By Kate Proctor
The Federal Government’s new Underused Housing Tax is something everyone needs to be aware of – and a lot of us must take action on. The deadline to file is the end of April and failure to file carries big penalties. Make sure you talk to your accountant and meet this deadline.
A few months ago, I got the first email from our accountant about something called the “Underused Housing Tax” (UHT). I did read the email, but quickly concluded it didn’t pertain to us and moved on to the next thing on my list. A little while later, I got another notice. I read it again, but still, wondered why our accountant kept sending these things. The tax is aimed at people who are not permanent residents or citizens of Canada who have vacant residential properties. We do have houses on farms, but we are Canadian, and they are always full.
I gave a sigh… just what we want ... another tax… and gave our accountant a call. That conversation quickly brought me to attention and then I watched a webinar on the subject. Our governments have clearly been paying attention to the lack of affordable housing problem in Canada and are going after it at all levels. This is not a completely new thing… a google search will quickly take you down a rabbit hole of taxes and cancelled rebates aimed at stopping people from leaving homes and businesses vacant. For this year’s end, the Ontario government has a new tax, and municipalities are starting to implement vacant home taxes, but what is really going to affect us in rural areas is the Federal Government’s new UHT.
This tax received Royal Assent in June 2022 and became effective on January 1, 2022, making 2022 the first tax year that requires a return filed. Why should you care? Even if you don’t owe taxes for this, the penalty for not filing is $10,000 per property per year, with the added penalty of possibly losing your tax exemption.
Kurt Oelschlagel, National Tax Leader for BDO writes “If you operate your farm through a Canadian corporation or Canadian partnership and it owns a residential property, you will be required to file a UHT return even if no UHT is owed. If you do not file, the late filing penalty will apply.” While most of us as Canadian citizens will be exempt from actually paying the tax, we are still required to file.
Okay. So I have been convinced that we have to take action on this. Our accountant delicately explained that for me to just dump this on her was probably not going to fly. Accountants are in their busiest season and this new tax has some wrinkles that need to be smoothed out while everyone figures out the details. Filing online isn’t even possible as I write this because the government does not have their website to register and file up and running. The four-page form is not that complicated, once you figure it out. Really.
I would suggest not leaving this to the last minute, although that is quickly approaching. The May 1 deadline for this year, due to April 30 falling on a Sunday, is also one of a farmer’s busy times of year. So digging into this as soon as you can is something you probably want to do. The first thing I learned is that you have to fill out the form for each property. The second is that you need to use the roll number, but also the Property Identification Number (PIN) for each property. The PIN is not on your tax form, but you can find it using the Ontario land registry access website, Onland, at https://www.onland.ca/.
While this site is technically free to use, the properties I tried to search did not have a recognizable address in the system, leading me to search using a map, then pay to access the PINs on the map. Maybe there is a better way, but I don’t know of it. Once you go this far, you can also dig up the history of your land transfers, for a $32 fee per property. This will give you the purchase price and date, which you will also need to fill out your UHT form.
So far, so good. Then I pulled out my Municipal Property Assessment Corporation (MPAC) assessments. Full confession – I have these forms, I have a file for these forms, but I have never really read them that carefully. I discovered that this was a huge mistake. MPAC has two websites – https://www.mpac.ca/en/ and their property tool, About My Property, https://www.about myproperty.ca/. I registered each property on “About my Property” and quickly discovered a whole raft of information - including values and condition scores for houses that had been gone 20 years or more. Some municipalities list different tax rates on your bill, some don’t.
I called MPAC to sort this out. I was informed that in order to remove houses that had been demolished decades ago, or maybe never even existed, I would have to fill out a “request for reconsideration”. I should probably also include pictures and any supporting documents to back up my claim that a non-existent house did not exist. Confused, I asked them if the “assessment date” on my MPAC statement meant that the house was not actually assessed? They informed me that a demolition permit should have triggered removal of a residence, but this clearly had never happened. My mind-picture of an MPAC person running around with a clipboard and camera actually assessing all these properties with an assessed date, listed value, and condition score, quickly evaporated. Next steps – follow up with the municipality and then Agricorp to sort out the non-existent tenant farmer also listed in the MPAC information.
So, the UHT is actually a good news story for me. Our accountant assured me that I do not have to complete a UHT form for houses that do not actually exist. And I had a lesson on the importance of not ignoring “IMPORTANT PLEASE READ” notices, as well as making sure to read MPAC forms much more carefully. So we should hopefully save some tax money in the future. I think. ◊