Opinion
Escape Room 2 – The NEW Real Estate Owner Tax Game – High Stakes Edition
By Cory G. Litzenberger, CPA, CMA, CFP, C.Mgr – CEO | Director of CGL Tax
Justin time for Tax Season, we have a new version of our most popular game, but this time you are now trying to convert your Real Estate to tax-Freeland.
No those are not typos.
In 2017, we released Escape Room – The NEW Small Business Tax Game – Family Edition after then Federal Liberal Finance Minister, Bill Morneau, finally released the new version of
the Tax on Split Income (“TOSI”) or the so-called “income sprinkling” rules.
This time, in this game, there are fewer unconditional exits, and the stakes are higher.
So just like I said in December 2017:
“These rules are written like a bad “escape room” game. The way these rules are written, everyone is caught… unless you can escape… and the exits are not clearly marked.”
The talking points in the media have been that the Underused Housing Tax (UHT) Act would only apply to non-resident and foreign owners.
However, what they failed to mention is that many Canadians will be caught by the filing requirement and will have to file or face penalties, even if they won’t owe any tax.
This ain’t your Daddy’s failure to file penalty.
Failing to file a UHT return faces a minimum penalty of $5,000 per individual, per property and $10,000 if you are a corporation.
This makes the failure to file a T1135 Foreign Property form look like pocket change.
So while you may not have to pay any UHT, you still might have to pay even more if you didn’t know you had to file it already this tax season because:
- the Underused Housing Tax Act is not part of the Income Tax Act;
- there are requirements to file even if you don’t owe;
- it is due on April 30 irrespective of your ordinary income tax filing deadline
- the filing is entirely separate from any other tax filing; and
- at the time of this article’s publication, it cannot be e-filed – it must be filled out and sent manually.
The prescribed Form UHT-2900 only came out on January 31, 2023, and applies to 2022.
As a result, you will need to figure out if you must file it by April 30 this year or face a minimum $5,000 penalty, per person, per property, for failure to file.
As this is new legislation with large penalty amounts, some practitioners are unaware if their errors and omissions insurance even includes coverage for these returns. This means you can expect to see extremely high fees for preparing these forms.
Can you think of a better way to navigate the messy rules than by playing a game for you to play this Tax Season?
Escape Room 2 – Rules of the Game
IMPORTANT RULES OF THE GAME: This is not an all-inclusive list. The below information is a high-level summary of the more common areas of concern. You should seek specialist advice on your specific circumstances and how the new rules will apply to you.
1) Were you the legal owner (a person/entity registered on title), jointly or otherwise, of a residential property in Canada as of December 31?
If yes, you are still trapped and get to keep playing.
If not, Congrats! You escaped! You can go back to paying rent or sleeping in your vehicle without having to worry about the UHT.
2) Are you a publicly-traded Trust or Corporation that is incorporated under the laws of Canada or a province and listed on a Canadian Stock Exchange?
If yes, Congrats! You escaped! You may continue working on your Securities filings for your upcoming AGM.
If not, you’re still trapped – keep playing.
3) Are you a Registered Charity, Cooperative Housing Corporation, Municipality, Indigenous Governing Body, Government of Canada, Provincial Government, University, Public College, School Authority or Hospital Authority?
If yes, Congrats! You escaped! You may continue dealing with your annual audit of financial statements.
If not, you’re still trapped – keep playing.
4) Are you an individually wealthy person that does not like to share with others?
For example, you own one or more multiple residential properties – but every single one of them is only in your personal name. No spouse, no corporation, no trust, no partnerships, no friends, no one!
If yes, Congrats! You escaped! You may go back to swimming alone in your pool of wealth.
If not, you’re still trapped – keep playing.
5) Is the only reason you are on the land title because you are currently the executor or administrator of someone’s estate?
If yes, Congrats! You escaped! You may continue to grieve and fill out the mountains of government paperwork while everyone else asks you “where’s my inheritance?”
