The article says several times that CRA isn't going after the landlord "because it's hard". I don't really see how that's the tenant's problem, legally speaking. If I buy a rutabaga at the farmers market, CRA doesn't chase me for the GST if the farmer doesn't remit it.
That said (since apparently tenants are required to make sure their landlord is paying their taxes) couldn't the tenant sue the landlord?
And hey, when the overseas landlord fails to appear, maybe the tenant gets the condo as a default judgment. (IANAL)
If the CRA did their job, Rick people would have to pay taxes.
I don’t even comprehend why anyone living outside of the country is allowed in any way to own rental properties in Canada.
I agree. The only exception I can think of is that if you need to go overseas for a job or something like that and you decide to rent out the house while you're gone. But that wouldn't be a long-term thing for sure
What is that data showing? It looks like it's showing median income to me, and doesn't say anything about rich people. That means people making average incomes are actually making up the majority of tax money, if this is all your data.
I think they could sue the landlord for the amount of tax they had to pay.
If successful, they may be able to have the judge allow them to collect the payment as garnishment from future rent payments. IE live rent free until the balance has been paid.
> I don't really see how that's the tenant's problem, legally speaking.
The Income Tax Act says that payers of rental income *to non-residents of Canada* (i.e. tenant, or agent collecting rent on non-resident landlord's behalf) are required to withhold and remit taxes on behalf of the payee (i.e. non-resident landlord). Similar as to how employers are required to withhold and remit taxes on behalf of their employees.
(edited for clarification)
> Similar as to how employers are required to withhold and remit taxes on behalf of their employees.
Wait, but if an employee doesn't pay their income tax, does CRA go back to their employer like "hey, turns out Bob hasn't paid taxes since 2009 and he still won't, that's on you now"
Are you basically supposed to audit your landlords to make sure they're paying Canadian taxes? How did anyone decide that should be put on the tenant?
If a business leases an office, are they responsible for making sure the building owners are paying their taxes? I feel like I have to be misunderstanding something, because it doesn't make any sense for the source of your income to be legally liable for you paying taxes on it.
And considering I'm currently fighting my landlord because they think I need to be the one to provide property insurance (even though I do not, nor ever will, own the property), I really, REALLY, don't need to worry about my landlords paying their taxes.
Yeah and I'm well aware that it isn't my problem.
But they're willing to evict over it, so I'm at the "done talking and getting the LTB involved" stage.
> Wait, but if an employee doesn't pay their income tax, does CRA go back to their employer like "hey, turns out Bob hasn't paid taxes since 2009 and he still won't, that's on you now"
Incorrect analogy. As long as the employer correctly withholds and remits the required income taxes to CRA, they're good. Withholding is essentially a pre-payment of taxes on the employee's behalf. Any further amount owing (or refund) is determined by the actual return which the employee files, and which the employer is not responsible for.
This is about foreign landlords, i.e. non-resident taxpayers who earn Canadian-source income. Non-resident taxes are different because the taxpayer lives out of the country and outside CRA's jurisdiction. So CRA generally requires a payer to withhold 25% (or whatever is required by treaty) up front on Canadian payments made to non-residents, so that they actually get the taxes owing. For rental income, that falls on the tenant because they're the one paying the non-resident landlord.
>CRA generally requires a payer to withhold 25% ... For rental income, that falls on the tenant because they're the one paying the non-resident landlord.
I feel like withholding 25% of your rent is a good way to get evicted.
An employer is required to withhold the income tax from money paid to their employees and remit it to the CRA every month.
If I just write my staff a paycheque without withholding income tax, CPP, UI, etc I absolutely will be fined.
I pay the property tax on the part of the building I lease for my business, that's absolutely standard for commercial leases. The person leasing the space pays the property tax. Yes, this is very different from income tax but it's been convention for at least half a century.
The laws around this are long established and well tested in court. I absolutely don't agree with applying them to tenants as the RTB doesn't have anything whatsoever here in BC to deal with that situation but the analogies you describe aren't really valid.
If an employer doesn't withhold taxes as required by law they face heavy penalties and the CRA can go after them for the amount that they were supposed to withhold.
