The Canada Revenue Agency (CRA) has announced additional transitional relief for the Underused Housing Tax (UHT). The deadline to file a return for the year ending December 31, 2022, without any penalties or interest, has been extended to April 30, 2024. This deadline had previously been extended to October 31, 2023, but many affected owners of residential property in Canada were still struggling to meet the revised date. Taxpayers should note that initial UHT returns were to be filed by April 30, 2023. With this latest extension, UHT returns for both the 2022 and 2023 calendar years must be filed by April 30, 2024.
The UHT took effect on January 1, 2022, and levies a 1% tax on the value of vacant or underused residential housing in Canada. This new tax primarily targets non-resident, non-Canadian owners of vacant or underused housing. Anyone considered to be an excluded owner of Canadian residential property has no liability or reporting obligations under the UHT. However, some Canadian owners of residential housing may have UHT reporting obligations and liabilities. These persons are known as “affected owners” and must file a UHT return. The tax has been difficult to navigate where the owner or part owner of residential property is not a Canadian individual or is a partner in a partnership or trustee of a trust.
Under the UHT, affected owners must file a return for each residential property owned on December 31 of a given year. They must also pay the required tax unless their ownership of the residential property qualifies for an exemption. Only excluded owners are relieved from the obligation to file annual returns.
The further extension of the deadline is welcome relief for those who have found it challenging to determine if they are “affected owners” as the UHT comes with significant penalties for failing to file a return as required. A minimum $5,000 penalty may be applied to individuals, and corporations may be subject to a minimum $10,000 penalty.
The CRA’s announcement also included the release of an online self-assessment tool to help owners of residential properties determine if they are considered “affected owners.” A link to this tool and full details about the UHT return filing deadline extension can be found in the CRA News Release, "Government of Canada extends deadline for homeowners to file their Underused Housing Tax return". In addition, further details on the UHT can be found in the Ryan tax development, Underused Housing Tax Returns Due April 30.
If you have any questions or concerns about the application of the UHT and its filing obligations, please contact the Ryan TaxDirect® line at taxdirect@ryan.com or 1.800.667.1600.
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