If not, you’re still trapped – keep playing.
6) Are you an individual Canadian Citizen or Permanent Resident of Canada (under the Immigration and Refugee Protection Act) that does not have a business, farm, or rental property owned with another person that could possibly be viewed as a partnership?
If yes, Congrats! You escaped! You may continue to live in your home, paycheque to paycheque, while your cost of payroll deductions and mortgage interest continue to rise and eat away at it.
If not, you’re still trapped – keep playing.
7) Does your business, farm, or rental property co-owned with another person have a residential dwelling on it?
For example, is your home on the same land title as your farmland or business?
If yes, Congrats! … haha – fooled you! You’re still trapped, and now you get to play the UHT Escape Room Game – Advanced Edition
If not, Congrats! You just made it out – lucky number 7!
Welcome to UHT Escape Room Game – Advanced Edition
In this Edition, everyone must file or face a minimum $5,000 penalty per person on each property.
For example, husband/wife partnership with three residential properties = 2 x 3 x $5,000 = $30,000 penalty if you don’t file!
8) Are you a Specified Canadian Corporation where at least 90% of the ownership and control (direct and indirect) are held by other Specified Canadian Corporations, Canadian Citizens, or Permanent Residents of Canada?
If yes, you have to file but you won’t have to pay. Don’t forget to file by April 30 no matter what your fiscal year-end date is!
If not, you’re still trapped – keep playing.
9) Are you a Specified Canadian Partnership where every member of the partnership is either a Specified Canadian Corporation, or would not have to file if we ignored the whole “partner of a partnership” thing?
If yes, Congrats! You have to file but won’t have to pay.
If not, You’re still trapped – keep playing.
10) Are you a Specified Canadian Trust where every beneficiary of the trust is either a Specified Canadian Corporation, or would have escaped from filing if they were the owner themselves?
If yes, Congrats! You have to file but won’t have to pay.
If not, You’re still trapped – keep playing.
11) In this filing year or last year, were you an owner of a property when another co-owner that owned 25% or more died?
If yes, Congrats! It’s sure a good thing they died! You have to file but won’t have to pay
If not, you’re still trapped – keep playing.
12) Did you die this year or last year (or are you the executor for someone that did and you were not on the land title before they died)?
If yes, then UHT definitely puts the FUN in FUNeral! You have to file, but won’t have to pay – don’t forget to play again next year!
If not, you’re still trapped (but alive) – keep playing.
13) Did you buy the property this year and never owned or had your name on it before in the past decade?
If yes, Congrats on becoming a home-owner, on your first… or second… or third… or… well it doesn’t matter how many homes you have, just as long as you bought it this year. You have to file but don’t have to pay – play again next year!
If not, you’re still trapped – keep playing.
14) Was the property still under construction before April Fools’ Day of the filing year?
If yes, Congrats – this isn’t an April Fools’ prank. You have to file, but don’t have to pay!
If not, You’re still trapped – keep playing.
15) Was the property finished before April Fools’ Day of the filing year, offered up for sale to the public, but never sold or occupied by an individual as a place of residence or lodging during the year?
If yes, Congrats! Isn’t it fun making mortgage payments on a home no one wants? You have to file but don’t have to pay.
If not, you’re still trapped – keep playing.
16) Was the property unable to be lived in for at least 120 consecutive days because of renovations undertaken that occurred in a timely fashion?
If yes, Congrats! As long as you haven’t used this escape door in the last decade, you can now use it. You have to file but don’t have to pay – otherwise, it’s still locked and you keep playing.
If not, you’re still trapped – keep playing.
17) Was the property unable to be lived in for at least 60 consecutive days in the year because of disaster or hazardous conditions caused by circumstances outside the reasonable control of an owner?
If yes, Congrats! As long as you haven’t used this escape door more than once before for the same disaster or hazardous condition on the property you have to file, but not pay – otherwise, you’re still trapped.
If not, you’re still trapped – keep playing.