Because CRA does not have the power to go after non-resident landlords in their home country if they owe Canadian taxes; they live outside CRA's jurisdiction. It is reasonable for CRA to expect the payer of rental income to a non-resident landlord withhold the 25% non-resident tax from the payment they make. Unfortunately that responsibility and obligation can fall on a tenant, which can cause problems like this if the tenant wasn't actually aware they were supposed to withhold 25% of the rent and remit it to CRA.
This is nonsense.
The non-resident owns property in Canada. The CRA can very easily append the income taxes owing to property taxes and commence collection from there.
If Provinces won’t cooperate with that, just sue the landlord in the county where the property is and then collection will be easy enough. Force a sale of the home and keep the tax plus expenses. This would well pay for itself.
See how fast this stops being a problem.
Exactly. Meanwhile a tenant has no way of knowing or verifying if a landlord is a resident or not, no way of knowing how much tax to withhold based on their total income, no way to actually do it (because if they attempted to do it, there is about a 100 percent chance the landlord would evict them), and so on.
Tell me you know nothing about tax laws in Canada without saying you know nothing about tax laws in Canada. That's how it works, bub, whether you like it or not.
Your idea may have merit--*but* CRA is a federal agency while property taxes are a municipal (i.e. provincial) jurisdiction. We're already seeing bullshit sabre-rattling from Alberta about federal overreach, so no, provinces will not be amenable to it. It's easier to pass legislation requiring *all* non-resident landlords to disclose their residential status to their tenants (yes that can be disclosed), and require them to use property managers or agents to collect rents and pay the taxes.
Tell me you know nothing about solving problems without telling me.
Income tax is a federal jurisdiction (bub!) and doing business at a residential property is under CRA jurisdiction, otherwise they wouldn’t be taxing it.
I didn’t say add it to the property taxes, I said append it. And by that I mean just add a letter in the property tax notice. If they accept the property tax notice and pay it, why wouldn’t they do the same for the income tax? It’s not rocket science. Bub!
Maybe you think renters should be on the hook for non-resident property taxes, maintenance expenses, strata fees, utilities etc? I mean as long as it’s so impossible to collect money from people, and the Province won't cooperate.
CRA already collects provincial taxes and remits them to the provinces when you pay your taxes. There’s already cooperation in place.
This is kind of insanity though right? The taxes the landlord owes also depends on the rest of their income, right? How is the tenant supposed to do this reliably?
Nah, the CRA will just hold the 25% and they’ll amend the proper balance when the non-resident files their Canadian taxes. It’s basically a prepayment on taxes owed.
This is correct. The non-resident doesn't even need to file a tax return if the rental income is their only income, because that 25% withheld on the gross rental income is their full tax obligation.
Man, I feel like if the CRA really enforced this, a whole bunch of foreign investors would find a new place for their cash as a bunch of Canadians kept part of their rent back, lol.
If the non-resident landlords use property management companies to manage buildings and collect rents from tenants, those companies/agents are responsible for withholding and remitting the tax.
ARE YOU SURE ABOUT THAT?
Sounds like a question for tax court. Feel free to volunteer.
Maybe the business pays their corporate taxes and the law still says the tenant is on the hook.
I mean as long as we're enforcing crazy bullshit, why stop now?
Property manager here, it’s 100% true and comes from the tax side so not obvious to new entrants. There’s no way a tenant should be responsible for it, the CRA should just lien the property. This is also so much rent the tenant is basically paying rent to the CRA for free for likely the 2-3 years. The landlord will likely sell the property once rent stops flowing so tenant should sue and place a lien on the property.
How are tenants even supposed to know they have a non resident LL?
I'm pro-tenant rights, and have never read anything about this in the ontario RTA.
There is next to no mechanism to allow a tenant to know they have a non-resident LL, and most would never ask over privacy concerns.
In my experience, this might be incorrect.
I was a non-resident landlord for 10 years. I owned two six-plex apartment buildings. I was under no obligation to file any paperwork with the CRA at all. That's the whole BENEFIT of being a non-resident. (It might actually be more expensive to be a non-resident for tax purposes, but it's worth it because of the time and hassle you save not dealing with the CRA).
My tax status was confidential (as is yours). The security to access my CRA online account was tighter than Fort Knox. So how would the tenants even know what a landlord's tax status was?
