New Federal Tax
Posted On: 16/03/23 - 0

There is a new federal tax in Canada called the Underused Housing Tax (UHT). This is a 1% tax on the value of vacant housing in Canada that started on January 1, 2022. There is potential of significant CRA penalties of $5,000 for individuals and $10,000 for corporations.

Reason For This New Tax

The rationale behind this new tax is to address the Canadian housing crisis and it’s sole purpose is to make home ownership more affordable for Canadians.

Filing a T1135

At times there will be an exemption from this new tax of 1%. There still will be a requirement to file the new UHT annual return. We have heard of instances of $1,500 penalties for not filing a T1135 form reporting their foreign assets. Even though they declared all of the income from that foreign asset.

Summary Of Details About This New Federal Tax

Only residential properties are affected. Canadian citizens and permanent residents qualify for an exemption from the 1% tax and filing of the annual return. UNLESS you are a partner of a partnership that owns the property, OR a trustee you need to file . Also, there is no exemption from filing the return for private corporations. There is no time limit for the CRA to assess the UHT, penalties and interest.

Deadline For The First UHT Return

The first UHT return is due on April 30th, 2023 for residential properties owned as of December 31, 2022. For further details please call 780-482-7297. Another option is to go to the Canada Revenue Agency website for a very detailed account of this new tax.

We are a locally owned accounting practice that specializes in small business accounting, bookkeeping, payroll and business coaching services. For a no charge consultation, call Cheryl Turner or e-mail her at cheryl@padgettnw.com. Why not deal with business owners who understand what it takes to grow a business profitably?

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