Legislative and Regulatory Proposals Relating to the Underused Housing Tax Act
Underused Housing Tax Act
1 (1) The definition excluded owner in section 2 of the Underused Housing Tax Act is replaced by the following:
- excluded owner
excluded owner of a residential property for a calendar year means a person (other than a prescribed person) that, on December 31 of the calendar year, is an owner of the residential property
(a) in the person’s capacity as a trustee of a trust that is
(b) in the person’s capacity as a partner of a partnership that is a specified Canadian partnership;
(c) in a capacity other than as a trustee of a trust or partner of a partnership if the person is
(i) an individual who is a citizen or permanent resident,
(ii) a specified Canadian corporation,
(iii) a corporation incorporated or continued under the laws of Canada or a province whose shares are listed on a stock exchange in Canada for which a designation under section 262 of the Income Tax Act is in effect,
(iv) a registered charity as defined in subsection 248(1) of the Income Tax Act,
(v) a cooperative housing corporation, a hospital authority, a municipality, a public college, a school authority, or a university, as those terms are defined in subsection 123(1) of the Excise Tax Act, or a para-municipal organization as defined in section 1 of Part VI of Schedule V to that Act,
(vi) an Indigenous governing body as defined in section 2 of the Department of Indigenous Services Act,
(vii) His Majesty in right of Canada or a province or an agent of His Majesty in right of Canada or a province, or
(viii) a corporation incorporated or continued under the laws of Canada or a province, all or substantially all of the shares of which are owned or controlled by a trust referred to in any of subparagraphs (a)(ii) to (iv) or by a corporation referred to in subparagraph (iii); or
(d) if the person is
(2) Paragraph (e) of the definition owner in section 2 of the Act is replaced by the following:
(e) a person that gives continuous possession of the land on which the residential property is situated to another person referred to in paragraph (b) or (c), or
(3) Paragraph (a) of the definition specified Canadian partnership in section 2 of the Act is replaced by the following:
(a) a partnership, each member of which is on December 31 of the calendar year
(i) a person referred to in paragraph (c) of the definition excluded owner,
(ii) another partnership, each member of which is a person referred to in that paragraph,
(iii) a trust, each beneficiary of which is a person referred to in that paragraph, or
(iv) a trust referred to in any of subparagraphs (a)(ii) to (iv) of that definition; or
(4) Paragraph (a) of the definition specified Canadian trust in section 2 of the Act is replaced by the following:
(a) a trust under which each beneficiary having a beneficial interest in the residential property is on December 31 of the calendar year
(i) a person referred to in paragraph (c) of the definition excluded owner,
(ii) a partnership, each member of which is a person referred to in that paragraph,
(iii) another trust, each beneficiary of which is a person referred to in that paragraph, or
(iv) a trust referred to in any of subparagraphs (a)(ii) to (iv) of that definition; or
(5) Subsections (1), (3) and (4) are deemed to have come into force on January 1, 2023.
(6) Subsection (2) is deemed to have come into force on January 1, 2022.
2 (1) The Act is amended by adding the following after section 4:
Marginal note:Owner — multiple capacities
4.1 If a person is an owner of a residential property in the person’s capacity as a partner of a partnership or a trustee of a trust, the Act applies to the person as if the person were a separate person in respect of
(a) each partnership for which the person is an owner of the residential property in the person’s capacity as a partner of the partnership;
(b) each trust for which the person is an owner of the residential property in the person’s capacity as a trustee of the trust; and
(c) all other capacities in which the person is an owner of the residential property.
(2) Subsection (1) is deemed to have come into force on January 1, 2022.
3 (1) The portion of subsection 6(3) of the Act before the formula is replaced by the following:
Marginal note:Tax payable
(3) Subject to this Act, every person that, on December 31 of a calendar year, is an owner of a residential property (other than an excluded owner of the residential property) must pay to His Majesty in right of Canada tax in respect of the residential property for the calendar year in the amount determined by the formula
(2) Paragraphs 6(7)(a) and (b) of the Act are repealed.
(3) Paragraph 6(8)(b) of the Act is replaced by the following:
(b) a child of the individual or of the individual’s spouse or common-law partner if the child occupies the dwelling unit for the purpose of authorized study at a designated learning institution as defined in section 211.1 of the Immigration and Refugee Protection Regulations.
