Are you a corporation that owns Canadian real estate? If so, you may need to file a new tax return by April 2023.
If you own residential property, you should be aware of the newly proposed Underused Housing Tax (“UHT “) that took effect on January 1, 2022. The UHT is a national, annual 1% tax on the value of non-resident, non-Canadian-owned residential real estate that is vacant or underused. We published a more detailed article explaining the UHT here.
The UHT generally applies to non-Canadians and corporations with non-Canadian owners. However, it is important to note that even if your corporation is 100% owned by Canadians, it may still be required to file the UHT Tax Return if it owns residential real estate in Canada.
The Canada Revenue Agency has made it clear that even if a corporation’s ownership of a residential property is exempt from the underused housing tax, it still has to file a return (Form UHT-2900) for the residential property and indicate the applicable exemption in the tax return.
Failing to file Form UHT-2900 on time could result in minimum penalties of $5,000 for individuals and $10,000 for corporations. These penalties can increase the longer the return is late.
The deadline to file your Annual Declaration for 2022 is April 30, 2023. So, if you own real estate in a corporation, reach out to your accountant immediately to ensure compliance with this new requirement.
