Notice to CHBA Members: Underused Housing Tax Affects Almost All Builders and Developers; CHBA Taking Action But So Should You

The federal Underused Housing Tax (UHT) Act unfortunately can affect nearly all builder and developer members across the country. Hopefully as a CHBA member you have already been contacted by your accountant about this issue, but in case you haven't, please note the following (and what CHBA is doing about it).

While the Act states that newly built housing units are not subject to the Underused Housing Tax, all private corporations – therefore all builders and developers that are not publicly owned – are now required to file an Underused Housing Tax return (UT-2900) each year. This requires residential property owners (with some exceptions), including those with no foreign ownership, to file an annual UHT return for each housing unit owned on or after December 31, even where no tax is payable. Significant penalties apply if the UHT return is not filed by the deadline of April 30. CHBA is actively advocating against this situation, since builders and developers will now be encumbered with unnecessary red tape and accounting expenses to file tax returns for a tax that does not even need to be paid, since newly built housing units are exempt.

For more details, CHBA Alliance Network partner MNP, one of Canada’s leading accounting, consulting, tax, and digital services firms, has a very thorough overview of the Underused Housing Tax Act. We encourage you to read it to find out if and how this applies to your company.

Details on this tax have been slow to emerge, and many questions remain and clarifications are still needed. Indeed, the actual UT-2900 form only came out last week. A UHT electronic form has now been launched this week. Given the unacceptable situation this is placing our industry in, CHBA is asking that the federal government immediately implement an exemption so that builders and developers will not have to file a tax return for their newly constructed housing units for which they still possess title. It is unknown at this time if such an adjustment will be possible in time for this year’s filing deadline. Therefore unfortunately, and until further notice, members should proceed as if the UHT rules will proceed as they currently are published.

CHBA will continue advocating to get this administrative burden removed from our industry, and to update membership on progress made in seeking an exemption.  CHBA is also seeking clarifications that may make filing the UHT returns less burdensome in the meantime.