Canada: Additional details on 1% federal tax on “underused” or vacant homes owned by non-residents

The new annual tax would apply beginning on 1 January 2022.

Additional details on 1% federal tax on “underused” or vacant homes owned by non-residents

The Department of Finance has provided additional details on a proposed annual 1% tax to be imposed on the value of “underused” or vacant homes owned by non-resident non-Canadians.

Legislation to implement the underused housing tax (UHT) is included in Bill C-8, which received first reading on 15 December 2021. The new annual tax would apply beginning on 1 January 2022.

The proposed legislation clarifies certain aspects of the UHT, and provides details on the legislative regime, some of which were outlined in Finance's public consultation on the proposed tax that ended in December 2021. Read TaxNewsFlash

Because the legislation contains references to certain “prescribed” entities and property, Finance may release regulations to further clarify how these rules would apply.

Underused housing tax

Affected owners would be required to remit this tax on or before 30 April of the following calendar year. This new tax generally would require owners (other than excluded owners) to file an annual prescribed return with the Canada Revenue Agency for each Canadian residential property they own, beginning with the 2022 calendar year (which would be due on or before 30 April 2023). 

Read a January 2022 report prepared by the KPMG member firm in Canada

 

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