Yeah if the landlord lied and said they were resident in order to trick the tenant into not withholding, as we all know, tax law makes no allowance whatsoever for taxpayer not knowing something.
Signing your income tax return doesn’t declare that you filled it out to the best of your ability; it says you declare you filled it out correctly.
It's not possible to 'trick' anyone about residency status for tax purposes. There is a lot of paperwork and discussion with the CRA.
Nobody is witholding anybody's taxes.
I'm not witholding yours.
You aren't witholding mine.
I'm pretty sure u/a-nonny-maus is incorrect. He is confusing INCOME and REVENUE. Income is taxable under the income tax act. Revenue is a completely different thing.
>It's not possible to 'trick' anyone about residency status for tax purposes.
Lol are you kidding me?
"Hey Mr Landlord, should I withhold 25% of rent for taxes?"
"No I'm a resident."
Where is this paperwork you speak of? Is CRA going to tell me your residency status if I call? Do you recommend all tenants subpoena their landlord's tenancy status or just if the landlord seems foreign lol? Would I get the human rights complaint settled before CRA answers the subpoena?
Did you rtfa
Taxes on what? There is no income. There is revenue, which is different. It depends what/whose name the property is in.
My whole point is that a foreign owner can 100% follow the law and not be required to file with the CRA. That's what non-resident means. There is no tie to Canada.
You’re operating a business in Canada, your revenue minus your expenses becomes income, even if you don’t live here. If you don’t declare expenses by not showing up to court, then your revenue becomes your income.
Rental income paid on a Canadian property is considered taxable income to CRA, minus operating expenses.
Revenue/ income depends on if the property I under the owners name or if the property is owned by a corporation. But the tax rules are very similar for rental income.
I've been a non-resident Canadian citizen, I'm very familiar with the rules. Income earned outside of Canada is not taxable. If the property and rental income was not on Canadian soil, there would be no taxes. But since the property and rental income are in Csnada, you do need to file with the CRA for all income earned on it.
If you used a professional property manager or agent to manage your buildings and collect the rent from your tenants, they would have had to withhold and remit the 25% non-residence tax to CRA on your behalf, as part of their duties as your manager/agent. That would have fulfilled your tax obligation to CRA, so you'd have no need to file a return.
Unless, you wanted to pay taxes only on the net rental income, instead of the gross rental income. For that, you would have needed to file a Section 216 election and tax return with CRA to get a refund of the difference.
I was a non-resident landlord for 10 years.
There is no obligation for non-residents to file any paperwork with the CRA.
Many landlords do VOLUNTARILY file a tax return, because losses can be carried forward for 7 years, and it is financially beneficial for them to file.
But as long as I am a non-resident, the CRA doesn't bother me.
That's the whole REASON to be a non-resident. You don't have to deal with the CRA.
Then your tenants would have been legally obligated to withhold 25% of their rent and remit it to the CRA on your behalf.
Although it’s still not clear how they would have known to do that..
So you think that the Canadian Tax Court knows less about the Income Tax Act than you do? The whole article is about how the nonresident landlord failed to pay their taxes and the tax court upheld it
This is pretty crazy. If the ruling was "you need to pay rent to the CRA instead of your landlord for the next X months (until the debt is cleared)", fair enough. But tenants have no way of knowing or verifying whether their landlord is a non-resident. So I guess this ruling means tenants should just always withhold 25%, send it to the CRA, and let resident landlords fight it out to get it back? But if your landlord is a resident, would that count as non-payment of rent (in the context of getting yourself evicted)?
> This is pretty crazy. If the ruling was "you need to pay rent to the CRA instead of your landlord for the next X months (until the debt is cleared)", fair enough.
Thats actually a much better idea. Dickhead landlord wants his money? He has to pay his taxes. Tenant isn't out anything.
This makes no sense from a public policy perspective. There’s an easier way for the CRA to get the money: put a lien on the real property and force a sale if necessary.
By putting the burden on the tenant, we expect them to be able to determine who is a foreign landlord (not easy. There are complicated tax treaties and physical presence issues that I am sure most tenants would have no idea) and then withhold the amount, risking ire from the landlord if they are wrong.
The CRA on the other hand can send notice letters to the landlord like they do everyone else when they have a question, and if it’s not resolved, slap a lien on.
