Partnership

Administrative Policy

Underused Housing Tax Notice UHTN4 Exemptions for Specified Canadian Partnerships, Trusts and Corporations January 2023

Citizen holding title to partnership property of Canadian-citizen partnership must file return for each property

Example 1

  • Since 2018, there has been a partnership of two Canadian citizens (A and B) with only A on registered title as the owner of the property.
  • A is an affected owner through A’s ownership as a partner.
  • A must file a return for the 2022 year but does not have to pay housing tax for A’s 100% ownership percentage because the partnership is a specified Canadian partnership.
  • B is an excluded owner because B is a citizen not owning the property as a partner or trustee.

Specified Canadian Trust

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Bare trust can be a specified Canadian trust (para. 1.18)

  • 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.

Beneficiaries do not include contingent beneficiaries (para. 4.2)

  • The reference to 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”).

Look through trust beneficiary to its beneficiaries (para. 4.4)

  • 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.
Words and Phrases
contingent beneficiary
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Underused Housing Tax Notice UHTN4 Exemptions for Specified Canadian Partnerships, Trusts and Corporations January 2023

Citizen holding title to house held in trust for Canadian-citizen beneficiaries must file return

Example 2

  • In 2018, two citizen spouses transferred their jointly owned property (a house) to a family trust of which Individual C is the trustee, holding registered title, and their citizen children are the beneficiaries.
  • Since C owns as trustee, C must file a return for the 2022 year – but does not have to pay tax for C’s 100% ownership interest because C owns the property solely as the trustee of a specified Canadian trust.
  • Corporation owned by citizens and holding title to condo must file return for the property

Taxable Value

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Assessed value used even where excess land (para. 2.1)

  • Where, for example, the 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).

Allocation of assessed value (para. 2.2)

  • The assessed value might be allocated between a detached house and a laneway house based on interior floor space (or some other method appropriate in the circumstances).
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Underused Housing Tax Notice UHTN2 Calculating the Underused Housing Tax Payable January 2023

Assessed value should be used if higher than value to which property tax is applied

Assessed value established by an authority …

A property assessment notice (or similar document) and a property tax bill are generally two separate and distinct documents. However, in some parts of Canada, the property assessment notice and the property tax bill may form one single document.

The assessed value of the residential property, as established by the authority, may not necessarily be the same as the value used by the municipality to calculate the property tax. In some parts of Canada, the property tax may be calculated on only part of the assessed value established by the authority.

To determine the taxable value of the residential property for a calendar year for purposes of the underused housing tax, use the full assessed value as established by an authority and as stated in the property assessment notice (or similar document).

Articles

PWC, "Tax Insights: The underused housing tax – A new compliance requirement for many owners of Canadian residential property", Issue 2023-06R, 5 April 2023

no need to indicate assessed value on a timely-filed return if an exemption is available

The GST/HST Rulings Directorate is described as indicating in a technical interpretation issued on March 10, 2023 that “a property’s assessed value and most recent sale price do not have to be reported on a UHT return (“$0” can be entered on lines 280 and 285) if: (i) no tax is payable in respect of the property, due to an available exemption; and (ii) the UHT return is filed by December 31 of the following calendar year.”

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property a building or condo unit is not a residential property until it is substantially completed 197

Section 6

Subsection 6(1)

Administrative Policy

Underused Housing Tax Notice UHTN7 “Exemption for Qualifying Occupancy” February 2023

Application of GST/HST policy on meaning of continuous occupancy

What is continuous occupancy

The CRA has guidelines and criteria under the goods and services tax/harmonized sales tax (GST/HST) to determine whether an individual has continuous occupancy of real property. The CRA intends to use similar guidelines and criteria for the underused housing tax.

