Is CRA providing wrong information about UHT

Called the CRA to get clarification on which of my clients would be subject to UHT filing. Was told by a senior agent who checked with a resource officer that any person that owns a property jointly with someone else is technically in a partnership and will have to file, because technically the don’t specify that it has to be a “registered” partnership. That doesn’t sound right. I thought I had this figured out.
Would the following individuals/entities need to file, and if yes, which person (assuming all are residents)?

1- Person A & and Person B own a residential property they live in
2- A & B jointly own a property they rent out
3- A owns the property (reports income, pays tax), B is only on title (e.g. young adult and parent or a couple where one spouse owned the property before and the other was added on later)
4- A passes away. B is the executor of the trust (I know B is an excluded owner, but does the trust need to file)
5- A is the executor of an inter vivos trust (e.g. joint spousal trust or family trust)
6- A is on title but is holding it in trust for an inter vivos trust.
7- A is on title but is holding it in trust for a holding company


Don’t know - just starting to see these now. But very interested in what others are doing as I suspect a fair number of my clients might actually have to file the return if this is correct… Anybody married would fall under #1!!

Is this for real? I always thought that you’d need to file the UHT return if a non-resident or a corporation owned a property. If this isn’t the case and that those 3 scenarios are also included, it looks like a lot of my clients, myself included, would need to file the UHT returns.

And how about the clients that we’ve already dealt with their taxes, I’d immediately have to bring this to their attention.

Found this on tax tips: - Canada's Underused Housing Tax

All owners other than excluded owners must file a declaration as to the current use of residential property owned by them and located in Canada.

A Canadian citizen or permanent resident will have to file a declaration if they are an owner of the residential property in their capacity as a trustee of a trust (other than a personal representative in respect of a deceased individual) or as a partner of a partnership.

For those who own jointly own rental properties and are earning rental income, but not as a partnership (thus not a “business”), the legislation does not seem to indicate that a UHT return would have to be filed.“

Who must file a return and pay the tax

If you are an excluded owner of a residential property in Canada, you have no obligations or liabilities under the Underused Housing Tax Act.

An excluded owner includes, but is not limited to:

  • an individual who is a Canadian citizen or permanent resident - unless included in the list of affected owners below
  • any person - including an individual who is a Canadian citizen or permanent resident - that owns a residential property as a trustee of a mutual fund trust, real estate investment trust, or specified investment flow-through trust (SIFT) for Canadian income tax purposes
  • a Canadian corporation whose shares are listed on a Canadian stock exchange designated for Canadian income tax purposes
  • a registered charity for Canadian income tax purposes
  • a cooperative housing corporation for Canadian GST/HST purposes
  • an Indigenous governing body or a corporation wholly owned by an Indigenous governing body

If you are not an excluded owner we refer to you as an affected owner and you have obligations under the Underused Housing Tax Act for your residential property in Canada. An affected owner includes, but is not limited to:

  • an individual who is not a Canadian citizen or permanent resident
  • 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)
  • any person - including an individual who is a Canadian citizen or permanent resident - that owns a residential property as a partner of a partnership
  • a corporation that is incorporated outside Canada
  • a Canadian corporation whose shares are not listed on a Canadian stock exchange designated for Canadian income tax purposes
  • a Canadian corporation without share capital

If you are an affected owner, you must file an Underused Housing Tax return for each residential property that you own in Canada on December 31. You must also pay the Underused Housing Tax, unless your ownership qualifies for an exemption for the calendar year. Even if your ownership qualifies for an exemption, you must still file an Underused Housing Tax return for the calendar year.

That’s what I had thought too. But CRA was saying that they view joint as partnership. That’s what threw me off. Also, I think in example number 3, person B would need to file because they are not an excluded owner. Person B is acting in the capacity of a trustee (they are on title … hold the property in trust for Person A). But I’d like someone to confirm.