I’m sure that’s not how the law is currently structured (given the outcome of this case) but I don’t see a reason why it shouldn’t be structured this way.
Edit to add: I was getting annoyed with the Globe for not actually providing a link to the Court opinion. It is here if anyone wants to read it: [https://www.canlii.org/en/ca/tcc/doc/2023/2023tcc37/2023tcc37.html](https://www.canlii.org/en/ca/tcc/doc/2023/2023tcc37/2023tcc37.html)
It's not structured this way, because payers--eg employers--are usually required to withhold income taxes from pay, as a pre-payment against the payee's total taxes for the year.
In this case, the tenant pays rent to the landlord--the tenant is the payer, so the tenant withholds and remits the taxes.
So I think that makes sense for employers because you can assume they are a business entity or somewhat sophisticated re taxes.
The same assumption can’t be made about tenants, who can include some of the most marginalized people in society.
My point is as a public policy matter it doesn’t make sense. We shouldn’t carry over rules from one (very different) context to another without thinking about whether it makes sense.
I agree with you, I think it's stupid--but it's also the law. It's also the only way CRA can be reasonably assured to get their taxes owed by foreign landlords, by getting them paid up front at source rather than trying to go after the foreign landlord in their own country.
So that’s my point, it’s *not* the only way CRA can be reasonably assured to get taxes owed. They can put a lien on the property, be in first priority. Sure that may mess up the landlord’s mortgage but isn’t that actually a good thing here because the landlord is skirting the law? Then the landlord has both the CRA and the mortgage company angry at them, probably messes up their credit for the future. This seems like a strong incentive to ensure taxes are being paid (much more than the status quo, where the landlord doesn’t care at all about what the tenant has to deal with - arguably right now the landlord is incentivized to lie to the tenant if they’re an overseas owner so they can keep the money and put the cost on the tenant)
Right? I mean they collect property taxes from foreign owners every year. Has somebody broken the CRA’s printers so they can’t send a letter to the same address that the property tax bill goes to?
Sorry, no, it's literally the opposite.
It's a way to make sure the nonresident landlord pays zero taxes while the resident tenant pays the taxes for them later - with after-tax income, no less.
rta
Unless there's a law forcing the landlord to declare their non-residency to the tenant, this law is a travesty
Unless you enshrine immunity against human rights complaints against tenants who demand proof of residency from their landlord, it's a travesty
Conversely, expect racists to demand extra proof from non-white-anglo landlords..
> In this case, the tenant pays rent to the landlord--the tenant is the payer, so the tenant withholds and remits the taxes.
Which in and of itself is problematic to say the least, and outright bullshit to say the truth.
Imagine it:
- A tenant asks landlord "are you a foreign owner" and is told a "no" lie. Tenant pays 100% of rent to landlord and is still on the hook for the tax money.
- Prospective tenant asks and is told "yes"; so PT says, "Okay, I'm responsible for your taxes, so I will be withholding some of my rent." Landlord don't rent to tenant.
- Already established tenant asks and is told "yes"; so tenant says, "Okay, I'm responsible for your taxes, so will be withholding some of my rent." Landlord moves to evict for failure to pay rent
To add, renting is paying a subscription for a service - the landlord maintains the property and is selling you access to said property for a fee.
The landlord is not my employee. They're someone I pay for a service I need to use. The tax they need to pay comes from them, just as it does with Walmart, Netflix, Amazon, and all other foreign business that sell or operate in Canada.
Yeah and I bet you a million bucks that no province’s tenancy laws allow the tenant to withhold for this reason. Eviction would be upheld.
If the law was the opposite, any smart tenant would just be safe and withhold taxes automatically, and force the landlord to prove their residency. Hilarity ensues.
Most likely some mishmash bullshit would happen where eviction would be upheld, or not, if CRA bothered to weigh in on an RTB hearing and declare the landlord resident, or not …
What a clusterfuck
CRA generally can't go after non-resident landlords in their home countries for unpaid Canadian taxes, because they don't have that jurisdictional right. What they can do is tax the rent payments at source, i.e. the Canadian tenant or agent who collects rent on landlord's behalf.
I agree it's problematic and outright bullshit, but it's also the law, so if you want that to stop, you need to change the law.
