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October 18, 2023
As owners of real estate, if you have not already done so, it is important that you find out if the Federal Government’s Underused Housing Tax applies to you and whether you need to pay it by the end of this month or risk penalties.
The way to find out is to speak to your Canadian accountant.
Tourism Whistler recently released this bulletin on how the UHT could effect residential, nightly rental and shared ownership (1/4 and 1/10 share) properties that contain a kitchen. I have included the bulletin below.
Many of you may be looking for advice and direction on this tax. My best advice to you is to seek professional accounting direction. I cannot comment on any implications this tax may have on you. Please speak to your accountant.
Here is the letter from Tourism Whistler to it’s members:
“Dear Members,
This communication includes important information regarding Canada’s Underused Housing Tax (UHT), a
federally regulated annual 1% tax on the ownership of vacant or underused housing in Canada. The tax took
effect on January 1, 2022, and applies primarily to non-resident, non-Canadian owners of “residential property”;
however, in some situations, it also applies to Canadian owners. For many of you, the following updates may not
be relevant, but we wanted to ensure all Tourism Whistler Members had access to this information and were
aware of the work we have been doing on your behalf.
Since it was first announced, Tourism Whistler has monitored updates relating to the Underused Housing Tax
closely, recognizing the impacts it would have on many of our Members and its obvious conflict with Whistler’s
long-standing Tourist Accommodation Zoning bylaws.
For several months, Tourism Whistler has been lobbying for the removal of the Underused Housing Tax in
Whistler before the October 31st deadline for reporting and payment of 2022 returns. These advocacy efforts
have involved communicating the issue directly with political officials including Minister Randy Boissonnault
(former Minister of Tourism & Deputy Minister of Finance and current Minister of Employment & Workforce
Development), Minister Soraya Martinez Ferrada (current Minister of Tourism), and our local MP, Patrick Weiler.
These discussions have been followed up in writing with letters outlining Whistler’s unique position. A copy of
Tourism Whistler’s letter has been posted to the member website. At our request, MP Weiler has further
addressed the UHT issue on Whistler’s behalf with both the federal Finance and Housing ministries.
Unfortunately, these efforts have not been met with favourable outcomes to date; however, we continue to
advocate for those homeowners who are impacted.
We initially suspected the tax would be applicable to most owners of properties zoned for nightly rental in
Whistler; however, we thought the UHT might not apply to owners of Phase 2 properties as the Phase 2
covenants apply primarily to hotel properties with restricted owner usage and might fall under the exemption of
being “not suitable for residential usage”. The Canada Revenue Agency (CRA) had also published some
information that indicated hotels would not be considered “residential properties.”
However, we have recently been advised by BDO Canada that stratified Phase 2 properties with kitchens are also
subject to UHT filing obligations, even if they are subject to fractional ownership such as quarter share. BDO is a
national accounting firm with a local office, so is very familiar with Whistler and its tourist accommodation
zoning. BDO has been working with the CRA to confirm their current interpretation of how the “residential
property” definition applies to all tourist accommodation zoned properties, including Phase 2 properties.
Based on the federal UHT legislation, and recent CRA interpretation and feedback provided to BDO, Tourism
Whistler can therefore confirm:
• CRA considers all properties zoned for nightly rental in Whistler, including Phase 2 properties with
kitchens, to be “residential properties” for UHT purposes, and “affected owners” therefore have
obligations for reporting and tax payment under the Underused Housing Tax Act. This applies to both
fractional and whole ownership.
• An “affected owner” includes, but is not limited to:
o An individual who is not a Canadian citizen or permanent resident
o An individual who is a Canadian citizen or permanent resident and who owns a residential
property as a trustee of a trust (other than as a personal representative of a deceased
individual)
o Any person – including an individual who is a Canadian citizen or permanent resident – that
owns a residential property as a partner of a partnership
o A corporation that is incorporated outside of Canada
o A Canadian corporation whose shares are not listed on a Canadian stock exchange designated
for Canadian income tax purposes
o A Canadian corporation without share capital
We understand that affected owners of residential properties do have to pay the tax unless they qualify for an
exemption. Currently, there is NO specific exemption for short-term rental use, even when in compliance with
municipal zoning. Affected owners will therefore need to consider if they qualify for any exemptions in order to
file and not pay the tax.
For Phase 2 properties, affected owners can explore whether these exemptions might be available to them:
• For Canadian entities, such as a Canadian corporation, there are “specified Canadian” exemptions that
may apply if criteria are met.
• For individuals, there is a vacation exemption that Whistler properties are eligible for if the owner or
their spouse occupy the unit for at least 28 days in the calendar year.
• New owners may be exempt if their property is purchased in the calendar year.
• The “not suitable for year-round use as a place of residence” exemption could apply given the restrictive
covenants that do not allow typical residential usage. We understand that BDO did discuss this option
with CRA; however, CRA was not able to confirm to BDO that they will accept this exemption but did
indicate that they may give it further consideration after they deal with other priorities. So, this may be
a viable option, allowing owners to file with an exemption and avoid a late filing, even if the exemption is
not accepted.
More information about possible exemptions is available on the Government of Canada’s website.
Affected owners could also choose not to file, perhaps on a basis that they believe there will eventually be a
change in the interpretation of “residential property” to exclude stratified hotel units. But this option could
subject property owners to significant late filing penalties (min. $5,000 for individuals and $10,000 for nonindividuals).
So, it may be more prudent to file to avoid those penalties, while considering filing an objection at a
later date to CRA’s current interpretation.
Please note that PROPERTY OWNERS (not Tourism Whistler or BDO) are responsible for the results of any filing
or position you may take with CRA. Given the new and evolving nature of this tax, Tourism Whistler cannot
guarantee any outcome for you. Likewise, BDO has not been engaged to provide advice to you or to Tourism
Whistler, but rather has shared the results of their work with CRA to ensure that Whistler property owners are
informed to meet their obligations ahead of the October 31st deadline for reporting and tax payment (without
penalty).
While I’m sure many of you likely still have questions, please keep in mind that Tourism Whistler staff are not
tax experts, and therefore, we cannot advise you further on how the Underused Housing Tax requirement may
impact you specifically. We therefore encourage you to consult with your accountants, business managers or the
Canada Revenue Agency directly if you have any additional questions.
More information about the Underused Housing Tax is available on the Government of Canada website.
Additional information relevant to Members is also available on the Tourism Whistler member website.
Yours sincerely,
Barrett Fisher
President & CEO, Tourism Whistler”