I think the question is what does CRA consider a partnership. Do two people who buy a property jointly essentially form a partnership? Or do you need to register a partnership, have a partnership agreement, etc. to meet the criteria.

And something that’s not mentioned specifically would be if someone owns a property and another is added to the title only (meaning the first person still owns 100% for tax purposes, report all the income, etc., but the second person is only legally on title) does the second person need to file because they are technically holding 50% of the property in trust for the first person?

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The legislation indicates that the property must be owned in the taxpayer’s capacity as a partner of a partnership in order for a UHT return to be necessary.

However, on form T776, it requires the taxpayer to indicate whether they are a sole proprietorship, partnership, or co-owner.

I operate my firm in Ontario, and real estate cannot be registered in the name of a partnership. I believe this is based on what province the tax payer is residing in.

It’s quite a confusing legislation that the feds passed, main purpose was to combat the housing shortage but they aren’t going after public enterprises, and are only going after trusts, non-residents and CCPCs which is quite ludicrous.

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It doesn’t matter what “CRA considers” a partnership…

CRA administers various laws, including, but not limited to the Income Tax Act (“ITA”), the Excise Tax Act (“ETA”) and the Underused Housing Tax Act (“UHT”).

Each act has ITS OWN DEFINITIONS of various terms…and what is a definition good for the purposes of the ITA may be quite different for the ETA or UHT.

What governs ALL acts in Canada is what the law says…and how Courts interpret it…not what “CRA thinks”. CRA will offer interpretations (often incorrect) and things said by an officer of CRA in an informal query are NOT protected statements nor are covered by estoppel. Bad info is given daily. Relying on spoken assurances is foolhardy.

That is why they issue Rulings and various Bulletins (which are also NOT law!). They are in the drivers’ seat to provide interpretations, but those may be right or wrong and are often changed as Courts rule against them.


Wholeheartedly agree SBG.

When clients argue to me that my advice is different than what the CRA agent had told them, I refer them to the auditor general report done in 2017. “The audit found that agents are giving Canadians incorrect information nearly 30 per cent of the time.” You would be foolish to follow what the CRA agent had said. Also the CRA agents words cannot be used as evidence in courts as that evidence can’t be reliable.

In the UHT return case, there hasn’t been any sort of precedent set by the tax courts on partnerships that hold rental properties. This is something that I’d be looking forward to in the next Video Tax News 2024 tax course.


Ludicrous indeed. Supposedly it was to combat Foreign ownership, but now you have to file even if there is no foreign ownership? It just doesn’t make any sense.

This is what’s called the “slippery slope”. It’s also a good reminder to watch how you designate ownership on a T776. Most cases are really co-ownership but I see many tax returns where it’s been designated as a partnership.

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Or in terms of the 6th chapter of the book of Revelation… Evil often rides in on the back of a white horse. :wink:


No self-respecting ‘tax preparer’ will EVER! call CRA for tax advice…


Love it! Falling off my chair laughing, just what I needed. Thanks.



CRA themselves say so: T4036(E) Rev. 21 “Rental Income”, Chapter 2, Part 1, says: “Most of the time, if you own the rental property with one or more persons, we consider you to be a co-owner. For example, if you own a rental property with your spouse or common-law partner, you are a co-owner.” And warns that if it is a partnership T5013s must be filed. I think by taking the “low risk” position of filing a UHT2900 we open ourselves to the high risk of clients being assessed for not filing T5013s for as many years as they can get us for.

The real answer is that you have to document WHY you believe your client is or is not a partner. EDITED: I would reference the types of services offered and why they are “basic” or “above basic” and base your decision on that.

A partnership exists if two or more entities run a BUSINESS to make a profit. Most rental operations are property income and “property income” is not “business income” therefore most rental operation by definition cannot be partnerships, they would co-ownerships. So if a rental operation is a co-ownership would we not need to file a UHT election?

So I am getting some conflicting information. Although I wasn’t able to attend a couple of my staff watched a Wolters Kluwer seminar today. Apparently they are saying the most important fact is the property title, is that some sort of joint ownership, “joint tenants” or “tenants in common”. But also seem to be saying that co-owners do not need to declare.