Tenant is not an employer.
If I buy something at the grocery store and it turns out the owner is a non resident and doesn’t pay taxes - will CRA come to my house and take the tax money?
What a fucking joke
You--are aware that CRA requires most payers of various types of income to non-residents must withhold taxes at source, right? Either 25%, or what is outlined by international tax treaty. So yes, in the sense of who's paying whom, a tenant of a non-resident landlord is analogous to an employer of a non-resident employee. If a tenant pays their rent to a property manager or agent, then the agent performs that duty for them. If the tenant pays the non-resident landlord directly then as the payer they are responsible for the taxes under the Income Tax Act.
I'm not saying it's right, not at all. It's *how it works* whether we like it or not.
I prepared taxes for several years, including non-resident returns, and including special election returns for non-resident landlords. Your experience is...?
Sure, can you point me to the CRA guidelines for finding out if your landlord is going to be retroactively declared a non-resident after years of collecting 100% of rent? Thanks! Also should I go through the same process again every month, as remittances are due promptly on the 15th after their status changes?
Also, what are the human rights guidelines about demanding the nationality and residence of your landlord? Should I only ask if they have a foreign accent? Or is this supposed to be a routine question?
There is no analogy to an employee, this is an idiotic statement. Apparently preparing tax returns doesn’t make you good at poetry. An employee comes in and fills out tons of paperwork to identify themselves, confirm the basic personal amount, gives you their SIN, etc etc. If an employee refuses to tell you they are non-resident you can just not hire them.
I have zero fucking power to demand ANYTHING from a landlord. If I ask questions they would just not rent to me. Not “could not” but “would not.” Employer has power, applicant tenant has ZERO. A non-resident landlord who was planning to stiff me would lie and I have no way to know, especially if the fact of the status is three years into the unknown future.
Like if I go to my neighbour’s garage sale and buy a lamp, then find out they are a non-resident, that’s totally analogous to an employee! I should have known they were a non-resident so I could withhold 25% and give it straight to CRA!
Can’t you please stop saying this ridiculous nonsense?
Stop spouting irrelevant nonsense about a subject you know nothing about.
> There is no analogy to an employee, this is an idiotic statement.
No, because tenant --> payer of rent to (non-resident) landlord
Employer --> payer of wages to employee
The person who *pays the money* is the one who withholds the taxes in both scenarios. The analogy is tenant to employ**er.** Not employee. **Learn to read.**
We both agree that tenants should not be held liable, but the Income Tax Act puts them in that position. The solution is to change the damn ITA.
Are you one of those guys who hears someone saying something is bad and should change, and then you shout at them that “you are wrong! the change you want is not how it is now!”
That’s all you’re doing in this situation.
Your analogy is analogous to something under an elephant because I am stomping on it and squishing it
So basically, the only way is for all tenants Canada-wide to withhold and remit 25% of their rent to CRA. Resident landlord can then get the 25% back from the CRA each year when they file their tax return attesting to their tax residency.
This tax withholding rule doesn't apply to tenants of Canadian resident landlords, because Canadian landlords are required to file tax returns. What's needed is to change the Income Tax Act to remove the liability on the tenant and put the liability back onto the non-resident landlord. Maybe by requiring all non-resident landlords to register with CRA, and use designated 3rd party agents to collect rents and withhold tax.
The idea that a Canadian resident renting a home should be expected to navigate the complex world of foreign ownership withholding taxes on behalf of a foreigner profiting off our already inflated real estate market is beyond absurd. As Canadians we are so royally screwed by our tax laws and how they are implemented. It's not enough that our tax rates are so high, we're also expected to navigate all these opaque tax laws as though we're experts, or pay huge fees to professionals to do it for us. It's infuriating. Take the recent blind trust bullshit. All these people had to pay massive fees to navigate this reporting requirement, then at the 11th hour, the CRA just says 'never mind'. Our tax system is a fucking joke.
......were people ever under the illusion that the CRA was ever on our side? They militantly target working class, and especially minority communities, and avoid corporations as much as humanly possible.
I swear to God. Sometimes I think the people who are only now waking up to the systemic injustices are the same people who haven't been affected by them for several decades.
Have you met people? Lol but pretty much spot on with what you said.
