The Underused Housing Tax Act (the “UHTA”) came into effect from January 1, 2022. The rules for UHTA were enacted June 9, 2022, for residential properties owned on December 31 each year starting December 31, 2022. The Underused Housing Tax (“UHT”) rules require residential property owners to file an annual return, unless certain exemptions apply, even if no tax is due.

The summary regarding “excluded owners” and exemptions from UHT can be found here.

Are superintendent suites or guest suites exempt from the UHT filing requirement?

The term owner as per UHTA means a person that is identified as an owner in respect of the residential property under the land registration system or other similar system applicable where the residential property is located.

A residential property means a property that is situated in Canada and that is either:

  • a detached house or similar building that contains not more than three dwelling units, along with any appurtenances and the related land
  • a semi-detached house, rowhouse unit, residential condominium unit or other similar premises, along with any common areas, appurtenances and the related land

A dwelling unit is a residential unit that contains:

  • private kitchen facilities
  • a private bath
  • a private living area

Generally, a residential unit is a single self-contained set of rooms in a building or part of a building that is distinguished from any other such set of rooms in the building or part and that is characteristic of, and suitable as, a residence.

Based on our understanding that superintendent suites and guest suites within a residential condominium complex generally contain the amenities outlined above, these units may be considered a residential property for the purposes of the UHT and therefore may be subject to the UHT filing requirement. Careful consideration should be given to the structure of legal title in these situations as the definition of residential property for the purposes of UHT is specific to units that are, or are intended to be, a separate parcel or other division of real or immovable property.

Are condominium corporations exempt from paying the UHT with respect to residential properties they own?

Exemption under the UHTA relieves certain categories of persons from the liability of UHT. The exemption includes a Specified Canadian Corporation.

For a condominium corporation to be a Specified Canadian Corporation and qualify for exemption from UHT, the chairpersons and other presiding officers should be citizens or permanent residents of Canada and more than 90% of its directors should be citizens or permanent residents of Canada.

Based on our understanding, condominium corporations may be considered a Specified Canadian Corporation provided the residency of their chairpersons, other presiding officers, and directors meet the above criteria.

If it is determined that the Corporation must file the Underused Housing Tax annual return they must first open an Underused Housing Tax program account and be issued a related RU program account number from the Canada Revenue Agency.

A Specified Canadian Corporation must file an Underused Housing Tax return for each residential property that they own in Canada on December 31. However, no tax should be payable by a Specified Canadian Corporation in respect of its residential properties. An Underused Housing Tax (RU) program account identifier code must be opened with the Canada Revenue Agency prior to filing a return. Failure for corporations to file UHT return when it is due will be subject to a minimum penalty of $10,000.

It is pertinent that the UHT return shall be filed by the owners of the residential property. In a scenario where the Superintendent/guest suite is owned by the condominium corporation, filing of UHT return will be undertaken by the management. However, in a case the ownership of these suites is divided among the other owners in the condominium corporation, each owner will be required to assess their status as excluded owner or exemption to discharge tax separately. For clarity, this filing obligation belongs to the owner and is separate from the corporate income tax return that RLB may prepare on behalf of your corporation.

The UHT return form is available on the CRA website. A link to the form can be found here.

Contact your RLB advisor for assistance in reviewing your UHT filing requirements or if you require support to open an Underused Housing Tax program account.

Note: The CRA has announced they will waive penalties and interest in relation to the UHT if the return is filed and the balance is paid before October 31, 2023. For more information, click here.