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Proposed Amendments to the Underused Housing Tax

Underused Housing Tax Notice UHTN16

March 2024

On November 21, 2023, the Department of Finance Canada released legislative and regulatory proposals relating to the Underused Housing Tax Act (UHTA). The proposed amendments would help facilitate compliance with the underused housing tax (UHT) while ensuring that the UHT continues to apply as intended.

This notice explains the proposed amendments that have significant impact on the operation of the UHT. Refer to Legislative and Regulatory Proposals Relating to the Underused Housing Tax Act and Explanatory Notes on the Department of Finance Canada’s website for a description of the proposed amendments.

This notice should not be taken as a statement by the Canada Revenue Agency (CRA) that the proposed amendments will in fact be enacted into law in their current form.

The examples in this notice provide general guidance and are intended to illustrate how the proposed amendments would apply. The application of the proposed amendments may vary depending on the specific facts and circumstances of a particular situation. If you require guidance with respect to a particular case, please contact the CRA for a ruling or interpretation.

Except as otherwise noted, all statutory references in this publication are to the provisions of the Underused Housing Tax Act (UHTA) and its regulations. The information in this publication does not replace the law found in the UHTA and its regulations.

Table of Contents

Background

On November 21, 2023, the Department of Finance Canada released legislative and regulatory proposals relating to the Underused Housing Tax Act (UHTA). The proposed amendments aim to facilitate compliance with the underused housing tax (UHT) while ensuring that the UHT continues to apply as intended. This publication contains highlights of the proposed amendments.

Note that while most of the proposed amendments would apply starting with the 2023 calendar year, some of the proposed legislation would apply as of the inception of the UHTA on January 1, 2022, and others would only start in 2024. We have made specific references to these dates throughout this notice for ease of reference.

Revised definition of excluded owner

Excluded owners are persons that are excluded from the UHT. These persons do not have to file an annual UHT return or pay the UHT.

It is proposed that the definition of excluded owner would be revised to include more persons as excluded owners. The new excluded owners are identified in the list below. In the 2023 and subsequent calendar years, you would be an excluded owner of a residential property in Canada if you are any of the following on December 31 of the calendar year:

Affected owners

If you are an owner of a residential property in Canada on December 31 of a calendar year and you are not an excluded owner of the residential property on that date, the Canada Revenue Agency (CRA) refers to you as an affected owner of the residential property for the calendar year. All affected owners of residential property have to file an annual UHT return.

The following are examples of individuals who, in the 2023 and subsequent calendar years, would be affected owners of residential property in Canada if they are any of the following on December 31 of the calendar year:

The following are examples of persons (other than individuals) that, in the 2023 and subsequent calendar years, would be affected owners of residential property in Canada if they are any of the following on December 31 of the calendar year:

The above are not exhaustive lists of examples of persons that would be affected owners. It is important that you review the revised definition of excluded owner and determine your status as an excluded owner or affected owner. If you do not fall within the revised definition of excluded owner, you would be an affected owner for the 2023 and subsequent calendar years.

Implications for citizens and permanent residents of Canada

The vast majority of Canadian owners of residential property in Canada are excluded owners. Under the proposed amendments, even more Canadian owners would be excluded owners starting with the 2023 calendar year.

Under the existing UHTA, some citizens or permanent residents of Canada who owned residential property with other citizens or permanent residents of Canada expressed challenges in determining whether their ownership structure constituted a trust or partnership for the 2022 calendar year. As illustrated in Examples 1 to 4, below, the proposed amendments would resolve some of these challenges starting with the 2023 calendar year.

Example 1

For estate planning purposes, a Canadian parent adds their Canadian adult child to the title of a residential property in Canada. On December 31, 2023, the parent and adult child are the only persons identified in the applicable provincial land registration system as owners of the residential property. However, it is not clear to them whether their ownership structure constitutes a trust, or whether they are simply co-owners of the residential property. Consequently, they are unsure whether they have to file an annual UHT return for the 2023 calendar year.

If the Canadian parent and the Canadian adult child were co-owners of the residential property on December 31, 2023, (that is, if their ownership structure was that neither of them was an owner as a trustee of a trust) then each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

If, on December 31, 2023, the Canadian parent was an owner of the residential property in their individual capacity (that is, if their ownership structure was that the Canadian parent was not an owner as a trustee of a trust) and the Canadian adult child was an owner as a trustee of a specified Canadian trust, then under the proposed amendments, each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

Consequently, under the proposed amendments, it would make no difference whether the ownership structure of a residential property owned solely by citizens or permanent residents of Canada was as a trust or as co-owners, provided that the trust (if a trust were to actually exist) would be a specified Canadian trust.

