Do I Have To File An Underused Housing Tax Return?

There have been some changes to Canada’s tax laws that requires many Canadians to file a trust tax return for 2023, even though they may not think they need to! You will have to gather info, contact your accountant, and file before March 30, 2024.

Don’t worry, here is what you need to know:

What needs to be filed?

This is a trust tax return filing, totally and completely separate from your personal returns due on April 30 of each year

Who needs to file?

Good question, you need to file if you have a trust. And if you have a trust or are a trustee that you know about, then you file. But, here are some examples that have now become “trusts” requiring a filing that you may not be thinking about are bare trusts. We have recommended bare trusts in many situations where parties separate the legal owner (who is registered as the owner) and the beneficial owner (who really, really is the owner and controls the property and the bare trustee).

Here are the most common examples:
parents adding children to title of their property or bank accounts for estate planning purposes to bypass probate
children adding their parents on title for financial mortgage or other reasons
holding title in personal names but in trust for a corporation for more favourable mortgage rates
legal registered ownership does not match the actual situation

The new rules means that now the bare trustee must file a tax return to the CRA.

What happens if I don’t file?

CRA may assess penalties of $2,500 for failure to file or bigger, “gross negligence” penalties. This is just for the trust tax return, even if you file your personal tax returns on time and have paid all your taxes.

We are not accountants but do advise clients to get bare trusts and so we are providing this information as a reminder to please take note of this change in tax rules. We cannot help you file, but if you have questions about whether you need to file or whether you fall within an exemption, please contact your accountant. We can only advise on whether there is a bare trust in place but cannot advise on all the details and amounts of tax that might or might not be owing.

For any questions regarding the Underused Housing Tax (UHT), please contact our office and someone one our real estate team will be happy to help!

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