The following is a general overview of Crowe MacKay LLP’s original Underused Housing Tax article.

The underused housing tax (UHT) is a Federal tax applied to vacant or underused housing in Canada, effective January 1, 2022. Generally speaking, this tax targets foreign property owners, but certain Canadian owners may be impacted.

There are significant penalties for affected owners who fail to file an annual return when it is due, with a minimum penalty of $5,000 for individuals who are affected owners, and $10,000 for owners other than individuals.

Update: Transitional Interest and Penalty Relief

On March 27, 2023, the CRA announced it would provide transitional penalty and interest relief and more time for owners to comply with the UHT filing requirements. The UHT filing deadline is May 1, 2023, for affected owners who own residential properties on December 31, 2022. However, the application of penalties and interest for the 2022 calendar year will be waived for any late-filed UHT return and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023.

This means that although the deadline for filing the UHT return and paying UHT tax is still May 1, 2023, no penalties or interest will be applied to the UHT returns or on payments that the CRA receives before November 1, 2023.

You can learn more details on the UHT transitional period in the CRA press release.

For more details on the UHT such as who has to file a return, filing requirements, and more, visit Crowe MacKay LLP’s website.