Example 2

To help their Canadian adult child purchase a residential property in Canada, a Canadian parent agrees to co-sign their adult child’s mortgage and have their name added to the title. On December 31, 2023, the adult child and parent are the only persons identified in the applicable provincial land registration system as owners of the residential property. However, it is not clear to them whether their ownership structure constitutes a trust, or whether they are simply co-owners of the residential property. Consequently, they are unsure whether they have to file an annual UHT return for the 2023 calendar year.

If the Canadian adult child and the Canadian parent were co-owners of the residential property on December 31, 2023, (that is, if their ownership structure was that neither of them was an owner as a trustee of a trust) then each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

If, on December 31, 2023, the Canadian adult child was an owner of the residential property in their individual capacity (that is, if their ownership structure was that the Canadian adult child was not an owner as a trustee of a trust) and the Canadian parent was an owner as a trustee of a specified Canadian trust, then under the proposed amendments, each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

Consequently, under the proposed amendments, it would make no difference whether the ownership structure of a residential property owned solely by citizens or permanent residents of Canada was as a trust or as co-owners, provided that the trust (if a trust were to actually exist) would be a specified Canadian trust.

Example 3

Two Canadian spouses own a residential property in Canada that is used for rental purposes. On December 31, 2023, they are the only persons identified in the applicable provincial land registration system as owners of the residential property. However, it is not clear to them whether their ownership structure constitutes a partnership, or whether they are simply co-owners of the residential property. Consequently, they are unsure whether they have to file an annual UHT return for the 2023 calendar year.

If each of them was a co-owner of the residential property on December 31, 2023, (that is, if their ownership structure was that neither of them was an owner as a partner of a partnership) then each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

If, on December 31, 2023, each of them was an owner of the residential property as a partner of a specified Canadian partnership, then under the proposed amendments, each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

Consequently, under the proposed amendments, it would make no difference whether the ownership structure of a residential property owned solely by citizens or permanent residents of Canada was as a partnership or as co-owners, provided that the partnership (if a partnership were to actually exist) would be a specified Canadian partnership.

Example 4

Two Canadian spouses own farmland in Canada, on which there is situated a residential property that is their primary place of residence. On December 31, 2023, they are the only persons identified in the applicable provincial land registration system as owners of the farmland. However, it is not clear to them whether their ownership structure constitutes a partnership, or whether they are simply co-owners of the residential property. Consequently, they are unsure whether they have to file an annual UHT return for the 2023 calendar year.

If each of them was a co-owner of the residential property on December 31, 2023, (that is, if their ownership structure was that neither of them was an owner as a partner of a partnership) then each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

If, on December 31, 2023, each of them was an owner of the residential property as a partner of a specified Canadian partnership, then under the proposed amendments, each of them would be an excluded owner of the residential property for the 2023 calendar year. As a result, neither of them would have to file an annual UHT return for the 2023 calendar year.

Consequently, under the proposed amendments, it would make no difference whether the ownership structure of a residential property owned solely by citizens or permanent residents of Canada was as a partnership or as co-owners, provided that the partnership (if a partnership were to actually exist) would be a specified Canadian partnership.

Implications for Canadian corporations

As illustrated in Examples 5 to 8, below, many Canadian corporations that had to file an annual UHT return for the 2022 calendar year would not have to file an annual UHT return for the 2023 and subsequent calendar years.

Example 5

A corporation that is incorporated in Canada is engaged in the business of constructing new homes in Canada. All of the corporation’s shares (none of which are listed on a stock exchange) are owned by individuals who are citizens or permanent residents of Canada. On December 31, 2023, the corporation is the only person identified in the applicable provincial land registration system as the owner of a residential property that is used as a model home to show to prospective buyers. The corporation is an owner of the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership. The corporation is unsure whether it has to file an annual UHT return for the 2023 calendar year.

The corporation is a specified Canadian corporation for UHT purposes because it is incorporated in Canada and it is not the case that 10% or more of its shares are owned or controlled by foreign nationals or by corporations that are incorporated or continued outside Canada.

Under the proposed amendments, as a specified Canadian corporation that owns the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership, the corporation would be an excluded owner of the residential property for the 2023 calendar year and would not have to file an annual UHT return for the 2023 calendar year.