18) Is the property unable to be accessed year-round because there is no maintained public access during the off-season?
If yes, Congrats! You have to file but don’t have to pay.
If not, you’re still trapped – keep playing.
19) Is the property unsuitable for year-round use as a place of residence?
If yes, Congrats! Keep following that boiled water advisory and burning everything around you to stay warm. The government is providing you with more blessings: you have to file but don’t have to pay.
If not, you’re still trapped – keep playing.
20) Is the property being used for at least a month consecutively and more than 180 days in the year by you, your spouse or common-law partner, child, or parent who is a Canadian citizen or permanent resident?
If yes, Congrats! You have to file but don’t have to pay – wasn’t this fun? – Be sure to play again next year!
If not, you’re still trapped – keep playing.
21) Is the property the primary residence for you, your spouse or common-law partner, or for your child attending a designated learning institution?
If yes, Congrats! You might have to file an election and your spouse must agree. If you need to convince them, tell them that marriage counselling will be cheaper than the failure to file penalty. That should get them to agree to anything. You have to file but don’t have to pay.
If not, you’re still trapped – keep playing.
22) Is the property a vacation property that is used by you or your spouse or common-law partner for at least 28 days in the year and is located in an “eligible area of Canada” (basically rural enough area where they might get dirty trying to find you)
If yes, Congrats on being able to take 4-weeks of vacation every year – you have to file, but won’t have to pay.
If not, you’re still trapped – and likely still at work – keep playing.
23) Speaking of work – is the property being used by you or your spouse or common-law partner for at least a month consecutively and more than 180 days in the year just while you are working in Canada, and the property relates to that purpose?
If yes, Congrats! You have to file but won’t have to pay.
If not, you’re still trapped – have you considered renting it out?
24) Is the property being rented under a written agreement for at least a month consecutively and more than 180 days in the year to someone paying at least 5% of the property value per year as rent?
If yes, Congrats! You have to file but won’t have to pay.
If not, you’re still trapped – keep playing – and raise that rent! We wouldn’t want anyone to have affordable housing.
25) Is the property being rented under a written agreement for at least a month consecutively and more than 180 days in the year to an unrelated person?
If yes, Congrats! But why are you charging them less than fair-value rent? What kind of slum lord are you? Stop making things affordable! You have to file but won’t have to pay.
If not, you are still trapped and now move on to the UHT Escape Room Game – High Stakes Edition
Welcome to UHT Escape Room Game – High Stakes Edition
In this edition of the UHT Escape Room Game, everyone must ante up and Pay to Play!
26) Is the Fair Market Value of the property lower than both the Property Tax Assessed Value and the most recent purchase price of the property?
If yes, you must have a formal appraisal done effective as of a date in the filing year or before the filing deadline. Then you only have to pay 1% of this value multiplied by your percentage of ownership as your UHT.
If not, either get that appraisal done or be happy that your property has increased in value. In the meantime keep playing.
27) Is the Property Tax Assessed Value more than the most recent purchase price?
If yes, Congrats! Not only has your property tax gone up, but so has your UHT – you owe 1% of this value multiplied by your percentage of ownership.
If no, Congrats on your property being worth less than you paid for it – keep playing.
28) Congrats on making it to the end. If you’ve come this far, it means:
- You own property in Canada;
- You are not a Canadian Citizen or Permanent Resident;
- You are alive, or you’ve been dead for more than two years;
- You don’t rent out the property under a written agreement …or if you do, it is to a relative, and it is way too affordable;
- If it is a vacation property, you don’t use it for 4-weeks of vacation likely because you don’t get 4-weeks of vacation;
- You don’t use the property for more than 30 days consecutively, nor more than 180 days in the year for a work-related purpose;
- You didn’t bother getting a formal appraisal done;
- You paid more than the current Property Tax Assessed value for the property; and
- You wonder why they didn’t just say all this in the first place
Congrats – you get to pay 1% of the purchase price when you last acquired the property multiplied by your percentage of ownership.
