Underused Housing Tax (UHT) – what is this? Does this apply to me?
Good morning! You may have heard about the new Underused Housing Tax and are wondering what is the government changing? Does this affect me? What about that huge penalty for failing to file? What do do? This is a heads up about the filing obligations and some of the possible implications of this new UHT.
What is the UHT? Take a moment to check out the Introduction to the Underused Housing Tax issued by the Government of Canada.
Because of the nature of this tax, it is not something that would be or can be filed with your taxes, despite having the same April 30 deadline. Corporations, Trusts (including estates), Individuals, Partnerships (this can include a rental property with a spouse), all have this April 30 deadline to file the return for properties held as of December 31 of the prior year. I want to reiterate that this is NOT SOMETHING I WILL BE FILING AS PART OF YOUR TAXES either corporate or personal unless I have been specifically engaged to do so, and provided all of the required information, in advance of the deadline.
Some of the more common scenarios where you may have to file include:
- Shared title with a spouse on a revenue property (this could include single family rental, or some AirBNB-style rentals) or previous reporting of revenue from rental properties as a partnership (splitting income)
- Someone on title of a property of which they are not the beneficial user – such as an aging parent adding children to the title of their home for estate planning purposes, parents owing a home where children live at university, or parents on title because they were co-signers on a mortgage
- Ownership of residential property through a corporation
This is not an exhaustive list, so if you think you may be affected, please check the guidance at https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html
If you are someone that I have identified on my client list as very likely to have a filing requirement based on my knowledge, you will receive another email with a heads-up and further information. Do not take not receiving another email as an indicator that you don’t have to file. It is your responsibility to ensure you meet your filing obligations for this tax as I cannot possibly be aware of everybody’s exact complete personal situations.
The penalty for failing to file NOT based on owing tax, and applies if you did not file but should have. It starts at $5,000 per property not declared for an individual and goes up to $10,000 per property for a corporation.
I have added both a “Quick Reference” guide and the actual fillable UHT return for your reference, as well as the link to the government website above with more details. Please feel free to share this information with any family or friends you may have who may be affected by this. Let’s make sure that none of us face these crazy penalties!
Have a great Thursday, and if you have any questions, make sure to contact our team at 780-868-8315.