11 www.georgianbay.ca GBA UPDATE Summer 2023 GOVERNMENT By Shannon Farquharson, Communications & Executive Services Coordinator The Underused Housing Tax (UHT) is a new one per cent annual tax levied on the value of residential property owned by non-Canadians and some companies/trusts that are vacant or considered underused. The intention of this tax is to deter non-residents and some companies/trusts from passively investing in Canadian real estate and to make housing more available to Canadian residents. Who needs to file? All non-Canadian property owners and some companies/ trusts are required to file a UHT form (T1261) with the Canada Revenue Agency (CRA) by April 30 annually. The tax itself will likely not apply to most GBA members who have property that is not suitable for year-round use (exemptions 630 or 635), however all non-Canadian property owners and some companies/trusts are required to file even if they will be exempt from paying the tax. Tips for filing To file a UHT tax form, you must have a valid CRA tax identifier number. If you do not have a Canadian Social Insurance Number (SIN) you will need to apply for an Individual Tax Number (ITN). The ITN application form and supporting documents must be mailed to the CRA. This process can take up to eight weeks, so please submit your application as soon as possible. Companies/trusts that need to file the UHT need a business number. Information on how to get a business number, if you do not have one (i.e, non-resident businesses), can be found here: bit.ly/CRA-BN. Water access properties do not have a Canadian postal code, so when filing the UHT form this should be left blank. Do not use the postal code of your local post office as this may negate your exemption. Filing Extension for 2023 The minimum penalty for late filing is $5,000 per property for any individual owner. Although April 30 is the deadline to file your UHT form, the CRA has effectively extended the filing deadline for the UHT to October 31 this year only, to provide more time for affected owners to comply. The CRA's application of penalties and interest will be waived provided the return is filed by October 31, 2023. If you find that you are nearing the October 31 deadline, you can avoid late filing fees, as follows: 1. File for an ITN number or business number as soon as possible. These requests can take up to eight weeks to process, so the sooner you can start that process the better. This number will be needed for any future dealings with the CRA, such as UHT filings, so please remember to store your ITN or business number safely. To get an ITN or business number you need to complete the application form as above and mail it along with the applicable government ID (certified or notarized copies). 2. When you complete the UHT form as above, include an explanatory note explaining why you are submitting the form without an ITN (or business) number, and also include a copy of the ITN (or business number) application submitted, which should include the date it was filed. With this information CRA should be able to process your filing and you should not incur any late filing charges due to the lack of an ITN (or business) number by the October 31 deadline. 3. Should CRA levy any late filing fee, you can file an objection through taxpayer relief provisions available. In this case, because the UHT form was released very late, has been poorly communicated by CRA, and may not provide enough time for filers to obtain an ITN or business number before the deadline in many cases, CRA advised that there would be sufficient grounds for an appeal. More information on the UHT can be found at bit.ly/GBA-UHT. This article is intended for general information purposes only. While we have attempted to provide information that is helpful for our readers, GBA does not provide tax, legal or accounting advice and accepts no legal liability for the contents of this article. Ensure you check original sources for additional details and updates. For advice regarding your personal taxation and filing needs, please contact your own tax professional or accounting advisor. What Is the Underused Housing Tax?
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