Underused Housing Tax penalties and interest waived

CRA SOURCE ARTICLE

The Canada Revenue Agency (CRA) understands that there are unique challenges for affected owners in the first year of the Underused Housing Tax Act (UHTA) administration.

To provide more time for affected owners to take necessary actions to comply, the Minister of National Revenue is providing transitional relief to affected owners. The application of penalties and interest under the UHTA for the 2022 calendar year will be waived for any late-filed underused housing tax (UHT) return and for any late-paid UHT payable, provided the return is filed or the UHT is paid by October 31, 2023.

This transitional relief means that although the deadline for filing the UHT return and paying the UHT payable is still April 30, 2023, no penalties or interest will be applied for UHT returns and payments that the CRA receives before November 1, 2023.

You’ve got questions and we’ve got answers!

To help you, these are answers to the top questions asked about the Underused Housing Tax (UHT). You can also check out our FAQs for more answers to common questions, which will be updated shortly.

What is the Underused Housing Tax?

Canada has a new 1% annual Underused Housing Tax on the ownership of vacant or underused housing in Canada. The tax usually applies to non-resident, non-Canadian owners. In some situations, however, it also applies to Canadian individuals and corporations. If you’re an affected owner of residential property in Canada, you must file a return for the underused housing tax by April 30, 2023, for each property you owned on December 31, 2022. To determine if the underused housing tax applies to you, please visit Canada.ca/cra-uht. For more technical information, visit our Underused housing tax notices page.

Vacation property exemptions

The CRA has developed an online vacation property designation tool that will help you determine if your property is located in an eligible area for purposes of the vacation property exemption.

In rare situations, this tool will be unable to determine whether your property is located in an eligible area. In such situations, you will have to conduct a visual inspection of the Statistics Canada’s GeoSearch map.

For more information on when a manual place-search is necessary, please see UHTN14: Exemption for Vacation Properties: Manual Place-search Instructions.

Filing the Underused Housing Tax return

As of March 14, 2023, you can file your UHT returns in My Account and My Business Account.

If you are not registered for the CRA’s online portals, you can also file your UHT return electronically through a webform at the following link Ready to file.

If you file your UHT return electronically through this webform, you will need:

• A valid CRA tax identifier number: Social Insurance Number (SIN), Individual Tax Number (ITN) or Business Number (BN-RU), and

• A digital access code (DAC). For step-by-step instructions on how to obtain a DAC: see Need a Digital Access Code. If assistance is needed in obtaining a DAC, you can call the UHT filing helpdesk toll free at 1-800-387-0720 or call collect at 613-221-3224.

Filing electronically is the fastest, easiest, and most secure way to file

If you do not have a valid CRA tax identifier number, you may be able to apply for one by filling out Form T1261 (to apply for an ITN) or Form RC1 (to apply for a BN-RU) and attaching the applicable application to your completed paper UHT return. Make sure to include all of the required supporting documentation for either the Form T1261 or Form RC1 with the application. These forms and supporting documentation are to be mailed/submitted together with the UHT return.

The CRA will assign the ITN or BN-RU before the UHT return is processed.

However, if you are a Canadian citizen or a permanent resident who is required to file a UHT return, and if you do not already have a SIN, you must apply for and receive one from Service Canada before you file the UHT return.  

Note: As long as the UHT return and the tax identifier application is received by the CRA before the April 30th deadline, the UHT return will not be considered as filed late. 

You can learn more about tax filing and the UHT by visiting the links above or by scheduling a free consultation with us.