Bare trusts still must file a UHT return

By Rudy Mezzetta | April 19, 2024 | Last updated on April 19, 2024
3 min read
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Despite the filing relief for bare trusts announced last month, bare trusts that hold Canadian residential property must still file an underused housing tax return (UHT) for the 2022 tax year, which is due April 30, 2024.

These trusts may also need to file a 2023 UHT return by the end of this month, even though Ottawa proposed exempting Canadian corporations, partnerships and trusts from being required to file a UHT return for 2023 if the entity is substantially or entirely Canadian.

With days to go until the filing deadline, the government has not tabled legislation to implement those proposals, leading to uncertainty regarding UHT filing obligations for 2023. Parliament resumes sitting on April 29.

“Without a definitive statement [from the Canada Revenue Agency], I’m sure there are people out there who are still filing a UHT return for 2023 for specified Canadian corporations, partnerships and trusts,” said John Oakey, vice-president of taxation with CPA Canada in Dartmouth, N.S.

A bare trust exists when the trustee’s only duty is to hold legal title of a property on behalf of someone else. Bare trusts may hold Canadian residential property for reasons such as probate planning, privacy or convenience.

Per the CRA’s guidance, trustees of a bare trust holding Canadian residential property are not excluded owners and must file a UHT return.

Further, the proposed changes that would exempt bare trusts from a UHT return filing requirement if the trust is substantially or entirely Canadian do not apply to 2022 returns.

Meanwhile, the proposed changes to the UHT for 2023 onward are not law, but the CRA has signalled that it will administer the UHT in alignment with the government’s proposal.

For example, the 2023 UHT return includes a definition of “excluded owner” that aligns with the proposed changes. On March 8, CRA published guidance to illustrate how the proposed amendments would apply, but cautioned the guidance shouldn’t be taken as a statement “that the proposed amendments will in fact be enacted into law in their current form.” asked the CRA whether it would be issuing a filing extension on 2022 or 2023 UHT returns, or both, before April 30, 2024. also asked, absent an extension to the filing deadlines, if the CRA would apply late-filing penalties beginning May 1.

As of press time, the CRA had not provided a response.

In the 2024 budget, the government said it intended to proceed with its proposed changes to the UHT outlined in the fall economic statement, but did not provide other details.

Under expanded trust reporting rules — a compliance regime separate from the UHT regime — bare trusts, and other types of trusts, must file a T3 return annually. On March 28, the CRA announced that bare trusts did not have a filing requirement under those expanded rules for 2023.

What is the UHT?

The UHT is an annual 1% tax on the ownership of vacant or underused housing in Canada, effective in 2022 and subsequent years.

The UHT primarily targets foreign owners of Canadian residential property, but a Canadian who owns a property through a trust, corporation or partnership must file a UHT return. If the trust, corporation or partnership is substantially or entirely Canadian, it may qualify for an exemption from the UHT as a “specified” Canadian trust, corporation or partnership. However, the obligation to file a UHT return remains.

The CRA announced on March 27, 2023, that it would give taxpayers a six-month extension to file the 2022 UHT return without penalties. Then, on the same day as the Oct. 31 extended deadline, the CRA announced a second extension for the 2022 tax year until April 30, 2024, the same deadline date for the filing of the 2023 UHT return.

In the fall economic statement, the government proposed expanding the definition of “excluded owner” — a taxpayer who doesn’t have an obligation to file a UHT return — to include specified Canadian corporations, trusts and partnerships.

However, the proposed change would only apply for 2023 and subsequent years. Specified Canadian entities would still have a filing requirement for 2022.

The federal government is also proposing to reduce penalties associated with the failure to file a UHT return to $1,000 for individuals from $5,000 currently, and to $2,000 for a corporation from $10,000.

The proposed change would be effective retroactively to 2022. The changes have not been enacted in legislation, but the CRA appears to be prepared to administer the UHT rules for 2023 and onward.

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Rudy Mezzetta

Rudy is a senior reporter for and its sister publication, Investment Executive. He has been reporting on tax, estate planning, industry news and more since 2005. Reach him at