Example 6

A corporation that is incorporated in Canada is engaged in a farming business. All of the corporation’s shares (none of which are listed on a stock exchange) are owned by an individual who is a citizen or permanent resident of Canada. The corporation owns farmland in Canada on which there is situated a residential property that is used as the primary place of residence of the corporation’s shareholder. On December 31, 2023, the corporation is the only person identified in the applicable provincial land registration system as the owner of the farmland and, thus, the residential property. The corporation is an owner of the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership. The corporation is unsure whether it has to file an annual UHT return for the 2023 calendar year.

The corporation is a specified Canadian corporation for UHT purposes because it is incorporated in Canada and it is not the case that 10% or more of its shares are owned or controlled by foreign nationals or by corporations that are incorporated or continued outside Canada.

Under the proposed amendments, as a specified Canadian corporation that owns the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership, the corporation would be an excluded owner of the residential property for the 2023 calendar year and would not have to file an annual UHT return for the 2023 calendar year.

Example 7

A not-for-profit corporation that is incorporated in Canada rents residential property to Canadians under an affordable housing program. The corporation was incorporated without share capital (that is, it has no stock) and the corporation’s chairperson and all of its directors are citizens or permanent residents of Canada. The corporation is not a registered charity, cooperative housing corporation, municipality, para-municipal organization or Indigenous governing body.

On December 31, 2023, the corporation is the only person identified in the applicable provincial land registration system as the owner of a residential property that is used for rental purposes. The corporation is an owner of the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership. The corporation is unsure whether it has to file an annual UHT return for the 2023 calendar year.

The not-for-profit corporation is a specified Canadian corporation for UHT purposes because it is incorporated in Canada and it is not the case that its chairperson (or 10% or more of its directors) is a foreign national.

Under the proposed amendments, as a specified Canadian corporation that owns the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership, the corporation would be an excluded owner of the residential property for the 2023 calendar year and would not have to file an annual UHT return for the 2023 calendar year.

Example 8

Parent Co. is a corporation that is incorporated in Canada. All of Parent Co.’s shares are listed on a Canadian stock exchange designated for Canadian income tax purposes. Forty percent (40%) of Parent Co.’s shares are owned or controlled (directly or indirectly) by Foreign Co. Foreign Co. is a corporation that is neither incorporated nor continued under the laws of Canada or a province.

Subsidiary Co. is a corporation that is incorporated in Canada. None of Subsidiary Co.’s shares are listed on a stock exchange. Ninety percent (90%) of Subsidiary Co.’s shares are owned by Parent Co.

On December 31, 2023, Subsidiary Co. is the only person identified in the applicable provincial land registration system as the owner of a residential property in Canada. Subsidiary Co. is an owner of the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership. Subsidiary Co. is unsure whether it has to file an annual UHT return for the 2023 calendar year.

Subsidiary Co. is not a specified Canadian corporation for UHT purposes because, although it is incorporated in Canada, 10% or more of its shares are owned or controlled (directly or indirectly) by a corporation that is incorporated or continued outside Canada (that is, Foreign Co.).

However, under the proposed amendments, Subsidiary Co. would be an excluded owner of the residential property for the 2023 calendar year and would not have to file an annual UHT return for the 2023 calendar year because all of the following conditions are met:

  • Subsidiary Co. is a corporation that owns the residential property neither in the capacity as a trustee of a trust nor as a partner of a partnership
  • Subsidiary Co. is a corporation that is incorporated or continued under the laws of Canada or a province
  • at least 90% of Subsidiary Co.’s shares are owned or controlled by a corporation that is incorporated or continued under the laws of Canada or a province and whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes (that is, Parent Co.)

Changes to penalties

If you are an affected owner of a residential property, there are penalties if you fail to file your annual UHT return when it is due.

Reduced minimum failure to file penalty amounts

Under the existing UHTA, if you fail to file your annual UHT return for a residential property for a calendar year by April 30 of the following calendar year, you have to pay a penalty that is the greater of the two following amounts:

It is proposed that the minimum failure to file penalty amounts would be reduced to one-fifth of their original amounts, retroactive to the inception of the UHTA on January 1, 2022, (that is, the reduction would apply to the 2022 and subsequent calendar years). The minimum failure to file penalty amount of $5,000 for affected owners who are individuals would be reduced to $1,000 and the minimum failure to file penalty amount of $10,000 for affected owners that are not individuals (such as corporations) would be reduced to $2,000.

