The Underused Housing Tax: What Ontario Condominium Corporations Need to Know

As of January 1, 2022, the Federal Underused Housing Tax Act came into effect in Canada, affecting all owners of residential properties who are not considered “excluded owners”. This includes condominium corporations in Ontario who own residential properties such as a superintendent’s suite.

With the filing deadline fast approaching on April 30, 2023, it is crucial that condominium corporations understand their obligations and the impact of the Underused Housing Tax on their operations.

Here’s what Ontario condominium corporations need to know about the Underused Housing Tax and the steps management needs to take

• Determine if the Corporation is an Affected Owner

Condominium corporations that own residential properties are considered “affected owners” unless one or more of the directors is neither a Canadian citizen nor a permanent resident. In this case, the corporation would be exempt from paying the Underused Housing Tax.

• File the Annual UHT Return

Affected owners are required to file an annual UHT return with the Canada Revenue Agency (CRA) by April 30, 2023. Failure to file the return can result in a fine of up to $10,000.00 for corporations.

• Take Advantage of the Waiver of Penalties and Interest

The CRA has announced that the Minister of National Revenue will be providing transitional relief for affected owners under the Underused Housing Tax Act. This means that no penalties or interest will be applied for UHT returns and payments received by the CRA prior to November 1, 2023.

• Seek Professional Advice

Condominium corporations should seek professional advice from their auditor or other qualified professionals to ensure that their UHT returns are filed correctly and in a timely manner. It should be noted that condominium corporations that own residential property, such as a superintendent’s suite, are likely required to file the annual UHT return but may be exempt from paying the UHT unless one or more of the directors is neither a Canadian citizen nor a permanent resident.

In conclusion, the Underused Housing Tax Act affects all owners of residential properties in Canada, including condominium corporations in Ontario. It is important that management takes the necessary steps to determine their obligations, file the annual UHT return, take advantage of the waiver of penalties and interest, and seek professional advice as needed.

Don’t miss the opportunity to stay compliant and avoid any potential fines.

Stay informed and stay ahead of the game.