Filing a Return and Paying the Underused Housing Tax
Underused Housing Tax Notice UHTN3
January 2023
The purpose of this notice is to provide you with information about filing an underused housing tax return and paying the underused housing tax for your residential property for a calendar year.
Except as otherwise noted, all statutory references in this publication are to the provisions of the Underused Housing Tax Act (UHTA) and its regulations. The information in this publication does not replace the law found in the UHTA and its regulations.
Table of Contents
Overview
The Government of Canada has introduced an underused housing tax on the ownership of vacant or underused housing in Canada. The Underused Housing Tax Act (UHTA), which governs the underused housing tax, received royal assent on June 9, 2022. The underused housing tax took effect on January 1, 2022.
Reminders
If you are an affected owner of a residential property on December 31 of a calendar year, you have to pay the underused housing tax for the residential property for the calendar year, unless your ownership of the residential property is exempt from the tax for the calendar year.
Even if your ownership of a residential property is exempt from the underused housing tax for a calendar year, as an affected owner, of a residential property on December 31 of a calendar year, you still have to file a return for the residential property using Form UHT-2900, Underused Housing Tax Return and Election Form.
There are significant penalties if you fail to file an annual return when it is due. Affected owners who are individuals are subject to a minimum penalty of $5,000. Affected owners that are corporations are subject to a minimum penalty of $10,000.
For an explanation of affected owner, owner and residential property, and to determine whether the underused housing tax applies to you, refer to Underused Housing Tax Notice UHTN1, Introduction to the Underused Housing Tax.
To help you determine if your ownership of a residential property is exempt from the underused housing tax for a calendar year, refer to the various Underused housing tax notices.
Filing a return
Multiple residential properties
If you are an affected owner of two or more residential properties on December 31 of a calendar year, you have to file a separate return, Form UHT-2900, for each residential property for the calendar year. You have to file a return for a residential property even if your ownership of it is exempt from the underused housing tax.
Multiple owners
If there are two or more affected owners of a residential property on December 31 of a calendar year, each of them has to file a separate return, Form UHT-2900, for the residential property for the calendar year even if their respective ownership of it is exempt from the underused housing tax.
When is the return due
Your return, Form UHT-2900, for a residential property for a calendar year is due by April 30 of the following calendar year.
When the due date for a return falls on a Saturday, Sunday or a public holiday recognized by the Canada Revenue Agency (CRA), your return is on time if the CRA receives it on the next business day.
For example, if you have to file a return for a residential property for the 2022 calendar year, your return is due by April 30, 2023. Since April 30, 2023, falls on a Sunday, your return is on time if the CRA receives it on May 1, 2023.
In order to file your return, you will need to have a valid CRA tax identifier number such as a social insurance number (SIN), an individual tax number (ITN) or a Canadian business number (BN) with an underused housing tax (RU) program account identifier code to file the return. For more information about these tax identifier numbers, go to the Tax identifier numbers section of the Underused Housing Tax.
Penalties for failing to file a return
If you are an affected owner of a residential property, there are significant penalties if you fail to file your return when it is due. In addition to the penalties, you will also have to pay any underused housing tax and interest due.
Failure to file your return by April 30 of the following calendar year
If you fail to file your return for a residential property for a calendar year by April 30 of the following calendar year, you have to pay a penalty that is the greater of the two following amounts:
- $5,000 for affected owners who are individuals or $10,000 for affected owners that are not individuals (such as corporations)
- the amount that is the total of the following:
- 5% of your underused housing tax payable for the residential property for the calendar year
- 3% of your underused housing tax payable for the residential property for the calendar year multiplied by the number of complete calendar months that the return is past due
Failure to file your return by December 31 of the following calendar year
If you fail to file your return for a residential property for a calendar year by December 31 of the following calendar year, there is an adjustment to the penalty calculation that could result in even higher penalties. The adjustment is applicable only to affected owners that claimed one of the following exemptions for the calendar year:
- exemption for properties that cannot be used throughout the year (that is, the residential property is not suitable for year-round use as a place of residence or is seasonally inaccessible because public access is not maintained year-round)
- exemption for uninhabitable properties (that is, the residential property is uninhabitable due to a disaster, hazardous condition or renovation)
- exemption for primary place of residence
- exemption for qualifying occupancy
If you fail to file your return for a residential property for a calendar year by December 31 of the following calendar year, the second amount in the penalty calculation (that is, the total of the two percentages applied to the underused housing tax payable, as described in the Failure to file your return by April 30 of the following calendar year section of this notice) is calculated as if the above exemptions do not apply.
Therefore, while you may not be liable for an amount of underused housing tax in respect of a residential property for a calendar year because you have qualified for one of the above exemptions, the penalty for failing to file a return by December 31 of the following calendar year is calculated based on the amount of underused housing tax that would have been payable in the absence of the exemption.