PS: maybe someone at TC could confirm but ticking off “co-owners” or “partners” on the TC T776 I don’t think is transmitted to CRA, it just changes how the CCA is handled.

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I’ve been using CRA’s guideline on how to determine if a rental property is considered a business or not.

To determine whether your rental income is from property or business, consider the number and types of services you provide for your tenants.

According to the CRA guideline, in most cases, you are earning an income from your property if you rent space and provide basic services only. Basic services include heat, light, parking and laundry facilities. If you provide additional services to tenants, such as cleaning, security and meals, you may be carrying on a business. The more services you provide, the greater the chance that your rental operation is a business. If that is the case, then it would be in the taxpayer’s best interest to file the UHT return. It all depends on a case to case basis.

Rental Income -

Information for individuals or partnerships owning rental property including information on completing Form T776, Statement of Real Estate Rentals.

Provincial definition of a partnership

1.1 Each of the common law provinces or territories has a partnership statute that defines the term partnership. Similarly, the Civil Code of Quebec defines a contract of partnership.

This also depends on what province you are residing.
1.2 In Continental Bank Leasing Corp. v. Canada, [1998] 2 SCR 298, 98 DTC 6505,and later in Backman v. Canada ,[2001] 1 SCR 367, 2001 DTC 5149, and Spire Freezers Ltd. v. Canada , [2001] 1 SCR 391,2001 DTC 5158, the Supreme Court of Canada confirmed that for purposes of the Act the existence of a partnership must be determined by reference to the partnership law of the relevant province or territory, and this is the case even when dealing with a partnership established in a jurisdiction outside Canada.

Individual Canadian citizens don’t have to file UNLESS they are on title because they are partners or trustees.

So defining a relationship as a partnership or not is of important in situations where there is more than one person on title and income is being earned.

Determining if a trust exists is important in both income and non-income earning situations. Situations we’ve seen so far: parent on a child’s primary residence or rental property for financing reasons, child on a parent’s property for probate reasons, husband on title but husband and wife both claiming rental income as co-owners, able sibling on title for house occupied by a disabled sibling…. There are going to be a lot of these informal trust situations.


I am not from TC but I am able to confirm that it makes no difference to the Efiled transmission whether you select off “co-owner” or “partnership” on the T776. Although the CRA does get some particular information regarding the “partners or co-owners” it does not get any type of indication whether the other people involved with the rental are “partners” or “co-owners”. In fact, regardless of whether you select partnership or co-owner the actual SFD area of the efile transmission labels the field “PartnerName”.

see relevant snip of efile transmission below; This was submitted to CRA as a “co-ownership”

< sfd:BusinessOwnershipPercent>5000</sfd:BusinessOwnershipPercent >
< sfd:FinalBusinessYearIndicator>2</sfd:FinalBusinessYearIndicator >

< sfd:PartnerCoOwnerData >
< sfd:PartnerName >
< comm:GivenName > ALFRED E </comm:GivenName>
< comm:FamilyName> NEUMAN </comm:FamilyName>

< sfd:PartnerBusinessOwnershipPercent > 500000 </sfd:PartnerBusinessOwnershipPercent>

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In Ontario “joint tenants” means both or all people registered on title have an indivisible interest in the property and if one of them passes away their interest gets automatically transferred to the remaining owners (right of survivorship).

“Tenants in common” is a registration process whereby each owner holds a specified or divided interest in the property which does not pass to the surviving owners on death. Instead, their interest would flow to their estate rather than the other owners upon death.

For instance, if you own a home with your spouse you would generally register that as joint tenants. If you die the house automatically passes to your spouse (and avoids probate).

If you and I bought a house together we would normally register it as tenants in common. If I died then you still own 50% of the house and my estate owns 50% of the house. If we registered the home as joint tenants then you would end up with my share when I died.

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