The Underused Housing Tax Act: A Primer

On December 15, 2021 the House of Commons held the first reading of Bill C-8, which includes draft legislation for a new stand-alone tax act: the Underused Housing Tax Act (the “Act”). Very broadly, the draft legislation intends to impose an annual tax of 1% on the value of residential property located in Canada owned, directly or indirectly, by persons who are neither citizens nor permanent residents of Canada, unless the owner is eligible to claim a specific exemption.  Although the Act is drafted to include a number of different exemptions, the two main exemptions are in respect of properties that are used as a primary place of residence by the owner or the owner's immediate family members, and properties that meet the “qualified occupancy period” requirements for at least 180 days in a calendar year.