The Canada Revenue Agency (CRA) has made a last-minute decision to extend the deadline for compliance with the new federal tax on underused housing, offering taxpayers some saving options.
The tax, known as the Underused Housing Tax (UHT), is an annual federal 1% tax on the ownership of vacant or underused housing in Canada. The tax initially took effect on January 1, 2022.
Originally, the CRA had set October 31 as the deadline for homeowners to meet their obligations under the UHT for the 2022 calendar year, with the risk of penalties or interest for non-compliance.
However, in a welcome move, the CRA has now granted an extension, giving taxpayers until April 30, 2024, to file tax forms and settle any amounts owing.
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According to the CRA, the “vast majority of Canadian individuals who own residential property are excluded owners and, therefore, do not have to file a UHT return or pay the tax.”
The government agency says it is the “duty of the owner of Canadian residential property to determine if they are an affected or excluded owner.”
Minister of National Revenue Marie-Claude Bibeau emphasized, “We understand that many homeowners may not be aware that they are subject to this new law. I want to ensure that every effort has been made to inform homeowners.”
The UHT imposes an annual 1% tax on the value of vacant or underused residential real estate held by foreign homeowners. However, it extends its reach, requiring some Canadians to file returns when they hold property through partnerships or trusts. In certain cases, Canadian corporations also have filing obligations under the UHT.
Accountants have raised concerns, noting that many Canadians might be unaware that these filing requirements could apply to them since the tax was initially presented as targeting foreigners.
Another challenge is that some Canadians may not realize they are considered to hold property through a partnership or trust, making compliance complex and potentially leading to unexpected penalties.
The CRA has published a new online self-assessment tool to determine if you are an “affected owner.”
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