The underused housing tax (UHT) came into effect January 1, 2022, and is an annual tax intended to apply to vacant or underused housing.  It generally applies to non-resident, non-Canadian owners.

A filing needs to be completed for each of your properties when all of the following conditions are met on December 31^st of every calendar year:

• the property is a residential property within the meaning of the act
• you are an owner of the residential property
• you are not an excluded owner of the residential property

An excluded owner includes, but is not limited to:

• an individual who is a Canadian citizen or permanent resident – unless included in the list of affected owners below
• any person – including an individual who is a Canadian citizen or permanent resident – that owns a residential property as a trustee of a mutual fund trust, real estate investment trust, or specified investment flow-through trust (SIFT) for Canadian income tax purposes
• a Canadian corporation whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes
• a registered charity for Canadian income tax purposes
• a cooperative housing corporation for Canadian GST/HST purposes
• an Indigenous governing body or a corporation wholly owned by an Indigenous governing body

If you are not an excluded owner, you are referred to as an “affected owner” and you must file a return for each residential property that you own in Canada.  You must also pay the UHT, unless your ownership qualifies for an exemption.  Exemptions include those based on the availability, location and use of the property.  Even if your ownership qualifies for an exemption, you must still file an UHT return for the year.

The UHT amount is a one-percent tax on the value of the affected owner’s ownership percentage.

The filing deadline for this year is May 1^st, 2023, although the Canada Revenue Agency has stated that as long as the return is filed or the payable is paid by October 31, 2023, late penalties and interest for 2022 will be waived.  If you require assistance with the UHT, we recommend that you reach out to your accountant.

Author: Jane Otterstrom 

This information is general in nature only. You should consult a lawyer before acting on any of this information. This information should not be considered as legal advice. To learn more about your legal needs, please contact our office at (250)448-2637 or any of our lawyers practicing in the area of real estate at the following:

Una Kuzio: una@touchstone.law

Jane Otterstrom: jane@touchstone.law