Registered charities, public sector entities and non-profit organizations (NPOs) may have obligations under the Underused Housing Tax (UHT) rules due April 30, 2023. Although registered charities and many public sector entities are generally exempt from these new federal UHT requirements, they may still be affected where they indirectly hold reportable residential property through other entities in their structures, such as trusts or nominee corporations. In this case, the trustee or nominee corporation that holds the legal title to the property must file an annual UHT return for each reportable residential property and determine whether it is also liable for the 1% UHT. Note that NPOs and public sector entities that are not exempt under these rules must also determine whether they meet the filing and payment UHT obligations for property that they hold the legal title to directly.
To meet this fast-approaching deadline for the 2022 calendar year, charities, public sector entities and NPOs should identify all affected owners in their structures who owned reportable residential property on December 31, 2022 and ensure these owners file a separate UHT return for each reportable residential property and, unless they meet one of several exemptions, pay any related UHT by April 30, 2023. Entities that do not meet these new requirements may face significant penalties of at least $10,000 per property, even where no tax is ultimately payable.
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