Are you an individual who is neither a Canadian citizen nor a permanent resident who owns a residential property in Canada?  Are you a partner of a partnership or a trustee of a trust that owns a residential property?  Do you own a private corporation that owns a residential property?  These are among the types of owners that may be required to file a UHT return. 

New rules came into effect for 2022 and future years that require certain owners of residential property to file UHT tax returns.  Fortunately, Canada Revenue Agency (CRA) announced on October 31, 2023, that they would extend the filing deadline for 2022 returns until April 30, 2024.  As such, the filing deadline for both 2022 and 2023 UHT filings is April 30, 2024

What is a residential Property?

For the UHT, a residential property includes the following:

  • A detached house or similar building containing not more than three dwelling units.
  • A dwelling unit contains private kitchen facilities, a private bath, and a private living area.
  • A semi-detached house, rowhouse unit, residential condominium, or any similar premise that has its own title.

Who is exempt from filing the UHT returns?

The following owners of residential property are exempt from the UHT rules.  An owner is a person or entity whose name is registered on the title, who is a life tenant under a life estate, a life leaseholder, or certain long-term leaseholders.

  • Canadian citizens or permanent residents who are NOT partners of a partnership or trustees of a trust are excluded.
  • Representatives of a deceased individual (such as an executor of an estate) are excluded as trustees.
  • Corporations that are both incorporated under the laws of Canada or a province and are listed on a Canadian stock exchange.
  • Private corporations are not excluded.
  • Registered charities, cooperative housing corporations, municipalities and indigenous governing bodies (or their corporations), government agencies or public service bodies (such as a university), and publicly traded trusts.

If you are one of the above-excluded owners, there is no requirement to file a UHT return.

Based on the above criteria, certain nonresidents, partners, trustees, and private corporations are those most likely to be required to file a UHT tax return.  If you are not an excluded owner, you are considered an “affected owner” and are required to file a UHT tax return.  A separate return is required for each owner of the property.

If I am required to file a UHT tax return, will I owe any tax?

Whether or not any tax will be payable with the filing of the return depends upon whether certain exemptions are required.  There are exemptions to tax based on the type of owner of the property, the availability of the property, the occupant of the property, and the location and use of the property.  If you do not meet one of these exemptions, there is a 1% tax based on the greater of the property’s assessed value or the sale price applied to the ownership percentage.

What are the penalties for non-compliance?

Individual owners who fail to file the return on time are subject to a minimum $5,000 penalty, while corporations are subject to a minimum $10,000 penalty.

Price & Comin LLP is here to help.

If you have any questions about whether you would be required to file a UHT return, or whether you might be required to pay any tax with your UHT filing, please reach out to us.