From year 2022, individual Canadian or PR owning residential properties as Partner of a partnership are required to file UHT form by April 30,2023. Information on T776 will show the ownership type.

1) Profile T776 Part 1 – Your percentage of the partnership

When Type of ownership “Co-owner/sole-proprietor” box is checked and Part 2 Co-owners’ details and percentage of ownership (50%) is entered, Part 1 “Your percentage of the partnership” shows 50% for Co-ownership (Spouses) clients. That 50% shouldn’t be showing up there for Co-owners, who don’t own the property as a partner of a partnership.  But if it is overridden as 0, no amounts will be linked to T1 line 12599 &12600. How to fix it?  

Maybe Profile can design the calculation of co-owner's rental income/loss to be based on field of Part 2: percentage of ownership filed (50%) instead of field of Part 1 “Your percentage of the partnership” and also “Part 1: Percentage of the partnership” to be left for users to enter, if partnership applies.

CRA reference: https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/rental-income/ownership.html#...

And the T776 form on the link (Updated 2 weeks ago?) looks like not updated: Amounts from The T776 Statement of Real Estate Rentals not flowing to the T1 jacket (intuit.ca)

2) Profile T776 Line 10 – Partners under Partnerships:

If Part1 “percentage of partnership” for co-owner spouse remains as 50% anyway and it could be explained that the ownership type was actually Co-ownership instead of partnership, amount of Co-owners’ net income/loss shows the same on both Line 9 (as Co-owner) and Line 10 (partner). Line 9 amount should be directly linked to box 9946 and no amount should be showing on Line 10 (Partner) (as Tax cycle 2021 shows). Again, if amount on Line 10 (partner) is overridden as $0, no amount showing on Line 9946 and being linked to T1 Line 12600. How to fix it?

3) Will CRA see the box of Type of ownership “Co-owner/sole-proprietor” was checked on Profile T776 when E-filed? Will CRA receive the profile T776 form or just the T1 jacket?

For tax perspective, tax refund/owing will be the same amount for the 50/50 split regardless of type of ownership (Co-ownership of Partnership).

However, as the type of ownership on T776 is crucial for this new UHT filing requirement (hefty penalty or potential future problems for our clients), can Profile development team please redesign T776 entries related to the type of ownership with new version issued or advise how to get around asap, as a high priority issue?

Thank you.