BILD drawing attention to Underused Housing Tax Act impacts on builders

By Ry Clarke - Lethbridge Herald Local Journalism Initiative Reporter on February 28, 2023.

Herald file photo BILD Lethbridge Region looks to raise awareness of issues regarding the UHT Act.

The Federal Underused Housing Tax (UHT) Act came into effect January 1, 2022, requiring certain non-Canadian owners, and in certain circumstances Canadian owners, of residential property in Canada to file an annual return to report their ownership, and pay a one per cent tax on the property’s value if applicable.

The filing deadline for 2022 is April 30 and some residential property owners will want to familiarize themselves with the filling requirements or be stuck with a penalty.

The Building Industry and Land Development Association (BILD) Lethbridge Region, is hoping to inform its builder and developer members of the issues regarding the UHT Act so they are not caught unaware.

While the Act states that newly built housing units are not subject to the tax, they are still required to file a UHT return each year, even where no tax is payable.

“Under the Underused Housing Tax Act, there is a one per cent annual tax that the Government of Canada is putting on the value of residential real estate owned by any non-resident, or non-Canadian, that is considered vacant or underused. I think their purpose with this was trying to make sure that our housing stock is being used, and that it is being held with Canadians,” said Bridget Mearns, Executive Officer with BILD Lethbridge.

“How it affects our members, is any real estate that is owned by Canadian corporations or partnerships… that hold residential property are required to file a return on each property every year, whether there is taxes or not.

“The majority of our builders, they are not publicly traded, they are private businesses, partnerships. So they would be subject under this act. They will likely be excluded from the tax, but they are still required to file a return. It’s just red tape, and it can be an onerous thing.”

Mearns notes the penalties for not filing can be around $5,000 for individuals and $10,000 for business.

Looking to assist its members, BLD is working with BDO to host a webinar to learn more about the UHT, hHelping with understanding towards filing obligations, and learning about the various exemptions, on Feb. 28 from 11 a.m. to 12 p.m.

“The concern for our members is making sure they are aware of it, and that they are talking to their accountant, or planners, to make sure they understand if they are exempt or not, and whether or not they have to file,” said Mearns.

“We are doing an education session for our members with BDO Canada to go through the nitty gritty, because everyone’s circumstances are a bit different.”

While advocating awareness with its members, BILD and the Canadian Home Builders’ Association (CHBA) are advocating for less red tape with officials.

“CHBA, which is our national tier of our organization, have been sitting down with the government to talk about some consequences we think they did not intend with this. We are looking for an exemption for the building industry,” said Mearns.

“It is important that we keep our members informed, but also that we keep our Members of Parliament informed when these things come around and have consequences we think are unintended, or misunderstood. It is our association’s job to make sure that we are educating our government leadership as well.”

Mearns has also penned a letter to Rachael Thomas, Member of Parliament Lethbridge, asking for her support in asking the federal government to implement an exemption so builders and developers will not have to file a tax return for their newly constructed housing units which they still possess titles for.

BILD Lethbridge is hoping to help its those in the community that may be caught unaware, so they don’t incur more stress during tax time. “We are happy to be able to do a webinar with accountants who have looked at what the consequences of this act are,” said Mearns.