Underused Housing Tax Update: October 31 deadline and guidance from CRA


By St.John McCloskey and Emily Davies

UPDATE (October 31, 2023): The Canada Revenue Agency has extended the effective deadline again for filing and payment for the 2022 UHT returns until April 30, 2024. Penalties and interest will be waived as long as the return is filed and payment is made before May 1, 2024. This coincides with the deadline for the 2023 UHT return, so be ready to file two returns for any relevant properties held in 2022 and 2023.

As covered in our previous article on the Underused Housing Tax (“UHT”), the federal government of Canada has implemented a federal vacancy tax. In March 2023 the CRA gave an effective extension to file a return until October 31, 2023. This replaced the normal deadline of April 30. If you have not considered your obligations under this new tax, it is time to do so.

The Canada Revenue Agency (“CRA”) has recently made some slight updates to their UHT Notice 15. This notice provides the CRA’s response to some frequently asked questions. Additionally, the CRA has released an interactive tool to help owners of residential property consider their UHT obligations. We discuss these updates below.

What is the UHT?

The UHT is an annual tax on owners of residential property in Canada, and is 1% of the property’s value. The UHT includes various exemptions and exclusions. Parliament seemed to intend to only tax residential property that is “underused” and “foreign-owned.” However, an owner should never assume they are exempt or excluded. The poor drafting of this tax means that its application can be quite technical. Any owner of residential property must consider whether the tax applies to them. Clark Wilson’s UHT Reference Chart provides a useful one-page summary of the tax. The CRA has their own information page with the return form and explanatory notes.

Who Must File?

There is a broad obligation to file a return with the CRA even when there is no tax payable. Every owner of a residential property who is not an “excluded owner” must file. The CRA calls owners who are not excluded “affected owners.” Affected owners who do not file are subject to penalties of $5,000 for individuals and $10,000 for corporations, even where no tax is due!

There are two fundamental questions which arise before we can consider questions of exclusion or exemption. The first question is whether the property in question is a “residential property” for the purposes of the UHT. The UHT does not consider zoning or assessment classes from BC Assessment. The general idea is that houses and similar buildings are residential property if they have between one and three residential units, each with its own kitchen, living area, and bathroom. Units within a building may be separate residential properties if they are intended to be owned separately. The second question is who the owner of the property was on December 31, 2022. The owner is generally the person registered as the owner on title with the Land Title Survey Authority in BC.

An affected owner of more than one residential property in Canada must file a separate return for each property. If there are multiple affected owners of a residential property, each affected owner must file a separated return for the property.


The CRA has recently released an interactive tool to help determine if you are an “affected” or “excluded” residential property owner. Canadian citizens and permanent residents are generally excluded, and therefore do not have to file a return or pay any tax. However, if such a person holds title as a partner in a partnership, or as trustee for a trust (other than an estate), then they are not an “excluded owner,” and must file a returnCrucially, the interactive tool does not help determine if the property in question is a “residential property” or if a person is an “owner.”

The updates to UHT Notice 15 are generally minor clarifications. The CRA has reiterated their position that where a child holds title to a parent’s house for estate planning purposes, the child must file a return. Again, penalties will be applicable even where no tax is due. The same is true where a parent is on title for a child’s house. These situations create a trust, and so the trustee must file. The CRA also reiterated that where spouses invest in a property together as partners in a partnership, they must file a return. An issue with this position is that it is generally difficult to distinguish between a partnership and a joint venture in such a situation. While a partnership has UHT implications, a joint venture does not.

Key Takeaway

The deadline to file for the 2022 UHT is October 31, 2023. Parties that are not excluded owners must file, even if there is no tax payable. Failure to do so will result in steep penalties.

If you have any further questions or concerns on the UHT, please reach out to a member of Clark Wilson LLP’s Tax Group for further information and guidance.