Tax on unproductive use of housing by non-resident, non-Canadian owners

Effective January 1, 2022, Government of Canada may implement a national, annual one per cent tax on the value of non-resident, non-Canadian owned residential real estate that is considered to be vacant or underused. The purpose of this tax is to ensure that foreign, non-resident owners who simply use Canada to passively store their wealth in housing, pay their fair share. See details in Budget 2021 and background paper.

Key considerations

The key considerations include:

• the definition of "residential property;"

• the definitions of "owner" of residential property and "interest" in residential property;

• the value on which the tax would apply;

• "excluded owners" in respect of which the tax would not apply;

• exemptions from the tax;

• the annual declaration requirement and the consequences of failing to file the declaration; and

• whether special rules should be established in respect of residential properties located in smaller, resort and tourism communities, and if so, what those rules should be.