(4) Subsection (2) is deemed to have come into force on January 1, 2023.
(5) Subsection (3) is deemed to have come into force on January 1, 2022.
4 Subsection 7(1) of the Act is replaced by the following:
Marginal note:Return required
7 (1) A person that, on December 31 of a calendar year, is an owner of a residential property (other than an excluded owner of the residential property) is required to file a return for the residential property for the calendar year.
5 (1) The portion of the definition confidential information in subsection 32(1) of the Act after paragraph (b) is replaced by the following:
but does not include information that does not directly or indirectly reveal the identity of the person to whom it relates and, for the purposes of applying subsections (3), (13) and (14) to a representative of a government entity that is not an official, includes only the information described in paragraph 211(6)(j) of the Excise Act, 2001. (renseignement confidentiel)
(2) Subsections 32(6) and (7) of the Act are replaced by the following:
Marginal note:Disclosure of confidential information
(6) Subsections 211(6) and (6.1) of the Excise Act, 2001 apply in this Act, with any modifications that the circumstances require, as if
(a) the references in those subsections to the Excise Act, 2001 were references to this Act;
(b) confidential information for the purposes of this Act were confidential information for the purposes of the Excise Act, 2001;
(c) an authorized person for the purposes of this Act were an authorized person for the purposes of the Excise Act, 2001; and
(d) a business number for the purposes of this Act were a business number for the purposes of the Excise Act, 2001.
(3) Subsections (1) and (2) are deemed to have come into force on January 1, 2022.
6 (1) Paragraph 47(1)(a) of the Act is replaced by the following:
(a) $1,000 if the person is an individual or $2,000 if the person is not an individual; and
(2) Subsection 47(2) of the Act is replaced by the following:
Marginal note:Failure to file
(2) If a person fails to file a return in respect of a residential property for a particular calendar year by December 31 of the following calendar year, for the purpose of calculating the total referred to in paragraph (1)(b), the tax calculated under section 6 in respect of the residential property for the particular calendar year is to be determined without reference to paragraphs 6(7)(c) to (f), subsections 6(8) and (9), and paragraph 2(3)(a) of the Underused Housing Tax Regulations.
(3) Subsection (1) is deemed to have come into force on January 1, 2022.
(4) Subsection (2) applies in respect of returns for the 2023 and subsequent calendar years.
7 (1) The portion of subsection 62(2) of the Act before paragraph (a) is replaced by the following:
Marginal note:Powers of authorized person
(2) Subject to subsection (3), the authorized person may, at all reasonable times, for any purpose related to the administration or enforcement of this Act
(2) Subsection 62(2) of the Act is amended by striking out “and” at the end of paragraph (a) and by replacing paragraph (b) with the following:
(b) require any person to give the authorized person all reasonable assistance, to answer all proper questions relating to the administration or enforcement of this Act and
(c) require any person to give the authorized person all reasonable assistance with anything the authorized person is authorized to do under this Act.
(3) Subsection 62(3) of the Act is replaced by the following:
Marginal note:Prior authorization
(3) If any place referred to in subsection (2) is a dwelling-house, the authorized person may not enter that dwelling-house without the consent of the occupant, except under the authority of a warrant issued under subsection (4).
(4) Paragraph 62(4)(a) of the Act is replaced by the following:
(a) there are reasonable grounds to believe that the dwelling-house is a place referred to in subsection (2);
8 (1) Section 80 of the Act is amended by adding the following before subsection (1):
Marginal note:Definition of transaction
80 (0.1) In this section, transaction has the meaning assigned by subsection 12(1).
