Canada Revenue Agency Notices for the Underused Housing Tax

March 17, 2023


As the 2023 tax season approaches, property owners of residential properties should review their new tax filing and tax payment obligations (if any) as per the Underused Housing Tax Act, 2022 (the “Act“). A summary of the Act, and the tax filing and taxation obligations can be found in our article here.

The Canada Revenue Agency (CRA) has recently released a number of Notices in anticipation of the April 30, 2023 filing deadline: the UHTN1 Introduction to the Underused Housing Tax; the UHTN2 Calculating the Underused Housing Tax Payable; the UHTN3 Filing a Return and Paying the Underused Housing Tax; and the UHTN4 Exemptions for Specified Canadian Partnerships, Trusts and Corporations.

The Notices provide insight into the CRA’s interpretation and application of the Act, which is certainly welcome information as we await additional regulations to the Act. Some of the key takeaways from the Notices are as follows:

Affected Owners

The Notices define a category of residential property owners, called “Affected Owners”, which reflects the nuances of the Act as it relates to the tax filing requirements and the tax (though this term is not used in the Act itself).

As mentioned in our prior article, the Act establishes a tax filing requirement that is distinct from the tax that is payable. The tax filing requirement appears to be based on whether a given person or entity falls within the definition of an “owner” as opposed to an “excluded owner”; it is not related to the type, nature or use of the residential property. In contrast, the tax is payable if the property falls within the definition of “residential property” (a definition based on property type), unless an exemption applies. It is therefore possible that an owner of residential property may be obliged to file an annual return but will not have to pay the tax. The Notices define this category of owners as “Affected Owners”: that is, owners of residential property in Canada on December 31 of a calendar year, who are not “excluded owners”. Affected Owners will have to file an annual return.

Bare Trusts

Trustees of bare trusts are likely obliged to file an annual return where the trustee is a registered owner on title to residential property. In bare trust arrangements, the trustee merely holds title to the trust property while the beneficiaries retain control and beneficial ownership of the property. However, the Notices and the Act do not distinguish between legal and beneficial ownership. For the purposes of the Act, an individual or entity (including a private corporation) is an owner of residential property if they are identified or considered as an owner in the land registration system where the property is located. Bare trustees appear to fit within the ambit of an Affected Owner for CRA purposes, as an Affected Owner includes an individual that is a citizen or permanent resident of Canada, who owns residential property in Canada as a trustee (other than as a personal representative for a deceased individual, or as a trustee of certain trusts: mutual fund trusts, real estate investment trusts or SIFT trusts for Canadian income tax purposes). Private corporations also share the tax filing obligations of an Affected Owner when acting as bare trustees of trusts that hold residential property.

Buildings that are not considered “residential properties”

There is some clarity on the types of buildings, premises and structures that are not considered “residential properties” for the purposes of the tax. While these building types are not outlined in the Act, the CRA will take the position that properties such as high-rise apartment buildings, commercial condominium units, quadruplexes, and commercial cottages, cabins and chalets are not “residential properties”. A list of other building types can be found in the UHTN1 Introduction to the Underused Housing Tax


The Notices provide a reminder of the stricter penalty that may follow if an Affected Owner claimed a property exemption but failed to file a return by December 31 of the following calendar year. This penalty essentially nullifies the exemption when calculating the penalty amount. In other words, the calculation is based on the amount of the tax that would have been payable if the exemption did not apply.

No time limit for assessment by CRA

The CRA can assess the tax, penalties and interest for a property in any given calendar year at any point in time.

The Act has a wide reach and imposes significant penalties for non-compliance. As such, owners of residential property should undergo a careful assessment of whether the Act applies in their circumstances, with particular regard to how property ownership is registered on title, the property’s use, and whether the owner falls within a certain category of owners under the Act.

You are encouraged to contact your lawyer at Fogler, Rubinoff LLP or one of the members of our Tax and Estates Group to obtain legal advice regarding the new taxation and filing requirements outlined in this bulletin.

Lawrence Adelberg
t: 416.941.8829
Tammy Anklewicz
t: 416.365.3710
Kathryn Balter
t: 416.864.0112
Leonard Bosschart
t: 416.864.7600
Shaun Doody
t: 416.941.8826
Peter Guselle
t: 416.941.8818
Eric Hoffstein
t: 416.864.9757
Ian MacInnis
t: 416.941.8813
Michael Rosen
t: 416.840.0665
Mary Wahbi
t: 416.864.7629

This publication is intended for general information purposes only and should not be relied upon as legal advice.

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