Do you know where your landlord lives? If they aren’t a Canadian resident, you should be sending a quarter of your rent to the taxman – or you might end up paying your landlord’s bill.
That’s what happened to David Siscoe, a Montreal gym owner who rented an apartment for 24 years and thought the landlord with whom he signed a lease in 2010 was a Canadian resident.
As The Globe and Mail reported in April, the Canada Revenue Agency found he had not withheld 25 per cent of his rent payments to his non-resident landlord, and successfully sued Mr. Siscoe last year for his landlord’s unpaid taxes. The bill, Mr. Siscoe said, totals more than $80,000 including interest and penalties.
That is the law. And the federal government should be fixing it. Fast.
Justin Trudeau’s Liberal government keeps telling Canadians they’re trying to ease their housing struggles. But the last thing Canada’s already-pressed renters need is to be stuck between their landlord and the taxman, worrying about whether they have to send a quarter of their rent to the CRA.
CRA’s website says that is what tenants must do if their landlord is not legally a Canadian resident. And don’t forget the tenant must send the landlord Slip NR4, the Statement of Amounts Paid or Credited to Non-Residents of Canada. And then send the CRA a NR4 information return.
The rules came as a surprise to Mr. Siscoe. He also didn’t know that his landlord was not a Canadian resident but a resident of Italy. But a court ruled it didn’t matter whether he knew or not.
When Mr. Siscoe signed his lease, the landlord listed an address in Pincourt, just west of Montreal Island. He deposited cheques in a Canadian bank.
“I was there for 24 years,” Mr. Siscoe said in a telephone interview on Thursday. “And at some point, apparently, the landlord became a non-resident.” In 2018, the CRA told him he was being assessed for her taxes.
This shouldn’t happen. But apparently, the federal government isn’t going to change it. They just want to reassure you that what happened to Mr. Siscoe probably won’t happen to you. Probably.
“We want to assure Canadians that the Canada Revenue Agency does not specifically target individual tenants and that, in the vast majority of circumstances, tenants should not be, and are not required to withhold 25% of the rent from their landlords,” Simon Lafortune, press secretary for Revenue Minister Marie-Claude Bibeau, said in an e-mailed statement.
That is not reassuring. It is true that this law has been on the books for decades and CRA has rarely pursued tenants. But it has now. It is true that the “vast majority” of tenants don’t have to send a quarter of their rent to the tax authorities, only those with foreign landlords. But a tenant might not know his landlord is a non-resident. And they certainly won’t know if the landlord is paying their taxes.
Mr. Siscoe’s case is raising some nerves. Ontario MPP Jessica Bell, the provincial NDP’s housing critic, said her office has had calls from some worried renters. One said their landlord refused to say if they are a Canadian resident for tax purposes, and was advised by CRA to withhold a quarter of their rent and send it to the revenue agency – but the landlord threatened to apply for eviction if they don’t pay the rent in full.
“No renter should be caught between a rock and a hard place, between their landlord and the CRA,” Ms. Bell said in an interview. She wrote a letter to Ms. Bibeau and Ontario Housing Minister Paul Calandra, asking Ottawa to change the law and the Ontario government to block evictions for tenants who withhold rent for the CRA.
Rare or not, theses cases should not exist. If the CRA wants to collect a landlord’s unpaid taxes, they can put a lien on the property. That’s what Mr. Siscoe expected the CRA to do, but his landlord sold the property in 2020 while the revenue agency was telling Mr. Siscoe to pay up.
The onus to handle non-resident taxes should not be placed on ordinary renters trying to secure a place to live. When the CRA took this case to court they made all tenants vulnerable.
This must change. Ms. Bibeau should instruct the CRA not to pursue residential tenants for an offshore landlord’s taxes. The Liberal government should fix the law.
Campbell Clark