(2) Section 80 of the Act is amended by adding the following after subsection (5):
Marginal note:Anti-avoidance rules
(6) For the purposes of this section, if a person transfers property to another person as part of a transaction or series of transactions, the following rules apply:
(a) the transferor is deemed to not be dealing at arm’s length with the transferee at the time of the transfer of the property if
(i) the transferor and the transferee do not deal at arm’s length at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, and
(ii) it is reasonable to conclude that one of the purposes of undertaking or arranging the transaction or series of transactions is to avoid joint and several, or solidary, liability of the transferee and the transferor under this section for an amount payable under this Act;
(b) an amount that the transferor is liable to pay under this Act (including, for greater certainty, an amount that the transferor is liable to pay under this section, regardless of whether the Minister has made an assessment under subsection (3) in respect of that amount) is deemed to have become payable in the calendar year of the transferor in which the property was transferred, if it is reasonable to conclude that one of the purposes of the transfer of the property is to avoid the payment of a future amount payable under this Act by the transferor or transferee; and
(c) the amount determined for A in paragraph (1)(d) is deemed to be the greater of
(i) the amount otherwise determined for A in paragraph (1)(d) without reference to this paragraph, and
(ii) the amount determined by the formula
A − B
where
- A
- is the fair market value of the property at the time of the transfer, and
- B
- is the fair market value, at its lowest at any time during the period beginning immediately prior to the transaction or series of transactions and ending immediately after the transaction or series of transactions, of the consideration given by the transferee for the transfer of the property (other than any part of the consideration that is in a form that is cancelled or extinguished during that period and for which no property that is neither cancelled nor extinguished during that period is substituted) provided that the consideration is held by the transferor at that time.
Underused Housing Tax Regulations
9 (1) The Underused Housing Tax Regulations are amended by adding the following after section 1:
Definition of Residential Property
Marginal note:Prescribed property — excluded property
1.1 For the purposes of the portion of the definition residential property in section 2 of the Act before paragraph (a), a particular residential condominium unit that is part of a building containing four or more residential condominium units is prescribed property if
(a) a person that is the owner of all or substantially all of the residential condominium units in the building is the owner of the particular residential condominium unit; and
(b) all or substantially all of those residential condominium units of which the person is the owner are held by the person for the purpose of providing individuals with continuous occupancy of a residential condominium unit as a place of residence or lodging for a period of at least one month.
(2) Subsection (1) is deemed to have come into force on December 31, 2022.
10 (1) Paragraphs 2(2)(a) and (b) of the Regulations are replaced by the following:
(2) Paragraphs 2(2)(a) and (b) of the Regulations, as amended by subsection (1), are replaced by the following:
(a) an area that is, as determined in the last census published by Statistics Canada before the calendar year, neither within a census metropolitan area nor within a specified census agglomeration; and
(b) an area that is, as determined in the last census published by Statistics Canada before the calendar year
(3) Subsection 2(3) of the Regulations is replaced by the following:
Marginal note:Paragraph 6(7)(m) of Act — prescribed conditions
(3) For the purposes of paragraph 6(7)(m) of the Act, each of the following paragraphs sets out conditions that are prescribed conditions for a calendar year and for the person and the particular residential property referred to in subsection 6(7) of the Act:
(a) the particular residential property is used as a place of residence or lodging by the person or the person’s spouse or common-law partner for at least 28 days during the calendar year; or
(b) the person, or another person that is related to the person, carries on business in Canada (in this paragraph referred to as the “operator”) and the particular residential property is held during the calendar year primarily to provide a place of residence or lodging to an individual at a location at which the individual is required to be in the performance of the individual’s duties as
(i) an officer — being a person holding an office — or an employee of the operator,
(ii) a contractor, or an employee of the contractor, engaged by the operator to render services at that location to the operator, or
(iii) a subcontractor, or an employee of the subcontractor, engaged by a contractor referred to in subparagraph (ii) to render services at that location that are acquired by the contractor for the purpose of supplying services to the operator.
(4) Paragraph 2(3)(a) of the Regulations, as amended by subsection (3), is replaced by the following:
(a) it is the case that
(i) the particular residential property is used as a place of residence or lodging by the person or the person’s spouse or common-law partner for at least 28 days during the calendar year,
(ii) the person indicates that no tax is payable in respect of the particular residential property under this paragraph and paragraph 6(7)(m) of the Act in the return filed under the Act by the person for the particular residential property and for the calendar year, and
(iii) neither the person nor the person’s spouse or common law partner indicates that no tax is payable in respect of any residential property other than the particular residential property under this paragraph and paragraph 6(7)(m) of the Act in a return filed under the Act by the person or the person’s spouse or common law partner for the calendar year; or
(5) Subsection (1) applies to the 2022 calendar year.
(6) Subsections (2) and (3) apply to the 2023 and subsequent calendar years.
(7) Subsection (4) applies to the 2024 and subsequent calendar years.
- Date modified: