The Underused Housing Tax (UHT)

The Underused Housing Tax (UHT) is applicable to certain underused and vacant properties effective January 1, 2022. The tax is 1% of the fair market value of the property multiplied by the ownership percentage. The reporting and payment of the UHT is due on or before April 30th of the following calendar year; the first UHT returns will be due on April 30th, 2023.

The UHT may apply on the following types of residential properties in Canada, n Detached house, duplexes and triplexes n Rowhouse n Semi-detached n Residential condominium units

Any taxpayer who meets the criteria of an excluded owner has no obligation or liability under the UHT; an excluded owner includes but is not limited to, n Any individual who is a Canadian citizen or permanent resident n Any person, including a Canadian citizen or permanent resident that owns residential property as a trustee n Publicly traded Canadian corporations n Registered charities n Cooperative housing units n Municipal organizations or public institutions and government bodies

Those not noted above will be referred to as an affected owner, which includes but is not limited to, n Any individual who is not a Canadian citizen or permanent n Any person, including a Canadian citizen or permanent resident that owns residential property as a trustee n Partners of a partnership that owns residential property n Corporations incorporated outside of Canada n Private Canadian corporations n Canadian corporations without share capital

Exemptions from the UHT are available depending on the ownership and use the property. The UHT may be exempted where the property was recently constructed, can only be used seasonally, uninhabitable due to a disaster, used as a vacation property by the owner or if the property is used by a tenant for at least six months. The exemption does not relieve the requirement to file a UHT return.

If you directly or indirectly own a residential property that was underused in 2022, please contact a tax professional to better understand your exposure to the UHT and possible filing requirements. One area of concern that we have identified is where property is held by a private Canadian corporation that may be underused due to the nature of its use, such as residential properties for seasonal workers or residential rental properties for short stays (i.e. Airbnb, Vrbo, etc.). Penalties for non-compliance of the UHT start at $5,000 and can be higher depending on the filing date and the value of the residence

The information provided is a summary of the UHT and does not constitute professional advice. Please contact our offices in Brantford, Simcoe, Hagersville and Port Dover and we will gladly assist you in navigating the new UHT. Or visit us at www.millards.com

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Your leadership investment in the Chamber allows the Board, volunteers, and staff to deliver and work on many events, projects, and issues to improve the environment for doing business in Brantford-Brant, Ontario, Canada, and internationally. Many issues businesses are struggling with in Brantford-Brant are also challenges for businesses in other regions, and vice-versa, and the power of the network of Chambers of Commerce and Boards of Trade to share information and ideas and to collaborate has been strengthened over the past three years.

Recently, a policy resolution developed by our Education Committee in 2019 went through a full cycle, which is important to illustrate. “Maintaining Investment and Innovation in Ontario’s Pubic Education System” was developed to respond to concerns from our about inefficient and ineffective investment in education, and recommended better planning in this area. The policy was approved by our Advocacy Committee and Board, and passed on the policy convention floor in 2019 as an official policy of the Ontario Chamber of Commerce. The OCC, in a January press release marking the International Day of Education, noted that the “Ontario government has introduced several initiatives to promote the skilled trades as a viable career for young people, expand financial literacy within Ontario’s education curriculum and continues to modernizing the computer studies and tech-ed curriculum to promote digital literacy. Ontario’s diversity is an economic advantage, but we must ensure barriers to accessing education and training programs are eroded, particularly for equity-deserving groups.” Certainly this item will need ongoing attention, but for 2023, our policy will be “sun-setting” from the OCC’s policy compendium, while concurrently our Chamber is working with others to address mental health supports, skilled labour, and WSIB improvements on COVID-19 Employer Counts, among others.

We are also proud to note significant progress on Surety Bonds, Public Procurement, and Red Tape Reduction with our municipal governments, and look forward to advocating strongly for a Regional Transportation Master Plan for Brantford-Brant and Six Nations of the Grand River. Please reach out with your ideas to improve the business community, or to be a part of the Advocacy Committee.