Examples of penalties for failing to file your return
Example 1 – penalty for failure to file by April 30 of the following calendar year
An individual is not a citizen or permanent resident of Canada. The individual is the only person identified in the land registration system as an owner of a property in Canada (a detached house) that they purchased in 2018. The taxable value of the property for the 2022 calendar year is $2,000,000.
Due to a severe rainstorm in early October 2022, a river near the property overflows its banks and the property is flooded and uninhabitable until repairs are completed in late March 2023.
The individual has to file a return for the property for the 2022 calendar year by April 30, 2023. The individual does not have to pay the underused housing tax for their 100% ownership percentage of the property for the 2022 calendar year because it was uninhabitable for at least 60 consecutive days in that calendar year as a result of a disaster caused by circumstances beyond their reasonable control and this exemption did not apply to the property for the same disaster in any previous calendar year. Therefore, the individual’s underused housing tax payable for the residential property for the 2022 calendar year is $0 because the exemption for uninhabitable properties applies.
The individual fails to file their return for the property for the 2022 calendar year by April 30, 2023, however, they file the return by December 31, 2023. The penalty for failing to file their return when required is calculated taking into account that the exemption for uninhabitable properties applies for that calendar year.
As a result, the penalty amount that the individual has to pay is equal to the greater of:
- $5,000 (they are an affected owner who is an individual)
- $0, which is the total of the following:
- $0 (5% of $0 [the underused housing tax payable because the exemption for uninhabitable properties applies])
- $0 (3% of $0 [the underused housing tax payable because the exemption for uninhabitable properties applies])
Therefore, the penalty amount that the individual has to pay is $5,000.
Example 2 – penalty for failure to file by December 31 of the following calendar year
If, in Example 1, the individual files their return for the property for the 2022 calendar year on January 10, 2024, the return is past due by eight complete calendar months (that is, May to December 2023). The penalty for failing to file their return when required is calculated as if the exemption for uninhabitable properties did not apply for that calendar year.
The individual’s underused housing tax payable would have been $20,000 (1% × $2,000,000 taxable value × 100% ownership percentage) if the exemption for uninhabitable properties did not apply for the 2022 calendar year.
As a result, the penalty amount that the individual has to pay is equal to the greater of:
- $5,000 (they are an affected owner who is an individual)
- $5,800, which is the total of the following:
- $1,000 (5% of $20,000 [the underused housing tax payable if the exemption did not apply])
- $4,800 (3% of $20,000 [the underused housing tax payable if the exemption did not apply] multiplied by 8 complete calendar months past due)
Therefore, the penalty amount that the individual has to pay is $5,800.
Assessment period extended
If you fail to file your return for a residential property for a calendar year when required, there is no time limit for the CRA to assess you the underused housing tax, penalties and interest in respect of the property for the calendar year.
Paying the tax
When is the payment due
If your ownership of a residential property is not exempt from the underused housing tax for a calendar year, your payment for the calendar year is due by April 30 of the following calendar year.
When the due date for a payment falls on a Saturday, Sunday or a public holiday recognized by the CRA, your payment is on time if the CRA receives it on the next business day.
For example, if you have to pay the underused housing tax for a residential property for the 2022 calendar year, your payment of the tax is due by April 30, 2023. Since April 30, 2023, falls on a Sunday, your payment is on time if the CRA receives it on May 1, 2023.
If you do not pay your underused housing tax for a calendar year by April 30 of the following calendar year, the CRA will begin charging you interest on the outstanding amount. To find out more, go to Prescribed interest rates.
For information on how to make a payment with the CRA, refer to the Payments section in the Additional Information of Form UHT-2900, and go to Payments to the CRA.
Keeping records
Every affected owner of a residential property must keep records to enable the determination of their obligations and liabilities under the UHTA. Generally, you must keep the records for six years from the end of the year to which they relate.
Further information
For all technical publications related to the UHTA, go to Underused housing tax technical information.
For general enquiries about the underused housing tax, call the applicable telephone number:
- if you are calling about a residential property that is owned by an individual and you are calling from:
- within Canada or the United States, call 1‑800‑959‑8281
- outside Canada and the United States, call 613‑940‑8495 (collect calls accepted)
- if you are calling about a residential property that is owned by a corporation and you are calling from:
- within Canada or the United States, call 1‑800‑959‑5525
- outside Canada and the United States, call 613‑940‑8497 (collect calls accepted)
To request a ruling or an interpretation related to the application of the underused housing tax, write to:
GST/HST Rulings Directorate
Canada Revenue Agency
Place de Ville Tower A 5th floor
320 Queen St
Ottawa ON K1A 0L5
Canada
Fax: 1‑418‑566‑0319
Refer to GST/HST Memorandum 1-4, Excise and GST/HST Rulings and Interpretations Service, which explains the rulings and interpretations service offered by the Canada Revenue Agency.
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