An update for all those who attended Clearline Consulting’s UHT information sessions, and/or purchased resources, in February and March.
As we all know, on March 27, 2023 Canada Revenue Agency (“CRA”) granted an extension of time to file UHT returns to October 31, 2023. We know that this extension was a waiver of penalties and interest, as long as the returns are filed and any tax owing is paid by October 31, 2023. The CRA has developed and published some administrative policies to assist in areas which have proven difficult for our tax and legal communities to interpret in a consistent manner. UHTN 14 Exemption for Vacation Properties: Manual Place-search Instructions and UHTN 15 Questions and Answers About the Underused Housing Tax were released late March and mid-April. UHTN 1 Introduction to the Underused Housing Tax has been updated to clarify where a B&B may not be considered a residential property for UHT purposes.
As outlined in UHTN 1, “a bed and breakfast is not a residential property for purposes of the underused housing tax where the building was purposely constructed or converted to provide sleeping or lodging accommodation on a transient or intermittent basis to several unrelated persons at once in separate rooms (that is, similar to the structure of a hotel, motel or inn). However, most bed and breakfasts are detached houses and are not structured similar to a hotel, motel or inn. Where this is the case, a bed and breakfast may be a residential property for purposes of the underused housing tax.” Further details are provided in Question 1.27 in UHTN 15.
For those who have already purchased Clearline Consulting UHT Firm Resource Template you can add these resources to your file by clicking on the links above and saving them as linked documents in your Caseware files.
What’s next
In the meantime, we are moving forward with UHT filings. Though there is still a lot of uncertainty about when a partnership arrangement exists, we understand that the CRA has provided all the opinions and commentary they are planning on releasing on this matter. The CRA seems to be referring people to review the provincial partnership legislation and common law. We understand that the CRA is responding promptly to technical inquiries (as they were not impacted by the now resolved strike), but we understand that there does appear to be any new information coming available. Our advice is still the same – when there is doubt that an owner has a filing obligation, it is advisable that the owners file a UHT Return given the potential for penalties.
Resources
During March 2023 we recorded two CPD sessions which are available for download. The first session includes a summary of the requirements with specific application questions asked and answered. The second session address over 30 specific scenario questions submitted by our colleague practitioners. If you have not looked at how UHT may impact your firm and/or clients at this time you may want to start with our free information session.
Also available is our Firm Resources which includes a draft engagement letter, engagement documentation template, draft communications for your clients, links to all CRA technical notices and other resources to help your firm assess these filing requirements.
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