The Canada Revenue Agency (CRA) has waived nearly $2.5 billion in interest and penalties related to Ottawa’s tax on vacant and underused homes held by foreign owners. This amount significantly surpasses the projected annual revenue of the new levy.
Key Highlights 📌
- Underused Housing Tax (UHT) 🏠:
- Effective from 2022, this tax imposes a 1% annual levy on vacant or underused residential properties owned by foreign nationals.
- The goal is to boost housing availability.
- Complex Reporting Requirements 📋:
- Initially, many Canadians were affected, leading to repeated relief for late filers by the CRA.
- The government eventually scrapped filing obligations for Canadian homeowners and corporations starting with the 2023 tax year.
- Waived Penalties and Interest 🚫💵:
- For 2022, CRA waived almost $2.5 billion in interest and fines.
- This figure vastly exceeds the $49 million Ottawa collected from the tax in fiscal 2023-24.
Expert Opinion 👨⚖️
John Oakey, Vice-President of Taxation at Chartered Professional Accountants of Canada, stated that the significant confusion and administrative burden of the levy likely led to the large amount of waived penalties.
Criticism of Initial Design 🛠️
Tax experts criticized the initial design of the tax for creating complex reporting rules and steep penalties for non-compliance, particularly for Canadian taxpayers who ultimately wouldn’t owe any money.
Impact on Canadians 🍁
Many Canadians, not just foreign nationals, were affected by the tax. The CRA intervened twice to waive interest penalties for late tax filers, extending the deadlines multiple times.
Implementation Costs 💸
The CRA spent around $59 million in fiscal 2022-23 and 2023-24 to implement and administer the tax, in addition to over $900,000 in advertising and promotion costs.