The purpose of the UHTA
The UHTA, effective from January 1, 2022, imposes a 1% annual tax on vacant or underused residential properties not owned by Canadian citizens or permanent residents. This tax is calculated based on the property’s assessed value or recent sale price, with the first payment due by April 30, 2024
Note: Filing the UHT-2900 for December 31, 2022, year has been extended to April 30, 2024. The UHT-2900 for December 31, 2023, remains as April 30, 2024. Two years are due on April 30, 2024.
Excluded Owners
The UHT does not apply to Canadian citizens or permanent residents owning residential properties directly. However, indirect ownership through corporations, partnerships, or trusts may not qualify you as an excluded owner, even if you’re a citizen or permanent resident. Certain conditions apply for corporations, partnerships, or trusts to be exempt from UHT liabilities.
Declaration and Penalties
Filing a declaration with the Canada Revenue Agency is mandatory to claim any exemption. Missed or late declarations can result in significant penalties: $5,000 for individuals, $10,000 for others, and additional charges based on the UHT amount. Penalties increase over time and failing to file can lead to indefinite assessments under the UHTA.
The Potential Problem
Canadian citizens and permanent residents with indirect property ownership (via corporations, partnerships, or trusts) must be aware of their obligations under the UHTA. The declaration due dates differ from standard tax filings, hence it’s crucial to be vigilant to avoid penalties.
Next Steps
Non-Canadians and indirect property owners should consult with Koss Accounting to ensure compliance with UHTA requirements. Remember, the UHTA’s definitions and exemptions are detailed and specific, as outlined in Bill C-8 and various clauses under the act.
We have included a tool to help you self assess your filing requirements under the Underused Housing Tax Act.
UHT Return Preparation Services by Koss Accounting
Koss Accounting is ready to assist with your Underused Housing Tax (UHT) returns. To utilize our services, please request a UHT engagement letter from our office. We’re committed to providing thorough and efficient service, with pricing starting at:
- $500 for the first UHT-2900 return for the year.
- $200 for each additional UHT-2900 return per residential property for each identified owner.
- Plus applicable GST/HST.
Important Deadlines and Requirements:
- To ensure timely completion, please engage us and submit all required information by Sunday, March 18, 2024.
- After this date, we will assume you’re managing your UHT returns independently.
What We Need From You:
For each residential property owned as of December 31, 2022, and December 31, 2023, please provide:
- Citizenship details if you’re not a Canadian citizen or permanent resident.
- Latest property tax assessment, including property address, tax roll number, owner names, and assessed value.
- Land title documents or details like Property Identification Number (PIN), ownership type, owner names and percentages, year of purchase, and recent purchase/sale price.
- If applicable, partnership or trust account numbers.
- Property type (e.g., detached house, duplex, townhouse, condo).
- Confirmation of Canadian citizenship or permanent residency status for individual owners, partners, trustees, or corporate shareholders, or details on any applicable UHT exemptions.
- In cases where market value is lower than assessed value or recent purchase price, a formal property appraisal.
Our Commitment:
Koss Accounting is dedicated to guiding you through this complex area of tax and financial planning. We aim to deliver optimal results and value your trust in our services.