Under the provisions of the C-8 Act, the Government has imposed a 1% annual tax on the fair market value of any “underused residential property” owned directly or indirectly, wholly or partially, by non-resident, non-Canadians. For example, if you purchased a home in 2018 for $1,700,000 and its current fair market value is $2,000,000, you will be required to pay $20,000 in taxes.
The owner, being the person registered on the title of the property, will be liable for the UHT in proportion to their interest in the property. Canadian citizens and permanent residents are “excluded owners” for the purposes of the Act. Residential property is defined as detached or semi-detached homes, row-house units, residential condominiums, duplexes, triplexes, or any other property designated as “residential property” under provincial or local zoning laws.
"Affected" owners are but not limited to the following:
Non-resident individuals who are not citizens or permanent residents. To be clear, if you are a non-resident Canadian or permanent resident, you will be considered an “Excluded Owner”
Canadian incorporated corporations even if all shareholders are Canadian citizens or permanent residents
Foreign incorporated corporations
Partnerships
Trusts and Trustees
"Excluded" owners for the purposes of the Act are:
Canadian citizens and permanent residents
Publicly-listed corporations listed on a Canadian stock exchange
Registered charities
Cooperative housing corporations
Indigenous governing body or a corporation owned by the governing body
Municipalities
Government of Canada or an agent appointed by the Government
Provincial governments or an agent appointed by provincial governments
Public service bodies such as hospitals, public schools and colleges
Canadian corporations that are not publicly-listed on a Canadian exchange, Canadian trusts, and partnerships are NOT considered “excluded owners” and are subject to the provisions of the Act.
In certain circumstances, owners who are not “excluded owners” are exempt from the provisions of the Act if the property:
was rented under a written agreement for a period of six (6) months or more to an arm's length renter
is used by the owner for the period of at least one-month while the individual is in Canada for work
is used by spouse or children of owner as their principal residence
is owned by a corporation where at least 90% of the share capital is owned by Canadian citizens or permanent residents
is owned by a specified Canadian partnership where every member is an “excluded owner”
is owned by a specified Canadian trust where every person with beneficial interest is an “excluded owner”
was not inhabitable for a period of at least sixty (60) days during the calendar year due to a disaster or hazardous conditions
is not suitable for year-round use and is inhabitable or inaccessible for a portion of the year due to weather
is undergoing major renovations and it is inhabitable for at least 4 months (120 days)
is vacant due to the death of the owner
is newly constructed and the property was not substantially completed before April 1st of the calendar year
Filing Requirements
Owners other than “excluded owners” are required to file a Form UHT-2900 - Underused Housing Tax Return and Election with the Canada Revenue Agency (CRA) on or before April 30th of the following year. For example, the UHT annual returns for calendar year 2023 are required to be filed on or before April 30, 2024.
An owner is required to report the following information in their declaration:
The calendar year of the declaration
Legal name of the owner
Contact information of the owner
Type of owner (Individual, partnership, corporation, etc.)
Civic address and other property-related information
Percentage interest in the property
Fair-Market Value (FMV) of the property
Underused Housing Tax owing calculated as: FMV (x) % Ownership (x) 1%
There are severe penalties for non-compliance. If the owner fails to file the declaration on April 30th of the following calendar year, the owner will be liable for a penalty equal to greater of the following amounts even if no UHT is owing:
$5,000 if the owner is an individual, or $10,000 if not an individual
The total amount of: 5% of the UHT applicable in respect of the owner’s interest in the property for the calendar year, and 3% of the UHT applicable in respect of the owner’s interest in the property for the calendar year for each calendar month the declaration is past due.
For further information please contact Softron at 1-877-SOFTRON or visit www.softrontax.com