Although the proposed amendment to reduce the minimum failure to file penalty amounts would apply for the 2022 and subsequent calendar years, please be aware that on October 31, 2023, the Minister of National Revenue announced that affected owners will have until April 30, 2024, to file their annual UHT returns for the 2022 calendar year without being charged penalties or interest. Refer to the news release Government of Canada extends deadline for homeowners to file their Underused Housing Tax return for more information.

Exemption for vacation properties non-applicable for the penalty calculation

If you fail to file your annual UHT return for a residential property by December 31 of the following calendar year, there is an adjustment to the second part of the penalty calculation that could result in even higher penalties. The adjustment is applicable only to affected owners that claimed (or that could have claimed) certain exemptions for the calendar year.

Starting with annual UHT returns for the 2023 calendar year, it is proposed that the list of exemptions that would trigger the adjustment to the second part of the penalty calculation would be expanded to include the exemption for vacation properties.

Refer to the Failure to file your return by December 31 of the following calendar year section in Underused Housing Tax Notice UHTN3, Filing a Return and Paying the Underused Housing Tax, for more information about the application of the adjustment.

Ownership in multiple capacities

It is proposed that new section 4.1 would be added to the UHTA. Starting with the 2022 calendar year, new section 4.1 proposes that where a person (for example, an individual or a corporation) is an owner of a residential property in more than one capacity, and one of those multiple capacities is as a partner of a partnership or as a trustee of a trust, the person is treated as if the person were a separate person in each capacity in which the person is an owner of the residential property.

Implications for individuals for the 2022 calendar year

If, on December 31, 2022, an individual was an owner of a residential property in multiple capacities, and one of those multiple capacities was as a partner of a partnership or as a trustee of a trust, then under the proposed amendments, the individual would be treated as being a separate person in respect of each of those multiple capacities. The facts surrounding the individual’s citizenship status and their ownership capacities of the property would dictate whether they have to file multiple annual UHT returns for the residential property.

If an individual is required to file multiple annual UHT returns for a residential property for the 2022 calendar year, but they had filed only one annual UHT return as of November 21, 2023, when the proposed amendment was announced, then they would have to amend the annual UHT return that they previously filed (for one of the capacities) and file one or more additional annual UHT returns (for the other capacity or capacities).

The following are examples of how the new section 4.1 of the UHTA would apply to individuals. As a reminder, new section 4.1 would also apply to persons that are corporations.

Example 9

On December 31, 2022, a Canadian individual is the only person identified in the applicable provincial land registration system as an owner of a residential property. According to a written trust document, the Canadian individual owns 60% of the property in the capacity as a trustee of a trust. The trust is a specified Canadian trust. The Canadian individual owns the remaining 40% of the property in their individual capacity (that is, neither in the capacity as a trustee of a trust nor as a partner of a partnership). However, given the Canadian individual owns the property in two capacities, and one of those capacities is as a trustee of a trust, they are not sure whether they have to file multiple annual UHT returns for the 2022 calendar year.

For the 2022 calendar year, the Canadian individual would be treated as a separate person with respect to their ownership of the residential property in the capacity as a trustee of a trust. In this capacity, the Canadian individual would be an affected owner and would have to file an annual UHT return for the property for the 2022 calendar year. However, their ownership of the property would qualify for the exemption for specified Canadian trusts because, as a separate person with respect to their ownership of the property in the capacity as a trustee of a trust, they are an owner of the property solely in their capacity as a trustee of a trust that is a specified Canadian trust. Therefore, in the capacity as a trustee of a trust, the Canadian individual would not have to pay the UHT for the 2022 calendar year.

Further, for the 2022 calendar year, the Canadian individual would be treated as a separate person with respect to their ownership of the residential property as a citizen who owns the property in their individual capacity. In this capacity, the Canadian individual would be an excluded owner and would not have to file an annual UHT return or pay the UHT for the 2022 calendar year.

Example 10

On December 31, 2023, a foreign national is the only person identified in the applicable provincial land registration system as an owner of a residential property. According to a written trust document, the foreign national owns 10% of the property in the capacity as a trustee of a trust. The trust is a specified Canadian trust. The foreign national owns the remaining 90% of the property in their individual capacity (that is, neither in the capacity as a trustee of a trust nor as a partner of a partnership). However, given the foreign national owns the property in two capacities, and one of those capacities is as a trustee of a trust, they are not sure whether they have to file multiple annual UHT returns for the 2023 calendar year.

