Good morning. My name is Pierre Mercille. I'm the director general responsible for the legislation in the sales tax division of the Department of Finance.
Part 2 of the bill would enact new legislation, the Underused Housing Tax Act, which would impose a new tax on owners of residential property in Canada, in certain circumstances, starting in the 2022 calendar year.
Beginning in 2023, certain owners of residential properties located in Canada would be required to file with the Canada Revenue Agency a return for each residential property they own for the previous calendar year. In that return, owners might, in certain circumstances, be entitled to claim an exemption from tax on their residential property, which might be, for example, a property under a long-term lease or occupied by its owner as the owner's primary place of residence.
Owners subject to the tax would be required to calculate, report and pay the amount of tax due, which would be equal to 1% of the value of the residential property, which would be prorated on the basis of the owner's interest in the property. Canadian citizens, permanent residents of Canada and certain Canadian entities would not be subject to the tax or required to file an annual return.
This measure was originally announced in the fall economic statement of 2020. It was confirmed in budget 2021, and there was also a public consultation last summer.
Thank you. This is my short description of part 2 of the bill.