Do you feel like you won?
Now… as for next year…
… I want to play a game…
From Resource Works
Heather-Exner Pirot of the Business Council of Canada and the Macdonald-Laurier Institute spoke with Resource Works about the transition to Donald Trump’s energy policy, hopes for Keystone XL’s revival, EVs, and more.
Do you think it is accurate to say that Trump’s energy policy will be the complete opposite of Joe Biden’s? Or will it be more nuanced than that?
It’s more nuanced than that. US oil and gas production did grow under Biden, as it did under Obama. It’s actually at record levels right now. The US is producing the most oil and gas per day that any nation has ever produced in the history of the world.
That said, the federal government in the US has imposed relatively little control over production. In the absence of restrictive emissions and climate policies that we have in Canada, most of the oil production decisions have been made based on market forces. With prices where they’re at currently, there’s not a lot of shareholder appetite to grow that significantly.
The few areas you can expect change: leasing more federal lands and off shore areas for oil and gas development; rescinding the pause in LNG export permits; eliminating the new methane fee; and removing Biden’s ambitious vehicle fuel efficiency standards, which would subsequently maintain gas demand.
I would say on nuclear energy, there won’t be a reversal, as that file has earned bipartisan support. If anything, a Trump Admin would push regulators to approve SMRs models and projects faster. They want more of all kinds of energy.
Is Keystone XL a dead letter, or is there enough planning and infrastructure still in-place to restart that project?
I haven’t heard any appetite in the private sector to restart that in the short term. I know Alberta is pushing it. I do think it makes sense for North American energy security – energy dominance, as the Trump Admin calls – and I believe there is a market for more Canadian oil in the USA; it makes economic sense. But it’s still looked at as too politically risky for investors.
To have it move forward I think you would need some government support to derisk it. A TMX model, even. And clear evidence of social license and bipartisan support so it can survive the next election on both sides of the border.
Frankly, Northern Gateway is the better project for Canada to restart, under a Conservative government.
Keystone XL was cancelled by Biden prior to the invasion of Ukraine in 2022. Do you think that the reshoring/friendshoring of the energy supply is a far bigger priority now?
It absolutely is a bigger priority. But it’s also a smaller threat. You need to appreciate that North America has become much more energy independent and secure than it has ever been. Both US and Canada are producing at record levels. Combined, we now produce more than the Middle East (41 million boe/d vs 38 million boe/d). And Canada has taken a growing share of US imports (now 60%) even as their import levels have declined.
But there are two risks on the horizon: the first is that oil is a non renewable resource and the US is expected to reach a peak in shale oil production in the next few years. No one wants to go back to the days when OPEC + had dominant market power. I think there will be a lot of demand for Canadian oil to fill the gap left by any decline in US oil production. And Norway’s production is expected to peak imminently as well.
The second is the need from our allies for LNG. Europe is still dependent on Russia for natural gas, energy demand is growing in Asia, and high industrial energy costs are weighing on both. More and cheaper LNG from North America is highly important for the energy security of our allies, and thus the western alliance as it faces a challenge from Russia, China and Iran.
Canada has little choice but to follow the US lead on many issues such as EVs and tariffs on China. Regarding energy policy, does Canada’s relative strength in the oil and gas sector give it a stronger hand when it comes to having an independent energy policy?
I don’t think we want an independent energy policy. I would argue we both benefit from alignment and interdependence. And we’ve built up that interdependence on the infrastructure side over decades: pipelines, refineries, transmission, everything.
That interdependence gives us a stronger hand in other areas of the economy. Any tariffs on Canadian energy would absolutely not be in American’s interests in terms of their energy dominance agenda. Trump wants to drop energy costs, not hike them.
I think we can leverage tariff exemptions in energy to other sectors, such as manufacturing, which is more vulnerable. But you have to make the case for why that makes sense for US, not just Canada. And that’s because we need as much industrial capacity in the west as we can muster to counter China and Russia. America First is fine, but this is not the time for America Alone.
