We want to remind you about the Underused Housing Tax (UHT) and the significant penalties that apply for non-compliance.

We have previously written about the new Federal tax and annual filing requirements for the UHT. Effective January 1, 2022, a new Federal tax and annual “UHT 2900” filing requirement has been introduced for owners of residential properties. Please note significant penalties apply for non-compliance.

For residential properties held at the end of a given calendar year, the filing deadline is April 30 of the following year. Since 2023 is the first year that these filings are required, the CRA has announced that they will not impose penalties for filings completed by October 31, 2023.

Note that this filing is separate and in addition to the T1/T2/T3 income tax filings. It is important to ensure that any required filings are completed by October 31, 2023, to avoid the substantial penalties and to ensure that exemptions from the tax are available where applicable. Significant penalties may apply to late filings even where there is no balance of tax owing:

• Minimum penalties are $5,000 for individuals and $10,000 for non-individuals.
• Late filing may jeopardize the availability of certain exemptions from the tax.

While Canadian citizens and/or permanent residents of Canada are generally exempt from the tax and related filing requirements, the new “UHT-2900” return may be required to be filed by individuals and/or corporation in instances where title to residential property is held, including properties held as a partner in a partnership or trustee in trusts, or bare trust and/or nominee corporations.

For example, there may be an obligation to file and/or pay if any of the following situations apply:

1. An individual owns residential property in Canada, and is not a Canadian citizen or permanent resident of Canada.
2. Title to Canadian residential property is held using a nominee/bare trustee structure.
3. Title to Canadian residential property is held in a corporation
4. Title to Canadian residential property is held by a partner of a partnership and/or trustee of a trust.

There are many situations where it may not be obvious that a filing is required. If legal title to a Canadian residential property is held please refer to the attached Underused Housing Tax Checklist.

If you determine that you might have an obligation to file and/or are subject to the tax and require our assistance, please contact your Shimmerman Penn representative and/or provide us with details using the attached checklist as soon as possible so we can help determine your filing obligations and advise regarding your eligibility for exemptions from the tax.

Thank you,

The team at Shimmerman Penn LLP