In GMS Flash Alert 2022-129 (June 28, 2022), we reported on the new (then proposed) laws (now effective as of January 1, 2022) that impact the ownership of residential real estate in Canada for persons other than individuals who are citizens or permanent residents of Canada. There have been some moves by the Canada Revenue Agency (CRA) regarding filing deadlines that could lighten taxpayers’ burdens.
Owners of vacant or “underused” real estate in Canada are potentially subject to a federal UHT tax equal to 1 percent of the value of their property. Generally, the tax applies to real estate that is not owned, directly or indirectly, by Canadian citizens or permanent residents. Note that the test is not whether the owner is an income tax resident of Canada, but rather whether he or she has the immigration status of a Canadian citizen or permanent resident.1
However, even in cases where the tax may not apply, persons who are not “excluded owners” need to file an annual tax return, Form UHT-2900, to report their interest in Canadian real estate, and calculate the tax, if any. Such return is generally due on April 30 of the following year.
Since the legislation was enacted, the Canada Revenue Agency (CRA) has provided some relief regarding the filing deadlines for 2022 returns. In particular, it has stated that it will not impose any interest or penalties if both the UHT returns and tax payments are made by October 31, 2023.