Generally, if an individual has the right to occupy a dwelling unit for a period on a continuous basis (that is, without interruption throughout the period), the individual has continuous occupancy of the dwelling unit for the period. An individual’s continuous occupancy of the dwelling unit for a period is not necessarily interrupted by the individual’s physical absence from the dwelling unit at a time in the period if both of the following apply:

  • the individual still has the right to occupy the dwelling unit throughout their physical absence
  • the right to occupy the dwelling unit is not given to another individual for any period during the physical absence

Tests varying on whether an individual owner and whether a written lease

No day can be counted more than once

As explained above, if you are an affected owner that:

  • is an individual, you can determine if there is a qualifying occupancy period for your ownership of a residential property as explained under one of the following headings:
    • Type 1 qualifying occupants – individuals having agreements evidenced in writing
    • Type 2 qualifying occupants – individual owners and their family
  • is not an individual (such as a corporation), you can determine if there is a qualifying occupancy period for your ownership of a residential property only under the heading Type 1 qualifying occupants – individuals having agreements evidenced in writing

In either case, your ownership of the residential property does not qualify for the exemption for qualifying occupancy unless at least 180 days in a calendar year are included in one or more qualifying occupancy periods for your ownership of the residential property.

You cannot count a day more than once to determine if at least 180 days in a calendar year are included in one or more qualifying occupancy periods of a residential property.

Words and Phrases
continuous occupancy

Subsection 6(7)

Paragraph 6(1)(g)

Administrative Policy

Underused Housing Tax Notice UHTN11 Exemption for New Owners February 2023

Example 2

  • Two non-resident/citizen spouses (C and D) co-owned a property on December 31, 2022, with the interest of D having been acquired in 2022 from C, who had acquired 100% of the property in 2020.
  • The co-ownership interest of D is exempted under s. 6(1)(g) – but not that of C.

Paragraph 6(7)(c)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Qualifies if not winterized (para. 9.2)

  • A residence that is not winterized (e.g., no sewer or septic system, no year-round power or water access, non-insulated water pipes, no permanent source of hear and lack of insulation) is not suitable for year-round use
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Underused Housing Tax Notice UHTN9 Exemptions for Residential Properties That Cannot be Used Year-round February 2023

Example 1

  • A house lacking a central heating system, such as a furnace or boiler, or room heating sources, such as fireplaces or electric baseboard heaters is not suitable for year-round use as a place of residence.

Paragraph 6(7)(d)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

“Public access” (paras. 9.3 to 9.6)

  • “Public access” means “the way or means of approach to the residential property, such as a road, is maintained at public expense and under public control,” so that access only by boat, or a private road that is closed in the winter, wold not satisfy “public access.”
Words and Phrases
public access
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Underused Housing Tax Notice UHTN9 Exemptions for Residential Properties That Cannot be Used Year-round February 2023

Example 2

  • A property fronting on a road which is impassable throughout the winter season is considered to be seasonally inaccessible.

Paragraph 6(7)(f)

Administrative Policy

Underused Housing Tax Notice UHTN10 Exemptions for Uninhabitable Residential Properties February 2023

Example 2

  • Two non-resident/citizen spouses co-owning a Canadian duplex renovated the first unit so that it was uninhabitable for 5 months in 2022 and did a similar renovation of the second unit in 2023. Because the exemption for a renovation had applied in 2022, it was not available in 2023.

Paragraph 6(7)(h)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Deceased individual can be excluded owner (para.12.1)

  • Given the implication of s. 6(7)(h) that a deceased individual still shown on title is a person, such person can also qualify as an “excluded owner.”
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023

S. 6(7)(h) applies rather than s. 6(7)(i) while registered title is held in the name of deceased rather than executor

Example 1

  • Although the estate arising on the death of A (not a citizen or permanent resident) on December 15, 2022 included a Canadian detached home, the estate still was not settled on December 31, 2023, and A continues to be the only registered owner.
  • A (through A’s executor) was obligated to file returns for the 2022 and 2023 years, but was exempted under s. 6(7)(h) because A died in the current year (re the 2022 return) or the prior year (re the 2023 return).

Example 2

  • The estate arising on the death of C on December 15, 2022 included a Canadian detached home, the registered title to which was transferred to the executor (D, also not a citizen or permanent resident) in February 2023. C (through D) was exempted for 2022 under s. 6(7)(h) because C died in that year.
  • 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 personal representative of a deceased individual who was the property’s owner during the prior year (2022), and D is only an owner thereof in 2023 as C’s personal representative.

