CRA Extends Filing Deadline for 2022 Underused Housing Tax Returns

By Puneet Shroff

We have previously commented on the Underused Housing Tax, and more information can be found here.

The Canadian government has made strides in addressing housing affordability and availability, particularly in Ontario. One such initiative is the Underused Housing Tax Act (UHTA), an important piece of legislation aimed at addressing housing underuse, particularly among non-resident property owners. The Underused Housing Tax Act, imposes a one percent annual tax on the value of residential real estate considered to be vacant or underutilized. The Act primarily targets non-resident, non-Canadian property owners but also has implications for Canadian residents and citizens under certain conditions.

Owners not falling under the "excluded owners" category are referred to as "affected owners" and must file an annual return and pay the UHT, unless they qualify for exemptions such as if the property is a primary residence, meets the qualifying occupancy test, or if the property has limited seasonal access, among others. Owners affected by the Underused Housing Tax (UHT) are required to file an annual return by April 30th of the following year, using Form UHT-2900.

The UHTA categorizes property owners into three groups:

1. Owners with no UHT reporting or tax obligations
2. Owners required to file a UHT return and pay tax
3. Owners required to file a return but have no tax payable due to an exemption

If the annual return is not filed by the deadline, the owner loses any available exemption for that year, and the UHT is levied on their property. Moreover, the Canada Revenue Agency (CRA) can assess tax, interest, and penalties at any time after the calendar year for overdue returns and tax payments. The initial return date for 2022 UHT was set for April 30, 2023. Recently, the CRA announced that even though this filing deadline would not be extended, it would not impose any late filing penalties on 2022 UHT returns that are filed, and any taxes due are paid by October 31, 2023.

It is important to note that if you hold a title for a property on behalf of a family member or a friend, you could be deemed as the trustee of the property. In such cases, you bear the responsibility to file for UHT. Likewise, during the refinancing of a property, if the bank demands that you include your spouse or partner on the title, despite you being the primary owner, it establishes a trust relationship. Consequently, you are obligated to file for UHT.