In a previous blog, we discussed proposed changes to Underused Housing Tax (UHT) legislation in the 2023 Fall Economic Statement which may alleviate UHT filing requirements for many Canadians. As we approach the April 30, 2024, filing deadline for 2023 UHT returns, we revisit these proposals and review their current status.
Current Legislation
Under current legislation, all corporations, partnerships, and trusts (as well as others not discussed here) are generally required to file a UHT return when they own residential property in Canada. Due to the potentially expansive definitions of partnerships and trusts, the current legislation may require many Canadians and Canadian owned entities to file UHT returns where they may be exempt from the tax.
Proposed Legislation
In the 2023 Fall Economic Statement, the definition of “excluded owner” is proposed to be expanded. Excluded owners are generally not required to file a UHT return. It is important to note that the proposed legislation has not yet received Royal Asset and is therefore not yet law.
The following groups are proposed to be included in the definition of excluded owner for the 2023 year onwards:
- Specified Canadian corporations,
- which is generally a Canadian corporation having less than 10 per cent of its votes or equity value owned by foreign individuals or corporations;
- Partners of specified Canadian partnerships,
- which is generally a partnership whose partners are exclusively Canadian;
- Trustees of specified Canadian trusts,
- which is generally a trust whose beneficiaries are exclusively Canadian.
Despite the fact that the proposed changes are not yet enacted, the Canada Revenue Agency (CRA) has taken promising steps by including the proposed rules in the new instructions to the Form UHT-2900, as well as updating their questionnaire to determine affected owners. This implies that the CRA is operating under the proposed legislation where these entities are not required to file. More information regarding the updated UHT guidelines can be found HERE on the Government of Canada website.
For taxpayers looking to the new rules for relief, it is important that they consider the risks of relying on proposed legislation before deciding whether to file. To determine if you are an affected owner please take the questionnaire HERE. If you have questions and require assistance with filing the 2022 or 2023 UHT return, please reach out to your trusted RLB advisor.
