Question Period Note: 2022-2023 SUPPLEMENTARY ESTIMATES (C) – TAX ON UNPRODUCTIVE USE OF CANADIAN HOUSING BY FOREIGN NON-RESIDENT OWNERS

Why is the Canada Revenue Agency seeking funding in the Supplementary Estimates (C) for the administration of the tax on unproductive use of Canadian housing by foreign non-resident owners?

• Canadians who file and pay their taxes on time should not be burdened with paying for those who do not pay their fair share.
• The Canada Revenue Agency (CRA) is seeking $21.2M in funding to implement required modifications to its systems as well as make any publication and procedural changes necessary for the administration of the Underused Housing Tax.
• Budget 2021 announced the government’s intention to implement a national, annual 1% tax on the value of non resident, non-Canadian owned residential real estate that is considered to be vacant or underused.
• The tax will require all owners, other than excluded owners such as Canadian citizens or permanent residents of Canada, to file an Underused Housing Tax return as to the current use of the property, with significant penalties for failure to file.

Through the 2022-2023 Supplementary Estimates (C), the Canada Revenue Agency (CRA) is seeking $21.2M for the administration of the tax on unproductive use of Canadian housing by foreign non-resident owners.

The funding will be used to implement required modifications to CRA systems, publications, and procedural changes to administer the Underused Housing Tax (UHT), a national, annual 1% tax on the value of Canadian residential real estate that is directly or indirectly owned by non resident, non-Canadians and some Canadian owners in limited situations, and is considered to be vacant or underused.

As outlined in Budget 2021, the stated purpose for introducing a national underused housing tax is to ensure that non-resident owners who were using Canada as a place to passively store their wealth in housing pay their fair share.

Owners (other than excluded owners) will be required to file a UHT annual return with the CRA for each Canadian residential property they own, beginning with the 2022 calendar year, which will be due on or before April 30, 2023.

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