The Underused Housing Tax is an annual 1% tax on the ownership of vacant or underused housing, specifically residential property. In Canada, this took effect on January 1, 2022.
The tax usually applies to non-resident, non-Canadian owners. In some situations, however, it also applies to Canadian owners.
The biggest misconception about this tax is surrounding who will have to pay, versus who may have to file. Many more people will have to file than a cursory reading of the name of the tax would indicate.
Affected owner, excluded owner, and available exemptions are all relevant factors here with very specific legal definitions. Residential property also has a very specific meaning under this act.
There are many exemptions and exclusions available, but to claim them you must file a return.
This isn’t part of the annual personal tax return; it is a separate return.
There are significant penalties if you fail to file an Underused Housing Tax return when it is due. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000. These penalties would apply, even if you don’t end up owing any underused housing tax. The penalty is simply for failing to file the return.
The due date for these returns is April 30, 2023.
For more information on this, you can visit the Canada Revenue Agency website regarding this.
https://www.canada.ca/en/services/taxes/excise-taxes-duties-and-levies/underused-housing-tax.html
If you are unsure of whether or not this applies to you, please contact our front desk to make an appointment with Kristopher McEvoy. Our normal consulting rates apply.
If you would like our help filing a return please contact our front desk to make an appointment with Kristopher McEvoy and he will scope out your needs and provide you with a quote.