Dear Valued Client,

Further to our various communications and newsletters over the past few months, we would like to bring to your attention of the approaching deadline to file the UHT return by October 31, 2023.

In late September, there has been a Q&A update from CRA, that provides further information on what constitutes a partnership and taxpayers who jointly own properties with spouses or other related/unrelated persons. Upon research and various communications with CRA over the past week, we have concluded that as CRA has yet to provide a clear definition of partnerships as it relates to the UHT filing requirements, this could include jointly owned properties by spouses or other jointly owned members of a property that could be deemed to be a partnership.

Here is a link to the recent CRA memo:   https://www.canada.ca/en/revenue-agency/services/forms-publications/publications/uhtn15/questions-answers-underused-housing-tax.html

Based on the recent memo from CRA, we recommend filing a UHT return if you have a jointly owned property (i.e., partnership).  Please see CRA guidelines below on the definition of a partnership (an excerpt from the recent CRA published memo).  Note that all other rules as they relate to UHT filing requirements still apply.

Action Required: 

1. Please confirm by responding to this email if you would like us to file the UHT return or if you will be filing on your own.
2. Please send us the information by October 18th.
3. We would require the following information for each property owned:
4. 1. Most recent assessed value of the property (from the Municipal Property Assessment Corporation (MPAC)
   2. Purchase and sale agreement & statement of adjustments
   3. Title Transfer Document (which includes the Property ID number)
   4. Property Tax Bill (which includes the Property Tax Roll Number)
   5. Rental Agreements for the full year with Tenant
5. We will let you know the fees based on the number of properties you own.
6. A reminder that if you do not file and are required to file, CRA will impose a $5K penalty.

__________________________________________________________________________________________________________________________________

Rules for Partnerships

Questions about partnerships

 Question1.2. What is a partnership?

The term partnership is not defined in the UHTA. Generally, a relationship that is a valid partnership under general law is treated as a partnership for UHT purposes. Whether a relationship is a partnership is a question of fact. Canada’s tax system is based on self-assessment, which requires persons to determine the facts themselves. The CRA then assists persons to understand how the tax laws apply to a given set of facts.

Question1.2.1. How does the CRA interpret the term partnership for UHT purposes?

For purposes of administering the UHTA in all parts of Canada (other than Quebec), the CRA interprets the term partnership to mean the relationship that exists between persons:

• carrying on a business
• in common
• with a view to profit

The above three criteria are fundamental for a relationship to be a valid partnership under general law. If any of the criteria are missing, then the relationship is not a valid partnership. Refer to Income Tax Folio S4-F16-C1, What is a Partnership? for information about the three fundamental criteria.

This interpretation is based on the legal definition of partnership that is found in most provincial partnership legislation. Also, it is consistent with how the CRA interprets the term partnership for income tax and GST/HST purposes.

Characteristics of a partner (as per Income Tax Folio S4-F16-C1, What is a Partnership?)

1.15 Except in certain cases, such as limited partnerships and limited liability partnerships, common law partners are generally jointly and severally liable for any debts that arise while carrying out the business of the partnership. Where the participants in a business arrangement are not jointly and severally liable for the debts of the business, it generally indicates that a partnership does not exist.

Please contact our office if you have any questions.