ARTICLE · 27 FEBRUARY 2023

Understanding The New Underused Housing Tax Act

Beard Winter

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Most family trusts and private corporations which own residential properties in Canada are now required to file an annual return under the new federal Underused Housing Tax Act, SC 2022, c 5, s 10 (the "Act").

CanadaTax

Summary

Most family trusts and private corporations which own residential properties in Canada are now required to file an annual return under the new federal Underused Housing Tax Act, SC 2022, c 5, s 10 (the "Act"). If you are a trustee of a trust or a director of a private corporation, it is important to be aware of, and comply with, this requirement and to understand your obligations under the Act.

Overview

The Act came into force on June 9, 2022, applying retroactively to applicable property as of January 1, 2022. The Act levies a 1% tax on the value of vacant or underused residential property owned, directly or indirectly, by certain non-resident individuals or entities. It also imposes a positive obligation on all owners of residential properties in Canada, other than "excluded owners," to file an annual return with the Canada Revenue Agency.

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