Paragraph 6(7)(i)

Administrative Policy

Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023

S. 6(7)(i) exemption is engaged once registered title is transferred from the name of deceased to that of the executor

Example 2

  • The estate arising on the death of C on December 15, 2022 included a Canadian detached home, the registered title to which was transferred to the executor (D, also not a citizen or permanent resident) in February 2023. C (through D) was exempted for 2022 under s. 6(7)(h) because C died in that year.
  • 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 personal representative of a deceased individual who was the property’s owner during the prior year (2022), and D is only an owner thereof in 2023 as C’s personal representative.

Paragraph 6(7)(j)

Administrative Policy

Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023

Application of s. 6(7)(j) exemption to surviving co-owner

Example 3

  • E and F (each not a citizen or permanent resident) are spouses and (apparently) joint tenants.
  • Since the registered title does not indicate their percentage ownership, they are deemed to each have an “ownership percentage” of 50% under the term’s definition.
  • Ownership of E’s interest passes on E’s death in 2022 to F.
  • Registered title remains in E on December 31, 2023. E (through E’s executor, G, also not a citizen or permanent resident) is exempted under s. 6(7)(h) for 2022 and 2023 regarding E’s ½ deemed interest because E died in the year or the prior year.
  • F is exempted under s. 6(7)(j) in each of the years for F’s deemed ½ interest because the co-owner died in the year or prior year and E’s ownership percentage at the time of death was at least 25%.

Paragraph 6(7)(k)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Property that has not been substantially completed is not exempted under s. 6(7)(k) (para. 13.2)

  • Given that a property that has not been substantially completed on December 31 is not a residential property, it is effectively exempted on those grounds rather than under s. 6(7)(k).
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41

Underused Housing Tax Notice UHTN13 Exemptions for New Residential Properties February 2023

Application of GST/HST guidelines on meaning of “substantial completion”

What is substantial completion

… The … CRA … has guidelines and criteria under the goods and services tax/harmonized sales tax (GST/HST) to determine when construction is substantially completed. Similar guidelines and criteria may be used for the underused housing tax.

Generally, substantial completion of a residential property means that construction is at a stage of completion (generally 90% or more) that allows an individual to reasonably inhabit the property. A residential property is considered to be substantially completed even if there are outstanding minor repairs, adjustments or upgrades, since this will not reasonably impair the use and enjoyment of the property as a place of residence.

Paragraph 6(7)(l)

Administrative Policy

Underused Housing Tax Notice UHTN13 Exemptions for New Residential Properties February 2023

Example 2

  • C and D (who are not citizens or permanent residents) together own all the shares of a Canadian corporation which had substantially completed constructing detached homes in Canada in March 2022.
  • Although the homes had been offered for sale to the public from shortly after the commencement of construction, they were still unsold on December 31, 2022.
  • The s. 6(7)(l) exemption would apply (although the corporation, as the registered owner, would be required to file a return).

Subsection 6(8)

Administrative Policy

Underused Housing Tax Notice UHTN6 Exemption for Primary Place of Residence February 2023

Determination of primary place of residence

What is a primary place of residence

The CRA has guidelines and criteria under the goods and services tax/harmonized sales tax (GST/HST) to determine whether an individual’s residence is their primary place of residence. Similar guidelines and criteria may be used for the underused housing tax.

Generally, if you have more than one place of residence, the place of residence that is first in order of importance to you is your primary place of residence. A place of residence that is not first in order of importance to you is a secondary place of residence. For example, a secondary place of residence may be one that is used mainly for recreational purposes or that is occupied less often than another residence. If you are not a citizen or a permanent resident of Canada and your primary place of residence is outside Canada, any residential property that you own in Canada is generally considered to be a secondary place of residence, unless you can prove otherwise.

Example 1

  • Re shift of primary residence to Halifax where 3-year work posting there (with offshore house leased out for this period).

Example 2

  • Re parents with a primary residence outside Canada having a jointly-owned condo in Canada qualifying as a primary residence through their university-student child.

