Manses Subject to Underused Housing Tax (UHT) Reporting

We are pleased to share that the recent changes to the Underused Housing Tax (UHT) indicate that church trustees who hold title to a manse are no longer required to file the annual UHT return (UHT-2900) for 2023 and subsequent years.

The federal government proposed these changes back in November 2023, but the best advice was to file in 2023 out of an abundance of caution because it wasn't law at the time of the 2023 filing deadline (April 30).

Bill C-69, which was passed into law on June 20, 2024, implements changes to the UHT rules retroactively, and excludes specified Canadian trusts from the filing obligation. Under these new rules, church trustees are considered excluded owners and are not required to file UHT returns starting with the 2023 calendar year.

However, the 2022 UHT filing is still required, and penalties will still apply if trustees failed to file their 2022 UHT return by the CRA's one-time extended deadline of April 30, 2024.  We are aware of one case so far.

Original message from Feb. 7, 2024

With very deep regret, I report that a formal appeal to the CRA on this topic has been submitted and denied. Accordingly, we have sent a broadcast e-mail to the 400 or so congregations that report owning manses, specifically to the ChurchHub primary contact and to the treasurer.

This matter will undoubtedly stir up some concern and objections—including refusal to do it. I am very sympathetic to that view, but it is our job to flag the risk. There is an apparent duty to file—with penalty for noncompliance—even though no tax liability is likely to arise.

My thanks to Houston Mo in Pacific Mountain Regional Council for overseeing the due diligence on this.

Erik Mathiesen
Executive Officer, Finance

Please refer to the sample completed UHT form under Downloads.

What is the Underused Housing Tax?

The UHT is a new annual federal 1% tax on the value of vacant or underused housing owned by non-Canadians and some Canadian companies/trusts. It is intended to deter non-residents and some companies/trusts from passively investing in Canadian real estate and to make housing more available to Canadian residents.

Because of the unique United Church Trust Model Deed and resulting trust structure for holding real property, church manses were inadvertently caught up in this based on legal technicalities.

Note: Any incorporated ministries that own a house will typically be exempt because charity direct ownership is exempt. The argument that our congregations are charities holding title was dismissed.

Who should file?

All non-Canadian property owners and some companies/trusts are required to file the UHT-2900 form with the Canada Revenue Agency (CRA) by April 30 annually. The tax itself will NOT apply to most—if any—manses if they are occupied (exemptions 510 or 520). However, all non-Canadian property owners and some companies/trusts are required to file even if they will be exempt from paying the tax.

How to file the UHT-2900

You must have a valid CRA tax identifier number. Individual trustees should file a form and use their SIN as the identifier.

If any properties do not have a Canadian postal code, when filing the UHT form leave the postal code blank. Do not use the postal code of your local post office as this may negate your exemption.

Others have spoken to Canada Revenue Agency, and they see no issue with not having a postal code to put on the form (only road access properties will have a postal code).

Not having a postal code means that you will also be unable to access the “Underused housing tax vacation property designation tool,” but it is not necessary to do so if you are exempt as above, and the tool is not helpful in any event.

Questions?

If you have further questions, please contact CRAHelp@united-church.ca.