For the 2023 calendar year, the foreign national would be treated as a separate person with respect to their ownership of the residential property in the capacity as a trustee of a trust. In this capacity, the foreign national would be an excluded owner because the trust is a specified Canadian trust, and they would not have to file an annual UHT return or pay the UHT for the 2023 calendar year.

Further, for the 2023 calendar year, the foreign national would be treated as a separate person with respect to their ownership of the residential property as an individual who owns the property in their individual capacity. In this capacity, the foreign national would be an affected owner and would have to file an annual UHT return for the 2023 calendar year. Also, the foreign national would have to pay the UHT for the 2023 calendar year, unless their ownership of the residential property qualifies for an exemption.

Specified Canadian partnerships, trusts and corporations

It is proposed that the exemptions for specified Canadian partnerships, specified Canadian trusts and specified Canadian corporations would be repealed effective January 1, 2023, since a person that is an owner of a residential property in their capacity as a partner of a specified Canadian partnership or as a trustee of a specified Canadian trust, or in their own capacity as a specified Canadian corporation, would be an excluded owner under the proposed amendments. As a result, these three exemptions would be applicable for only the 2022 calendar year.

Also, it is proposed that paragraph (a) of the definition of specified Canadian partnership and paragraph (a) of the definition of specified Canadian trust would be replaced, for clarity, starting with the 2023 calendar year.

While it is generally the case that a member of a partnership or a beneficiary of a trust is a person (for example, an individual or a corporation), it is not uncommon for a particular partnership or trust to have a member or beneficiary, as the case may be, that is, itself, a partnership or trust. In this notice, the CRA uses the terms second-tier partnership and second-tier trust to refer to the partnership or trust that is a member or beneficiary of a particular partnership or trust.

New subparagraphs (a)(ii) and (iii) in the definitions of specified Canadian partnership and specified Canadian trust would essentially provide a look-through rule where a particular partnership or trust has a second-tier partnership or second-tier trust as a member or beneficiary, as the case may be. In simple terms, one would look through the second-tier partnership or second-tier trust and determine whether each of its members or beneficiaries, as the case may be, is a person referred to in paragraph (c) of the revised definition of excluded owner. Where this test is met, the particular partnership or trust may qualify as a specified Canadian partnership or specified Canadian trust, as the case may be, for UHT purposes.

Refer to Legislative and Regulatory Proposals Relating to the Underused Housing Tax Act and Explanatory Notes on the Department of Finance Canada’s website for a full description of the proposed amendments to the definitions of specified Canadian partnership and specified Canadian trust.

Prescribed residential property

It is proposed that new section 1.1 would be added to the Underused Housing Tax Regulations (Regulations) to prescribe certain property for purposes of the preamble of the definition of residential property. Starting with the 2022 calendar year, such prescribed property would not be residential property for UHT purposes and, therefore, an owner would not have to file an annual UHT return or pay the UHT with respect to the prescribed property.

Specifically, a particular residential condominium unit that is part of a building containing four or more residential condominium units would be prescribed property where both of the following conditions are met:

Refer to the What is a month section and the What is continuous occupancy section in Underused Housing Tax Notice UHTN7, Exemption for Qualifying Occupancy, for the CRA’s interpretation of the terms month and continuous occupancy.

The following is an example of how the new section 1.1 of the Regulations would apply.

Example 11

A corporation is engaged in the business of constructing multi-unit residential buildings in Canada. The corporation registers condominium plans under which the dwelling units in the buildings are designated as separate units. As a result, the dwelling units are legally residential condominium units that could be sold separately to purchasers. Under its business model, the corporation typically maintains ownership of all of the residential condominium units in its buildings and rents the units to individuals, as places of residence, under annual leases.

The corporation constructed a particular multi-unit residential building that is made up of 200 residential condominium units. The corporation sold 10 residential condominium units to a local housing authority that rents the 10 units to individuals, as places of residence, under annual leases as part of an affordable housing program. Of the remaining 190 residential condominium units that are owned by the corporation, 188 residential condominium units are held for rent to individuals, as places of residence, under annual leases. The remaining two residential condominium units are held as guest suites for use by individuals visiting tenants of the building on a short-term basis (that is, for providing continuous occupancy as a place of lodging for periods of less than one month).

On December 31, 2022, the corporation is the only person identified in the applicable provincial land registration system as the owner of the 190 residential condominium units.

