The Canada Revenue Agency has pushed back the deadline for compliance with a new federal tax on underused housing, in a last-minute decision it announced on Tuesday, the same day it had previously set as the cutoff.
Taxpayers will now have until April 30 to file tax forms and pay any amounts owing for the 2022 calendar year under the underused housing tax, or UHT, which imposes a levy on foreign owners of real estate deemed to be vacant or underutilized.
The CRA had previously set Oct. 31 as the date by which affected homeowners had to meet their obligations, or risk incurring penalties or interest.
The UHT is aimed at foreign nationals, and Canadians don’t generally have to pay the tax. But the measure includes broad filing requirements that will also affect many Canadian citizens and permanent residents, tax accountants have warned. Failing to file on time – even if only to claim an exemption – can result in penalties starting at $5,000 for each affected homeowner.
“We understand that many homeowners may not be aware that they are subject to this new law,” Minister of National Revenue Marie-Claude Bibeau said in a statement. “I want to ensure that every effort has been made to inform homeowners.”
The UHT, which took effect at the start of 2022, imposes an annual tax of 1 per cent on the value of vacant or underused residential real estate held by foreign homeowners.
But the tax, which the federal government says is intended to help combat the country’s housing shortage, also makes it mandatory for some Canadians to file returns when they hold property through partnerships or trusts. (Some Canadian corporations also have filing obligations under the UHT.)
Accountants across the country had warned that many Canadians were likely unaware that these filing requirements might apply to them, because Ottawa had consistently presented the tax as targeting foreigners.
Another issue is that some Canadians may not realize they are considered to be holding property through a partnership or trust.
For example, a couple who jointly own rental property may be considered a partnership, which is legally defined as two or more people coming together in pursuit of profit.
Similarly, parents who were added to the title of their adult child’s home because they co-signed the mortgage could be considered to hold that property in trust. The same might apply to a person who holds title to their aging parents’ home, a common arrangement that can simplify the process of transferring a property when one’s parents die.
The deadline set in legislation for each year’s filings is the following April 30, but the CRA used its administrative powers to waive penalties until Oct. 31 for filings related to 2022. That cutoff has now been pushed to April 30 of next year.
The deadline to file and pay the tax for 2023 remains April 30, 2024.
Erica Alini