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March 9, 2023

Canada's Underused Housing Tax Act may require Canadian entities to file new tax returns

Canada’s new Underused Housing Tax Act (UHTA) contains tax filing requirements and significant late-filing penalties that could impact Canadian owners (other than individuals) of residential real estate. The new legislation came into effect on January 1, 2022, and the first filing deadline is fast approaching on April 30. While the stated intention of the UHTA is to levy a tax on the direct or indirect ownership of “underused” residential property by nonresidents, the UHTA as drafted has a broad annual tax filing requirement that applies even if the owner of a property is exempt from the annual tax. Absent the introduction of any changes to the UHTA regulations prior to April 30, multiple categories of Canadian real estate owners and investors will be required to file a UHTA tax return, with substantive penalty exposure if they fail to comply.

A Tax Alert prepared by EY Canada, and attached below, provides additional details.


Full text of Tax Alert