2023-Feb-15
Underused Housing Tax Form for Non-Canadian Property Owners Now Published
Last spring GBA reported on the proposed new Underused Housing Tax (UHT) for US and overseas property owners. The federal government put forth this new 1% annual tax levied on the value of residential property that is vacant or considered underused. The intention of this tax is to make housing more affordable for Canadian residents by deterring non-residents from passively investing in Canadian real estate.
GBA has been looking into the effects UHT may have on our members. Here are some of our findings:
- This new tax only applies to non-Canadian residents.
- Canadian residents do not need to submit a UHT tax form.
- Non-Canadian residents must submit this form by April 30 annually even if they are exempt from the tax.
- As far as GBA is aware, non-resident owners of properties on the east and north coasts of Georgian Bay fall under one of the exemptions (630 or 635) on page 5 of the form, which can be found here.
- To file your UHT tax form, with the Canada Revenue Agency (CRA) you must have a valid CRA tax identifier number. If you do not have a Canadian Social Insurance Number (SIN) you must file using an Individual Tax Number (ITN) which you can apply for here.
- GBA has spoken to the Canadian Revenue Agency (CRA) and they see no issue with not having a postal code to input on the form (only road access properties will have a postal code).
- Do not use the postal code of your local post office as this may reverse your exemption.
- Not having a postal code means that you will also be unable to access the: “Underused housing tax vacation property designation tool”, but it is not necessary to do so if you are exempt as above, and the tool is not helpful, in any event.
- The minimum penalty for missing the April 30 filing deadline is $5,000 per property for any individual owner. Additional penalties can apply depending on how late the return is filed.
After talking with the CRA there are some issues that may interfere with filing this year before the deadline, and CRA has suggested that those affected should:
- File for an ITN number as soon as possible.
- These requests can take up to eight weeks to process, so the sooner you can start that process the better. This number will be needed for any future dealings with the CRA, such as UHT filings, so please remember to store your ITN safely.
- To get an ITN you need to complete the application form as above and mail it along with the applicable government ID (certified or notarized copies)
- When you complete the UHT form as above, include an explanatory note explaining why you are submitting the form without an ITN number, and also include a copy of the ITN application submitted, which should include the date it was filed. With this information CRA should be able to process your filing and you should not incur any late filing charges due to the lack of an ITN number by the April 30 deadline.
However, should CRA levy any late filing fee, you can file an objection through taxpayer relief provisions available. In this case, because the UHT form was released very late and does not provide enough time for filers to obtain an ITN number before the deadline in some, or most, cases, CRA advised that there would be sufficient grounds for an appeal.
More information on the UHT can be found here.