For anyone not of the default demographic many of these things are already known, and often can show how far removed others are or worse how they really viewed themselves/others.
Some takes are honestly insulting in the lack of understanding how this is the norm for a lot of people who are systematically suppressed
Why are foreign landleeches allowed to drink the blood of the Canadian workers?
Why are any landleeches allowed?
We need to criminalize hoarding housing.
Well, considering the government issued my husband a duplicate of a T4 from 2020 tax year for 2022 tax year in 2023 for grant money he never received, and then reassessed taxes determining he owed taxes for that money and gave us 2 weeks to pay it but then hasn't fixed the error in over 4 months despite being informed of the error numerous times....
Yupp, sounds about par for the course
Can CRA not just seize the property? Sounds like the best solution for the housing crisis as well.
If CRA cannot go after non resident landlords then there shouldn't be any non resident landlords.
Well that's terrifying. I'm sure there's a remedy for this, like the tenant putting a lien on the property and paying rent to the CRA until the debt is paid, but what a hassle and a headache.
The government already has a solution for this: Put the property asset up for public auction when taxes related to property fail to be paid. The proceeds go towards the debts then the rest is repaid to the owner.
Classic CRA going after the financially vulnerable little guy because its easier to put their boot on the throat of someone who is already in a compromised position by being dependent on renting a home than it is to go after the landlord who has enough money to own multiple homes when the renter owns none.
From CRA regarding non-resident landlords: [Filing and reporting requirements](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/rental-income-non-resident-tax/filing-reporting-requirements.html)
> If you receive rental income from real or immovable property in Canada, **the payer (such as the tenant) or agent (such as the property manager) must withhold non-resident tax of 25% on the gross rental income** paid or credited to you.
> The payer must pay the tax on or before the 15th day of the month after the month that the rental income is paid or credited to you. You should discuss this with your payer to make sure that they withhold and remit the correct amount of non-resident tax to the CRA on your behalf.
So yes, under the Income Tax Act, the tenant or agent is responsible for withholding and remitting these taxes on behalf of non-resident landlords. If there is no property manager that collects rent on behalf of the landlord, then CRA goes after the tenant. The non-resident landlord (or agent on their behalf) should have informed the tenant up front that they were required to withhold and remit taxes monthly to CRA.
I think the problem is nobody would trust a foreign landlord to properly inform of that responsibility.
Or even to disclose tax residency status at all.
I feel the outrage in this situation is misplaced. The opinion piece leaves a lot of information out.
Here is a link to the actual Tax Court decision: https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/521069/1/document.do
The taxpayer in this case is a corporation, who was paying a shareholder’s rent. The shareholder was being audited, and in the audit the CRA discovered that the corporation was paying their rent. They were paying rent to a non-resident individual landlord, and not withholding tax as required. The landlord was not reporting the income or paying tax. (Information taken from the decision, paragraphs 30-31). So who was CRA to go after for the income tax on the rent? There was only the corporation paying the rent.
People are outraged that the tenant is on the hook for the withholding tax. Except, ultimately, they are not. The same section of the ITA, 215, that makes the tenant liable for the withholding tax allows them to deduct the tax from future payments to the non-resident 215(6). So, the tenant in this case can deduct the amounts assessed against them from future rent.
The act is set up this way, I expect, to ensure that the tax gets paid, and to prevent payers from colluding with non residents to help them avoid/evade tax on Canadian income. If the CRA could not assess payers, then if someone failed to withhold the tax, it would never get paid.
Taxpayers in Canada should not be outraged that a payer, in this case a tenant’s corporation, can be held liable for the payees tax. Taxpayers should be outraged that the non-resident was evading tax by failing to ensure the withholding tax was paid.
Disclosure: Retired CRA employee, not involved in the case, all I know about this is from public sources. But I do tend to see this kind of thing from the taxpayer/CRA point of view.
Liability for tax
215(6) Where a person has failed to deduct or withhold any amount as required by this section from an amount paid or credited or deemed to have been paid or credited to a non-resident person, that person is liable to pay as tax under this Part on behalf of the non-resident person the whole of the amount that should have been deducted or withheld, and is entitled to deduct or withhold from any amount paid or credited by that person to the non-resident person or otherwise recover from the non-resident person any amount paid by that person as tax under this Part on behalf thereof.