Subsection 6(10)

Administrative Policy

Underused Housing Tax Notice UHTN8 Special Rule and Elections for Individual Owners of Multiple Residential Properties February 2023

How to determine if the special rule applies to you

The special rule applies to you for a calendar year if, on December 31 of the calendar year, all of the following conditions are met:

  • you are an owner of a particular residential property
  • you are an individual who is not a citizen or permanent resident of Canada
  • either (or both) of the following apply:
    • you are an owner of one or more other residential properties
    • your spouse or common-law partner is not a citizen or permanent resident of Canada and is an owner of one or more other residential properties

What happens if the special rule applies to you

Impact on the exemption for primary place of residence

If the special rule applies to you for a calendar year, the exemption for primary place of residence generally cannot be claimed by you (or by your spouse or common-law partner who is not a citizen or permanent resident of Canada) for any of your residential properties for the calendar year, unless a valid election is filed with the Canada Revenue Agency (CRA). This includes any residential property in which a dwelling unit is occupied by your child (or your spouse’s or common-law partner’s child) while pursuing authorized study at a designated learning institution.

For more information, refer to the Election required to qualify for exemptions section in this notice.

Impact on the exemption for qualifying occupancy (for certain Type 2 qualifying occupants)

If the special rule applies to you for a calendar year, the exemption for qualifying occupancy generally cannot be claimed by you (or by your spouse or common-law partner who is not a citizen or permanent resident of Canada) for your (or your spouse’s or common-law partner’s) personal occupancy of any of your residential properties for the calendar year, unless a valid election is filed with the CRA. In the absence of a valid election, this means that for every residential property of which you (or your spouse or common-law partner) are an owner, a qualifying occupancy period for your ownership of the residential property does not include any period in the calendar year during which either of the following applies:

  • you (or your spouse or common-law partner) have continuous occupancy of a dwelling unit while pursuing authorized work under a Canadian work permit
  • your spouse or common-law partner, who is a citizen or permanent resident of Canada, has continuous occupancy of a dwelling unit

It is only your (and your spouse’s or common-law partner’s) personal occupancy that is excluded under the special rule. The special rule has no impact on whether a period during which another Type 2 qualifying occupant (such as your parent or child who is a citizen or permanent resident of Canada) has continuous occupancy of a dwelling unit is a qualifying occupancy period for your ownership of a residential property.

However, it is possible that your (or your spouse’s or common-law partner’s) personal occupancy of a dwelling unit may still be considered for the exemption for qualifying occupancy (that is, for Type 2 qualifying occupants).

Section 7

Subsection 7(1)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

No requirement to complete assessed value if exemption applies and return is filed on time or no more than 8 months late (para. 3.1)

  • A person is not required to report amounts on Line 280 (assessed value of the residential property) and Line 285 (most recent sale price) of Form UHT-2900 for a residential property for a calendar year in situations where:
    • no tax is payable in respect of the residential property for the calendar year due to the person’s ownership of the residential property being exempt from the UHT for the calendar year; and
    • the person files the return by December 31 of the following calendar year (for example, the return for the 2022 calendar year is filed by December 31, 2023).

Need claim only 1 exemption (paras. 3.2, 3.3)

  • When filing a return, an owner need only claim one out of a number of applicable exemptions – although, in light of s. 47(2), the exemptions in s. 6(7)(c) to (f) may be considered less desirable.

Separate return for each property (para. 3.4)

  • 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.

Registered owner until sale reflected on title (para. 3.5)

  • Where the closing of a sale occurs in late December and the documents for transfer of the registered title are submitted at that time, but not processed by the provincial land titles office until the next year, such affected owner is considered to still be the owner on December 31 and must file a return and pay tax if not exempted.