Do you see provinces like Alberta and Saskatchewan being more on-side with the US than the federal government when it comes to energy?
Of course. The North American capital that is threatening their economic interests is not Washington DC; it’s Ottawa.
I think you are seeing some recognition – much belated and fast on the heels of an emissions cap that could shut in over 2 million boe of production! – that what makes Canada important to the United States and in the world is our oil and gas and uranium and critical minerals and agricultural products.
We’ve spent almost a decade constraining those sectors. There is no doubt a Trump Admin will be complicated, but at the very least it’s clarified how important those sectors are to our soft and hard power.
It’s not too late for Canada to flex its muscles on the world stage and use its resources to advance our national interests, and our allies’ interests. In fact, it’s absolutely critical that we do so.
conflict
US and UK authorize missile strikes into Russia, but are we really in danger of World War III?
From LifeSiteNews
By Frank Wright
Hopefully a world war appears unlikely, but the decision to allow Ukraine to shoot U.S. and U.K.-provided missiles into Russia once again reveals the lengths to which the ‘neocon globalists’ will go to throw a lifeline to their failing business model.
News that the lame duck President Joe Biden has authorized long-range strikes into Russia using NATO systems was announced with the alarming warning that he had “started World War III.”
The following day, U.S.-supplied and operated ATACMS missiles were fired into Russia.
Russian Foreign Minister Sergei Lavrov described the authorized strikes as an “escalation” showing that the West wants war.
“The fact that ATACMS were used repeatedly in the Bryansk region overnight is, of course, a signal that they want escalation,” he said, according to Reuters.
Lavrov continued: “Without the Americans, it is impossible to use these high-tech missiles, as Putin has repeatedly said.”
Why would the U.S. president finally give the green light to use NATO systems to attack Russia? German Chancellor Olaf Scholz has refused to follow suit and supply German-made Taurus cruise missiles to Ukraine – because he does not want to see Germany drawn into a direct war with Russia.
British Prime Minister Keir Starmer responded by suggesting it is only a matter of time before U.K.-supplied Storm Shadow cruise missiles strike deep into Russian territory.
Today – Wednesday, November 20 – the Guardian reported that it has already happened.
The U.K. government has been behind a long campaign to escalate the war in Ukraine, a move seen as an attempt to secure continued U.S. commitments in Europe. The Trump camp has long signaled its desire to draw down its security provision to leave a “dormant NATO.”
In an indication of the dangers of the U.K.-backed move by Biden, Russian President Vladimir Putin announced an alarming amendment of the Russian nuclear doctrine.
The policy change, announced in September and published following Biden’s announcement, says “an attack from a non-nuclear state, if backed by a nuclear power, will be treated as a joint assault on Russia,” according to the BBC.
Russian nuclear doctrine has long included the use of low-yield “tactical” nuclear weapons in “conventional” warfare – a significantly lower threshold than that of NATO.
While Russian officials urged Western leaders to consult the text, Foreign Minister Lavrov stressed that “we strongly are in favor of doing everything to not allow nuclear war to happen.”
As Reuters reported, this latest provocation is “unlikely to be a gamechanger.” Western media outlets have moved from a narrative of Ukrainian victory to mulling how or even if the state of Ukraine can survive its “inevitable” defeat.
Yet it is not only Ukraine which faces an uncertain future with a Russian victory. The entire globalist order faces a significant blow should the war conclude. Statements from figures such as George Soros, U.S. General Mark Milley, E.U. chief Ursula von der Leyen, and the former head of NATO stressed that their liberal-globalist regime is threatened by defeat in Ukraine.
Biden’s decision has been seen as an attempt to frustrate Donald Trump’s declared agenda – to clear out the “deep state globalists” whose “neocons seeking confrontation … such as Victoria Nuland” have led the U.S. into endless wars since that in Iraq.
