Author:
Nicholas Raycroft, CPA
Senior Manager, Tax
Hendry Warren LLP | Chartered Professional Accountants
E: [email protected]
Edited by:
Grant Gilmour, B.SC., MBA, CPA BC, CA, CPA AZ
Integra Tax World Newsletter Editor
E: [email protected]
On June 9, 2022, the Canadian Government enacted the “UHT Act”. This tax is intended to discourage ownership of vacant or underused Canadian real estate. We had previously provided an overview of the new UHT in our publication on February 23, 2023 https://www.integra-international.net/underused-housing-tax-uht-canada/.
Since February 23, 2023, the Canadian Government has released additional guidance and amended UHT Act legislation. We thought it would be helpful to provide an update on some of these changes. Note that these updates are based on the amended UHT Act legislation as drafted. This legislation is not currently law. The laws once enacted are expected to have retroactive effect.
Filing Deadline
The initial filing deadline for the 2022 UHT return was April 30th, 2023. However, the Canada Revenue Agency (CRA) has since extended the deadline to April 30th, 2024 (the first extension was to October 31st, 2023 which was further extended).
This makes both the 2022 and 2023 UHT tax returns due on April 30th, 2024.
Penalties
Initially, minimum late-filing penalties of $5,000 applied for individuals and $10,000 for other owners where there was an obligation to file a UHT return and the return was filed late. In the Fall Economic Update, the draft legislation proposed that the minimum penalties would be reduced to $1,000 and $2,000 to individuals and other owners, respectively. The late filing penalties would be applicable retroactively to 2022 and 2023 returns filed after April 30th, 2024.
Specified Canadian Corporations, Partnerships, and Trusts.
The Fall Economic Update also provides additional relief for certain Canadian property owners under the UHT Act. In particular, specified Canadian corporations, partners of specified Canadian partnerships, and trustees of specified Canadian trusts will not have a filing obligation under the UHT Act starting with the 2023 tax filing year. UHT tax returns are still required for the 2022 tax year and are due by April 30, 2024 if the returns have not already been filed for these entities.
A specified Canadian corporation is a generally a corporation that is incorporated or continued under the laws of Canada or a province, and on December 31st of the calendar year has less than 10% of the votes or value owned by individuals who are not Canadian citizens or permanent residents, or a corporation incorporated outside Canada, or a combination of those individuals and corporations.
FINAL THOUGHTS
The UHT continues to apply to non-Canadian citizens and non-permanent residents and any foreign entities. There have been no changes to these filing requirements.
The filing extension is appreciated for all owners of real estate in Canada who may not have been aware of the filing requirements. Further extensions to the filing deadline appear unlikely. If you own real estate in Canada, we would be pleased to review your situation to determine your specific UHT filing requirements.
About the Author:
Nicholas Raycroft, CPA| Senior Manager, Tax | Hendry Warren LLP | Chartered Professional Accountants
Saying that I like tax would be an understatement. Income tax is complicated but I enjoy the challenge of understanding the tax rules and helping clients navigate this tricky terrain. On top of that, it feels like each day there is something new to learn to expand my tax knowledge and advise clients on how to reach their goals.
At Hendry Warren, we aim to meet your tax needs by offering quality advice and superior client service through our collaborative team approach. This team approach is what drew me to Hendry Warren and allows us to creatively solve your tax problems.
Nick joined Hendry Warren in September 2014 as a co-op student from the University of Ottawa and was hired full time upon graduation. He is a member of CPA Canada and CPA Ontario and obtained his CPA in 2018.
In 2020, Nick completed CPA Canada’s 3 year in-depth tax course, which is the cornerstone education for professionals specializing in income tax in Canada. He has also completed Part I of the CPA Canada’s GST/HST in-depth course.
Integra Member Profile:
https://www.integra-international.net/find-an-integra-firm/find-firm-profile/name/hendry-warren-llp/
Firm Website:
https://www.hwllp.ca/managers/nicholas-raycroft/