Electronic signature (para. 3.6)

  • Handwritten signatures, block signatures and electronic signatures are all acceptable on UHT returns.
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Underused Housing Tax Regulations - Section 2 - Subsection 2(3) 39
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51

Forms

UHT-2900 Underused Housing Tax Return and Election Form

  • Use this return if, on December 31 of a calendar year (starting with the 2022 calendar year), you are an owner of a residential property and not an excluded owner of the residential property, as set out in subsection 7(1) of the Underused Housing Tax Act (UHTA). …
  • You must file an annual return with the Canada Revenue Agency (CRA) on or before April 30 for each residential property that you own on December 31 of the preceding calendar year. If you do not already have a Canadian tax identification number (such as a social insurance number, individual tax number, or business number), contact the CRA before filing this return

Section 8

Paragraph 8(a)

Administrative Policy

31 October 2023 Press Release, “Government of Canada extends deadline for homeowners to file their Underused Housing Tax return”

initial filing deadline extended to 30 April 2024

The Minister of National Revenue announces that owners affected by the Underused Housing Tax (UHT) will have until April 30, 2024, to file their returns for the 2022 calendar year without being charged penalties or interest.

… Consequently, the Canada Revenue Agency will waive the application of penalties and interest for any late-filed UHT returns and for any late-paid UHT payable for the 2022 calendar year, provided the return is filed and the UHT is paid by April 30, 2024.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 48 - Subsection 48(1) Deadline for filing 2022 returns extended to 30 April 2024 127

Forms

UHT-2900 Underused Housing Tax Return and Election Form

Section 11

Subsection 11(4)

Administrative Policy

Underused Housing Tax Notice UHTN11 Exemptions for Deceased Individuals and Their Personal Representatives or Co-owners February 2023

Requirement to obtain UHTA clearance certificate before an executor makes a distribution

Clearance certificates

The representative of a deceased individual’s estate must obtain a clearance certificate from the Canada Revenue Agency (CRA) before the representative distributes any property belonging to the estate.

Generally, a clearance certificate confirms that all amounts of the underused housing tax and any other amounts (such as penalties and interest) that are payable by the deceased individual and by the representative, have been paid at the time the certificate is issued.

If a representative distributes property belonging to the estate before obtaining a clearance certificate from the CRA, the representative may be personally liable for paying any outstanding amounts.

Section 47

Subsection 47(2)

Administrative Policy

Underused Housing Tax Notice UHTN3 Filing a Return and Paying the Underused Housing Tax January 2023

Failure of non-excluded owner to file generates penalty even where property is exempted

Reminders

Even if your ownership of a residential property is exempt from the underused housing tax for a calendar year, as an affected owner, of a residential property on December 31 of a calendar year, you still have to file a return for the residential property using Form UHT-2900, Underused Housing Tax Return and Election Form.

There are significant penalties if you fail to file an annual return when it is due. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000.

S. 47(1) penalty

Failure to file your return by April 30 of the following calendar year

If you fail to file your return for a residential property for a calendar year by April 30 of the following calendar year, you have to pay a penalty that is the greater of the two following amounts:

  • $5,000 for affected owners who are individuals or $10,000 for affected owners that are not individuals (such as corporations)
  • the amount that is the total of the following:
    • 5% of your underused housing tax payable for the residential property for the calendar year
    • 3% of your underused housing tax payable for the residential property for the calendar year multiplied by the number of complete calendar months that the return is past due

Additional S. 47(2) penalty

Failure to file your return by December 31 of the following calendar year

If you fail to file your return for a residential property for a calendar year by December 31 of the following calendar year, there is an adjustment to the penalty calculation that could result in even higher penalties. The adjustment is applicable only to affected owners that claimed one of the following exemptions for the calendar year:

  • exemption for properties that cannot be used throughout the year (that is, the residential property is not suitable for year-round use as a place of residence or is seasonally inaccessible because public access is not maintained year-round)
  • exemption for uninhabitable properties (that is, the residential property is uninhabitable due to a disaster, hazardous condition or renovation)
  • exemption for primary place of residence
  • exemption for qualifying occupancy

If you fail to file your return for a residential property for a calendar year by December 31 of the following calendar year, the second amount in the penalty calculation (that is, the total of the two percentages applied to the underused housing tax payable, as described in the Failure to file your return by April 30 of the following calendar year section of this notice) is calculated as if the above exemptions do not apply.

