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Underused Housing Tax Act (UHT) Update March, 2024 –
In November of 2023, after a great deal of public feedback surrounding the UHT requirements that took effect in 2022, the Department of Finance proposed amendments to the Act and Regulations. More info can be read at Explanatory Notes to Legislative and Regulatory Proposals Relating to the Underused Housing Tax Act (canada.ca)
Most importantly to note was the amendment of the definition of “excluded owner”. Excluded owners of a residential property on December 31 of a calendar year are not required to file a UHT return (UHT-2900) or to pay the tax prescribed by the Act in respect of the residential property.
The amendments propose to expand the definition of excluded owner to include a trustee of a trust that is a specified Canadian trust, a partner of a partnership that is a specified Canadian partnership, a specified Canadian corporation, and a Canadian subsidiary of certain trusts or corporations. The amendments as proposed are deemed to have come into force on January 1, 2023.
On February 29, 2024 the Form UHT-2900 and its’ accompanying instructions were updated on the CRA website to include a section entitled “Excluded owner (2023 definition)”.
The result of this change is that many of the filers of a UHT return for the 2022 calendar year will be exempted from filing in 2023 onward if these changes are implemented to the Act. This will specifically apply to anybody who filed a return for 2022 which claimed an ‘other exemption’ under Part 6 on lines 620 or 625. If a return was filed and an other exemption was claimed either for a residence or for qualifying occupancy you may also find yourself exempted if you filed as part of a partnership or trust as defined and all individuals that are owners are Canadian Citizens or Permanent Residents.
Based on Canada Revenue Agency having updated the form instructions effective to the 2023 and subsequent calendar years they appear to have taken an Administrative Position on filing requirements. It is important to note that this administrative position is contrary to current law in force – although it is in line with proposed law. Administrative positions are not the law – however they are a very important indicators of the direction CRA and Finance intend to take (or not) in enforcement of the various Acts.
If you find yourself qualifying as an Excluded owner under the 2023 definitions, you may wish to consider foregoing filing for the 2023 calendar year, which would be otherwise due by April 30, 2024. If you have any questions please feel free to reach out to us and we can discuss the new facts as they apply to you and assist you.
The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.
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