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Change Is In The Air
I'm going to leave the title of this article the same as last week for one really simple reason. The CRA continues to move the goal post on their reporting requirements as it relates to the Underused Housing Tax (UHT).
The filing deadline was previously October 31, 2023, but, several hours from the deadline, decided to extend it to April 30, 2024. That means that affected owners will now have until that date to file their returns for the 2022 calendar year without being charged penalties or interest. If you've been procrastinating regarding this, you have a few more months to figure it out! A word of caution though, as that date coincides with tax season, it is best to get it taken care of now. Many accountants won't have time to provide you with the guidance you may need during that time.
The CRA has also introduced a new filing requirement for trust reporting. The change in reporting requirements means that affected trusts will be required to file a T3 Trust income tax and information return (T3 return) and a Schedule 15 (Beneficial Ownership Information of a Trust) with the Canada Revenue Agency (CRA) every year.
Simply put, if the entities on title don't reflect the true ownership of the property, there will be a filing requirement. While this doesn't only affect real estate owners, there are several scenarios where we may have to file. In the real estate world, joint ventures that are owned by a separate JV agreement and bare trust agreements are two common scenarios that might trigger a reporting requirement.
It appears that the CRA wants more and more information about our finances to audit and control the flow of money between entities. Like everything the CRA does, there are some hefty fines for not filing! The greater of $2,500 or 5% of the fair market value of the property held in trust could be at stake!
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