Therefore, while you may not be liable for an amount of underused housing tax in respect of a residential property for a calendar year because you have qualified for one of the above exemptions, the penalty for failing to file a return by December 31 of the following calendar year is calculated based on the amount of underused housing tax that would have been payable in the absence of the exemption.

Section 48

Subsection 48(1)

Administrative Policy

31 October 2023 Press Release, “Government of Canada extends deadline for homeowners to file their Underused Housing Tax return”

Deadline for filing 2022 returns extended to 30 April 2024

On March 27, 2023, CRA announced that no interest and penalties would be imposed on owners who otherwise would have been required to file an underused housing tax return for their 2022 year on April 30, 2023, provided the return was filed or the UHT paid by October 31, 2023. CRA now stated:

The Minister of National Revenue announces that owners affected by the Underused Housing Tax (UHT) will have until April 30, 2024, to file their returns for the 2022 calendar year without being charged penalties or interest.

… Consequently, the Canada Revenue Agency will waive the application of penalties and interest for any late-filed UHT returns and for any late-paid UHT payable for the 2022 calendar year, provided the return is filed and the UHT is paid by April 30, 2024.

Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 8 - Paragraph 8(a) initial filing deadline extended to 30 April 2024 79

27 March 2023 CRA News Release, Underused Housing Tax penalties and interest waived

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

CRA announced:

… CRA … understands that there are unique challenges for affected owners in the first year of the Underused Housing Tax Act (UHTA) administration.

To provide more time for affected owners to take necessary actions to comply, the Minister of National Revenue is providing transitional relief to affected owners. 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.

Underused Housing Tax Regulations

Section 2

Subsection 2(2)

Administrative Policy

Underused Housing Tax Notice UHTN14 Exemption for Vacation Properties: Manual Place-search Instructions, 23 March 2023

When is a manual place search necessary

The CRA has developed an online tool that will help you determine if your residential property is located in an eligible area of Canada for the purposes of the vacation property exemption. It is important for you to perform this verification each year before claiming the vacation property exemption on your return. To use this tool, go to Underused housing tax vacation property designation tool.

In rare situations, the CRA’s Underused housing tax vacation property designation tool will be unable to determine whether your residential property is located in an eligible area for purposes of the vacation property exemption. In such situations, you will have to conduct a visual inspection of the Statistics Canada’s GeoSearch map to determine whether your residential property is located in an eligible area.

If your residential property is not located inside a population centre, then your residential property is located in an eligible area for purposes of the vacation property exemption.

If your residential property is located inside a population centre, you must determine whether the population centre is inside a census metropolitan area or inside a specified census agglomeration. If the population centre is inside a census metropolitan area or inside a specified census agglomeration, your residential property is not located in an eligible area for purposes of the vacation property exemption. If the population centre is inside a census agglomeration that is not a specified census agglomeration, your residential property is located in an eligible area for purposes of the vacation property exemption.

Underused Housing Tax Notice UHTN5 Exemption for Vacation Properties January 2023

CRA online tool for identifying eligible area

Is your residential property located in an eligible area of Canada

The CRA has developed an online tool that will help you determine if your residential property is located in an eligible area of Canada for the purposes of this exemption. It is important for you to perform this verification each year before claiming the exemption for vacation properties on your return. To use this tool, go to Underused housing tax vacation property designation tool.

Subsection 2(3)

Administrative Policy

Underused Housing Tax Notice UHTN15, Questions and Answers About the Underused Housing Tax, 17 April 2023

Individual cannot satisfy “use” test if holding as trustee (paras. 5.1, 5.2)

  • Only individuals holding in their own capacity (rather than as partner or trustee) can satisfy the prescribed use condition in s. 2(3).
Locations of other summaries Wordcount
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (b) 104
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Owner 62
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner - Paragraph (c) 32
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Dwelling Unit 69
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Residential Property 251
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Taxable Value 123
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 7 - Subsection 7(1) 319
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Specified Canadian Trust 153
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(c) 50
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(d) 59
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 2 - Excluded Owner 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(h) 41
Tax Topics - Other Legislation/Constitution - Federal - Underused Housing Tax Act - Section 6 - Subsection 6(7) - Paragraph 6(7)(k) 51