As a Canadian, you must have heard about the Underused Housing Tax (UHT). This federal tax caught countless property owners off guard. With the final filing deadline passed, the CRA is now actively identifying and auditing thousands of non-filers.
If your business, trust, or partnership owns residential property, you could be facing severe, non-negotiable penalties. Even without owing tax! However, many entities (such as publicly traded corporations, registered charities, and certain trusts) are excluded owners and have no filing obligation. For affected owners, failing to file can trigger severe, non-negotiable penalties.
Who Is at Risk and What are the Penalties?
A common misconception is that the Underused Housing Tax (UHT) only applies to foreign owners. In reality, the filing obligation is much broader.
Even if you ultimately qualify as an excluded owner (for example, as an individual Canadian citizen, permanent resident, or certain types of corporations and trusts) you still need to understand the rules carefully.
The CRA requires filings from many entities that Canadians use to hold property, such as:
- Corporations (including small business corporations that own residential property)
- Partnerships (including family arrangements)
- Trustees (such as parents listed on title for a child’s home)
Failure to file carries stiff penalties:
- Individuals: Minimum penalty of $5,000 per year
- Corporations: Minimum penalty of $10,000 per year
These penalties apply even if no tax is owing. This is because the charge is for failing to file, not for failing to pay.
So, while most Canadian entities are exempt from paying UHT, the filing requirement is where many are exposed. Once the CRA begins an audit, penalties are rarely waived.
Act Now Before It's Too Late
Do not wait for a CRA notice. Your best defense is a proactive approach. If you suspect you might be a non-filer or are unsure of your obligations, the time to act is now.
At Legend Fusions Canada, our tax experts can quickly:
- Assess your past UHT filing obligations.
- Determine if you qualify for exemptions.
- Help you file overdue returns to mitigate penalties.
The CRA is auditing. The clock is ticking on potential penalties.
Protect your business and assets.
Contact Legend Fusions today for an urgent consultation.
Jeffrey Ross
Jeffrey Ross is an experienced tax accountant focused on US-Canada cross-border taxation, with over three years in the industry, including a key role as client manager at a Canadian tax firm. He provides expertise in corporate and personal tax planning, specializing in non-resident tax, capital gains, CRA and IRS compliance, and retirement planning. Known for his personalized approach, Jeffrey is dedicated to guiding clients with clear, practical advice tailored to complex tax scenarios, aligned with the evolving tax laws.