Underused Housing Tax Act

What is the Underused Housing Tax Act?

The UHT Act, which came into effect January 1, 2022, implements an annual 1% tax on the value of vacant and underused residential properties directly or indirectly owned by those who are not permanent residents or Canadian citizens.

Please note that penalties under UHTA will be waived for any late-filed UHT returns or any late-paid UHT payable within this tax return. Provided they are filed or the UHT is paid by October 31, 2023. Learn more here.

For more information on the Underused Housing Tax, you can find a Q&A here.

How is the Canadian Federation of Agriculture taking action?

CFA is seeking an exemption to the UHT for agricultural businesses in the future to reduce the administrative burden of this tax. While CFA is seeking long-term solutions for this issue, their efforts will most likely not impact the current tax year, so they are still encouraging farmers to follow the information below.

How does the UHT impact your farming operation?

If you operate your farm through a Canadian corporation or Canadian partnership and it owns a residential property, you will be required to file a UHT return even if no UHT is owed due to applicable exemptions noted below. If you do not file, the late filing penalty will apply.

Ex: Canadian Corporation – Cash Crop Operation

The corporation is 100% owned by Canadian citizens and possesses several residential homes on its farms. This corporation is required to file a UHT return.

  • It would be exempt from the UHT as a Specified Canadian Corporation, but the UHT return must still be filed to claim the exemption.
    • It could be subject to a $10,000 penalty if it does not file a UHT return on time. This penalty would apply for each year a UHT return is required and not filed by the April 30 deadline.

How much is the UHT?

The UHT on vacant or underused residential property is 1% of the home’s taxable value or 1% of its most recent sale price, whichever is greater. If you would rather have the property’s fair market value determine the UHT, you can obtain an appraisal and file an election between Jan 1-April 30 of the following calendar year. If two or more individuals hold title to a property, each owner will be responsible for the UHT based on their ownership interest.

What are the UHT filing requirements and penalties?

Countless numbers of farm corporations and farm partnerships across this country will have an obligation to file a UHT return, even if they owe no UHT. Non-filing can result in substantial financial penalties.

Failure to file a UHT return by April 30 of the following year, when required, could result in a penalty of at least $5,000 for individuals and $10,000 for other entities, such as Canadian corporations, partnerships, and trusts.