UHT Filing – Still Clear As Mud

Evelyn Jacks

Exactly who needs to file a UHT-2900 by April 30, 2024?  Even tax pros are having trouble deciphering these complicated rules, and explaining them to their clients.  Fortunately, Knowledge Bureau’s Advanced T1 Tax Update Course, now available online for tax training, has the answers and a handy conversation guide for tax accounting and financial advisors to share with their clients.  Here’s a brief synopsis of filing requirements:

Whether excluded people have to file a form is really a difficult question because it depends firstly on whether they are filing a 2022 UHT return (residential property owned on December 31, 2022 by “Affected Persons”) and/or a 2023 return (residential property owned on December 31, 2023 by “Affected Persons”).

Filing the form depends on who the registered owner of the residential property is, so that’s the first test.  Every owner must potentially file unless they are a Canadian citizen or permanent resident.  However, if one owner of the property must file, then all owners must file, except  if they are excluded owners in specified Canadian partnerships who are not listed in the land registration system.  Also, if the property has a mixed use (residential and commercial) no return is required if the property is used more than 50% for commercial reasons.

In most cases Canadian citizens will not have to file the return – no matter where they live in the world – unless they have to file to claim an exemption.  For 2022 that includes properties owned in a specified Canadian corporation, specified partnership or specified trust.  In the case of properties jointly owned by spouses, you must determine if this is a business activity by the amount of services provided (the more services provided the more likely it is this is a partnership).  In most cases, spouses are co-owners and not required to file if they are Canadian Citizens or permanent residents.  This co-ownership status should be reflected on the T776 if the property is rented.

For 2023 owners of residential properties in specified Canadian corporation, specified partnership or specified trust are excluded and do not have to file a UHT return to claim an exemption.

Note there are a number of other exemptions on the form for non-resident owners of residential property as well. 

Anyone who files to claim an exemption will not pay the 1% tax; however, failure to file for an exemption will result in a $1000 or $2000 penalty for each property and each owner.

Check out Knowledge Bureau’s Handy checklist:  Completing the Underused Housing Tax Return and Election form UHT-2900, which is included in your CES Online course materials.  It does a great job of explaining these complex rules.  Enrol now and receive access to the recorded presentations.