Under the proposed amendment, each of the 190 residential condominium units owned by the corporation would be prescribed property because all of the following conditions are met:

  • the building contains four or more residential condominium units
  • the corporation is the owner of at least 90% of the residential condominium units in the building (190 residential condominium units ÷ 200 residential condominium units = 95% of the residential condominium units in the building are owned by the corporation)
  • at least 90% of the residential condominium units of which the corporation is the owner are held by the corporation for purposes of providing individuals with continuous occupancy as a place of residence or lodging for periods of at least one month (188 residential condominium units ÷ 190 residential condominium units = 98.9% of the residential condominium units of which the corporation is the owner are held by the corporation for purposes of providing individuals with continuous occupancy as a place of residence or lodging for a period of at least one month)

New conditions for the exemption for vacation properties

It is proposed that the exemption for vacation properties would be amended by adding two new conditions to ensure that an individual (or an individual and their spouse or common-law partner) can only claim the exemption for one residential property for a calendar year. Starting in the 2024 calendar year, if you are an affected owner of a residential property on December 31 of a calendar year, your ownership of the residential property would be exempt from the UHT for the calendar year if all of the following conditions are met (please note the two new conditions for the 2024 calendar year at the bottom of the list):

New exemption for employee accommodations

It is proposed that a new exemption from paying the UHT would be introduced starting with the 2023 calendar year. In this notice, we refer to the new exemption as the exemption for employee accommodations.

Starting with the 2023 calendar year, if you are an affected owner of a residential property on December 31 of a calendar year, your ownership of the residential property would be exempt from the UHT for the calendar year if all of the following conditions are met:

The eligible areas of Canada for the proposed exemption for employee accommodations would be exactly the same as the eligible areas of Canada for the exemption for vacation properties. The CRA has developed an online tool that will help you determine if your residential property is located in an eligible area of Canada. It is important for you to perform this verification each year before claiming the exemption for employee accommodations on your annual UHT return. To use this tool, go to Underused housing tax vacation property designation tool.

This exemption would be available to all affected owners regardless of whether they are an individual or another person, such as a corporation, provided all of the above conditions are met.

Please note, the CRA interprets the term primarily to mean more than 50%. Refer to the What is arm’s length section in Underused Housing Tax Notice UHTN7 for the CRA’s interpretation of the term related.

The following is an example of how the new exemption for employee accommodations would apply.

Example 12

A corporation owns and operates a mine that is located in a remote part of Canada. The corporation is incorporated in Canada and its shares are listed on a stock exchange that is not a Canadian stock exchange designated for Canadian income tax purposes. All of the corporation’s shares are owned or controlled (directly or indirectly) by individuals and/or corporations as described in paragraph (a) of the definition of specified Canadian corporation.

The corporation’s officers normally do not work at the mine but occasionally they are required to travel to the mine to perform their duties as officers of the corporation. Due to the remote location of the mine, the corporation constructed a residential property and holds the property primarily for use in providing a place of residence or lodging to its visiting officers. The mine is located in a place that is outside both a census metropolitan area and a census agglomeration. On December 31, 2023, the corporation is the only person identified in the applicable provincial land registration system as the owner of the residential property.

The corporation is an affected owner of the residential property on December 31, 2023.

The corporation has to file an annual UHT return for the residential property for the 2023 calendar year by April 30, 2024. The corporation does not have to pay the UHT for its 100% ownership percentage of the property for the 2023 calendar year because all of the following conditions are met:

  • the property is located in an eligible area for purposes of the exemption for employee-occupied properties
  • the corporation carries on a business in Canada
  • the corporation held the property during the 2023 calendar year primarily to provide a place of residence or lodging to an individual at a location at which the individual is required to be in the performance of their duties as an officer of the corporation

Further information

For all technical publications related to the UHTA, go to Underused housing tax technical information.

For general enquiries about the underused housing tax, call the applicable telephone number:

  • if you are calling about a residential property that is owned by an individual and you are calling from:
    • within Canada or the United States, call 1-800-959-8281
    • outside Canada and the United States, call 613-940-8495 (collect calls accepted)
  • if you are calling about a residential property that is owned by a corporation and you are calling from:
    • within Canada or the United States, call 1-800-959-5525
    • outside Canada and the United States, call 613-940-8497 (collect calls accepted)

To request a ruling or an interpretation related to the application of the underused housing tax, write to:

GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville Tower A 5th floor
320 Queen St
Ottawa ON  K1A 0L5
Canada

Fax: 1-418-566-0319

Refer to GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, which explains the rulings and interpretations service offered by the Canada Revenue Agency.

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