An escalation to all-out war with Russia would not only be a disastrous precursor to nuclear escalation, but would also preserve the dominance of the same “neocon globalists” whose “forever wars” Trump has pledged to end.
Arch-neocon Robert Kagan said Americans who support ending wars are “intolerant.” He went on to author two articles which Hitlerized Trump and appeared to incite the assassination of a man who promised in his 2024 victory speech, “I’m not going to start wars. I’m going to stop wars.”
This follows a long series of claims in the same vein.
“I will end the war in Ukraine,” Trump declared in February 2023, saying he would also end “the chaos in the Middle East” and “stop World War III.”
This move by Biden has no military significance in improving Ukraine’s chances of victory. Russia claimed to have shot down seven of eight ATACMS fired into its Bryansk region. Yet prolonging or even escalating this war has enormous political significance.
Since the publication of the RAND Corporation’s 2019 paper “Overextending and Unbalancing Russia,” a strategy of bleeding Russia on the battlefield to collapse its government has been clear. Russia’s near-limitless mineral wealth would provide an obvious boon to a Western system self-sabotaged by sanctions and the destruction of the Nordstream gas supply.
The enormous significance of the war is found in its use as an attempt to extend and consolidate the power of the same system of neocon “globalism” which Trump has vowed to end.
This context explains why the U.K. government has consistently pressed for escalation since the 2022 intervention of then-Prime Minister Boris Johnson seems to have sabotaged peace in favor of an all-or-nothing gamble towards “regime change” in Russia.
Since then, the U.K. government has urged the authorization of long-range strikes into Russia, and it has supplied cruise missiles to attack Russian over-the-horizon nuclear radar warning systems, which play no role in the Ukraine war.
Reports have confirmed “terrorist operations” in Russia, including attacks on the Kerch Bridge leading to Crimea were U.K.-led. A recent expose by The Grayzone revealed that the British state appears to be training Ukrainians to fight a guerilla war, extending hostilities even beyond any ceasefire.
Ukraine’s recent and failed offensive into Russia’s Kursk region appears to have also been a British operation – to secure the kind of “morale boost” which Alastair Crooke says is the only significant war-fighting contribution of the authorization of “wonder weapons” like ATACMS.
The ATACMS authorization was heralded as a turning point in the war by Foreign Affairs. Yet the suspicion of Responsible Statecraft that it was a “sideshow that may become a tragedy” appears to have been confirmed.
The grim reality of this war is underscored by the fact that measures taken which will result in even more needless loss of human life are done so to legitimize useful propaganda headlines. This is undertaken to sell a war which has long been predicted to end as it now seems certain to do so: with a victory on Russian terms.
Though it appears unlikely that a world war will result from this latest reckless move, what has been demonstrated once more is the lengths to which the “neocon globalists” will go to throw a lifeline to their failing business model.
That lifeline is perpetual war, and when they end – so do the careers of so many whose livelihoods and reputations depend on keeping them going.
Canadian veterans battle invisible wounds of moral injury and addiction
How Canadians lost the rule of law
Trump Effect: No One Gretz Off Easy Backing The Donald
New Australian law, if passed, will make the gov’t the sole arbiter of truth’
-
Business1 day agoCarbon tax bureaucracy costs taxpayers $800 million
-
Brownstone Institute1 day agoThe Most Devastating Report So Far
-
ESG21 hours agoCan’t afford Rent? Groceries for your kids? Trudeau says suck it up and pay the tax!
-
Daily Caller21 hours agoLos Angeles Passes ‘Sanctuary City’ Ordinance In Wake Of Trump’s Deportation Plan
-
COVID-191 day agoDr. McCullough praises RFK Jr., urges him to pull COVID shots from the market
-
John Stossel19 hours agoGreen Energy Needs Minerals, Yet America Blocks New Mines
-
Business2 days agoOttawa’s avalanche of spending hasn’t helped First Nations
-
MAiD1 day agoOver 40% of people euthanized in Ontario lived in poorest parts of the province: government data