Sign up for tax alert emails    GTNU homepage    Tax newsroom    Email document    Print document    Download document

March 15, 2023

Canada’s Underused Housing Tax Act: Canadian entities may be required to file new tax returns

  • Canada’s new Underused Housing Tax Act (UHTA), which came into effect on 1 January 2022, contains tax filing requirements. The first filing deadline is 30 April 2023.

  • It is important that taxpayers consider the implications of the tax filing requirements as they relate to their Canadian residential property holdings as there are significant penalties for non-compliance.

Canada’s new UHTA contains tax filing requirements and significant late-filing penalties that could impact Canadian owners (other than individuals) of residential real estate. The new legislation came into effect on 1 January 2022, and the first filing deadline is fast approaching on 30 April 2023. For EY’s complete summary of the UHTA released when the legislation first became law, see EY Tax Alert 2022 Issue No. 35.

While the stated intention of the UHTA is to levy a tax on the direct or indirect ownership of “underused” residential property by nonresidents, the UHTA as drafted has a broad annual tax filing requirement that applies even if the owner of a property is exempt from the annual tax. Absent the introduction of any changes to the UHTA regulations prior to 30 April, multiple categories of Canadian real estate owners and investors will be required to file a UHTA tax return, with substantive penalty exposure if they fail to comply.

Who is affected and why?

The UHTA requires that all owners of residential property that is situated in Canada file a UHTA tax return for the calendar year. Only an “excluded owner” is exempt from the requirement to file the new tax return. An “excluded owner” is generally an individual who is a Canadian citizen or permanent resident (but excludes an individual acting in their capacity as a trustee or as a partner in a partnership). Certain publicly traded entities, registered charities and cooperative housing corporations are also excluded owners under the UHTA. An “owner” is defined to be the person identified under the land registry system with respect to the ownership of a residential property. Unfortunately, privately owned Canadian corporations, personal trusts and partnerships that are owners of residential property, including, for example, bare trust corporations and other nominee entities, are not excluded from the UHTA filing requirements.

Properties covered by the UHTA are “residential property,” generally meaning a detached house or similar building (containing not more than three dwelling units), or a part of a building that is a semi-detached house, row-house unit, residential condominium unit or other similar premises. Owners of high-density rental real estate such as apartment buildings should be unaffected; however, owners of stratified properties with separate title will be impacted. The UHTA could therefore also extend to include Canadian real estate developers who own completed but unsold inventory on 31 December that meets the “residential property” definition, or Canadian investment funds that own pools of residential property.


The requirement to file a UHTA tax return does not mean the filer is liable to tax. Several categories of purely domestic Canadian property owners are entitled to claim an exemption from the tax, including certain Canadian corporations, trusts and partnerships, but are still required to file a UHTA tax return for each residential property (situated in Canada) that is owned on 31 December 2022. A failure to file the UHTA tax return by 30 April 2023 exposes the entity to a minimum penalty of CA$10,000 per return,1 even if no UHTA tax is owing as a result of accessing a particular exemption.2 Furthermore, as indicated above, a separate UHTA return is required for each property owned, and the exposure for non-compliance could therefore be multiplied across the number of properties owned.

The Canada Revenue Agency (CRA) has also confirmed that domestic corporations must register for a separate UHTA program account as a new extension to their existing business number (for example, the BN with the extension RU0001) to file a UHTA tax return.

The requirement to file a UHTA tax return for each property owned is anticipated to be a significant burden for real estate development and investment entities. For example, a bare trust corporation holding title to 30 condominium units at 31 December 2022 would need to file 30 UHTA tax returns by 30 April 2023; failure to file all 30 UHTA tax returns would expose the bare trustee corporation to a minimum $300,000 penalty, despite no UHTA 1% tax being exigible.

Unlike the Toronto Vacant Home Tax or Vancouver Empty Homes Tax, which use an online declaration tool, the UHTA requires a tax return to be filed with the CRA. The return is completed using Form UHT-2900, Underused Housing Tax Return and Election Form, which is available, along with published guidance, on the UHTA section of the CRA’s website.

There are several instances where the law is ambiguous as to whether an exemption is available for certain complex real estate ownership arrangements among Canadian entities. Consultation with a tax professional is highly recommended in these circumstances.

It should further be noted that the Government has the authority to adjust these broad filing requirements for Canadian entities by prescribing additional categories of excluded owners under the UHTA regulations; however, such modifications have not been made at the time of drafting this Tax Alert.

Taxpayers should consult with a real estate lawyer or tax professional to identify all instances of Canadian residential property ownership, including bare trust and nominee ownership arrangements, and discuss a recommended approach to ensuring compliance with the UHTA.


For additional information with respect to this Alert, please contact the following:

Ernst & Young LLP (Canada), Toronto

Ernst & Young LLP (Canada), Montreal

Ernst & Young LLP (Canada), Ottawa

Ernst & Young LLP (Canada), Waterloo

Ernst & Young LLP (Canada), Saskatoon

Ernst & Young LLP (Canada), Calgary

Ernst & Young LLP (Canada), Vancouver



  1. Currency references in this Alert are to the CA$.

  2. The minimum penalty for individuals is $5,000 per return.


The information contained herein is general in nature and is not intended, and should not be construed, as legal, accounting or tax advice or opinion provided by Ernst & Young LLP to the reader. The reader also is cautioned that this material may not be applicable to, or suitable for, the reader's specific circumstances or needs, and may require consideration of non-tax and other tax factors if any action is to be contemplated. The reader should contact his or her Ernst & Young LLP or other tax professional prior to taking any action based upon this information. Ernst & Young LLP assumes no obligation to inform the reader of any changes in tax laws or other factors that could affect the information contained herein.


Copyright © 2024, Ernst & Young LLP.


All rights reserved. No part of this document may be reproduced, retransmitted or otherwise redistributed in any form or by any means, electronic or mechanical, including by photocopying, facsimile transmission, recording, rekeying, or using any information storage and retrieval system, without written permission from Ernst & Young LLP.


Any U.S. tax advice contained herein was not intended or written to be used, and cannot be used, by the recipient for the purpose of avoiding penalties that may be imposed under the Internal Revenue Code or applicable state or local tax law provisions.


"EY" refers to the global organisation, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.


Privacy  |  Cookies  |  BCR  |  Legal  |  Global Code of Conduct Opt out of all email from EY Global Limited.


Cookie Settings

This site uses cookies to provide you with a personalized browsing experience and allows us to understand more about you. More information on the cookies we use can be found here. By clicking 'Yes, I accept' you agree and consent to our use of cookies. More information on what these cookies are and how we use them, including how you can manage them, is outlined in our Privacy Notice. Please note that your decision to decline the use of cookies is limited to this site only, and not in relation to other EY sites or Please refer to the privacy notice/policy on these sites for more information.

Yes, I accept         Find out more