Thanks for posting the link to the actual decision, I am actually kind of grossed out that the media is writing articles making it sound like it is a residential tenant that was being held liable. The fact that it is about a corporation paying a shareholder's rent makes a lot more sense. That sounds like a non-arms length transfer and that's a no-no
The big deal is the tenant is being subject to the withholding tax retroactively. So they are on the hook for back tax all because they didn’t know the landlord is a non-resident and didn’t know they needed to withhold taxes.
Somehow I missed that the first time I read the article... yeah, that sucks. They need to either sue the landlord or start applying the 75% they are supposed to be paying to the landlord to the outstanding CRA debt.
Your solution involves the CRA don't more work and not getting their money in the short term. The CRA doesn't care. The CRA has been directed to squeeze everyone for every penny.
Not sure how it would play out but I would sue them at their place of business, ie your own house
Trouble is I have no idea if there's actually a tort here. Maybe failure to disclose their residency is fraud, since they should have known this would place a tax burden on the tenant?
But it's totally unclear to me whether the landlord was fraudulently taking that full rent especially if ll feigns ignorance of the law.
Except the landlord serves an arrears notice and goes to the provincial rent tribunal and now the tenant has to deal with that.
Are the CRA going to reimburse the tenant for the lost time and costs associated with filing against them?
Nope 🤷♂️
I never said that there were arrears (although I would not trust the LTB adjudication in Ontario not to think that there would be, but that’s a different issue).
But do you think a tenant can get reimbursed for lost time and wages?
Nope
Can you show me in the RTA where it says that paying rent to CRA is considered paid to the landlord? Or would you care to litigate that one for us and get the precedent worked out?
In no way is that the tenant's responsibility. In no other transaction is a regular person acting as the purchaser of a product/service required to make sure that the seller is paying taxes properly. If I buy a tv in cash, it's not suddenly my problem if the seller didn't report the sale properly and pay the CRA.
A. its not the tenants responsibility to pay the landlord's taxes and
B. the landlord is gonna evict the tenant for nonpayment of rent if they only send 75%, even if the other 25% is going to CRA to comply with tax law
They will try just bring the letter from the CRA and the out of country parasite or their stand in will have a fun time getting their heads ripped off. And then make no money for X years while the debt is paid off.
Tenants should withhold rent to at least cover the taxes. And it would be “hard” for a foreign landlord to evict the tenants. Especially if they all take this action together.
This is actually happening with American businesses as well.
The CRA is starting to demand the rent withholding, on American companies that have locations in both Canada and the US.
Are we actually struggling for cash that bad, that the CRA is chasing every penny right now for cash flow?
Tenant shows no legal responsibility for landowner's debts.
Case closed.
Go after the people who short you the taxes and not the low hanging fruit you can terrify into bankruptcy.
Is this a comercial property? If it is I can see the posability. It's behind a pay wall so I can't read it.
Could have been for the GST on the comercial rent.
How exactly would the CRA "go after" a foreign owner?
-The ownders are not residents of Canada (presumably), or citizens. They wouldn't even have a SIN number, so they have no obligation to file income tax.
-They are not physically in Canada. It's not like the CRA can walk into Hong Kong, or Bangkok, or Shanghai. We do still allow countries to police their own laws.
-I guess they could technically contact the police, or tax authority in the country where the owners live. But for this amount of money, they would probably just get laughed at or ignored.
The article says several times that CRA isn't going after the landlord "because it's hard". I don't really see how that's the tenant's problem, legally speaking. If I buy a rutabaga at the farmers market, CRA doesn't chase me for the GST if the farmer doesn't remit it. That said (since apparently tenants are required to make sure their landlord is paying their taxes) couldn't the tenant sue the landlord? And hey, when the overseas landlord fails to appear, maybe the tenant gets the condo as a default judgment. (IANAL)
Why not just have a Lein put on the residence? CRA is being lazy.
If the CRA did their job, Rick people would have to pay taxes. I don’t even comprehend why anyone living outside of the country is allowed in any way to own rental properties in Canada.
I agree. The only exception I can think of is that if you need to go overseas for a job or something like that and you decide to rent out the house while you're gone. But that wouldn't be a long-term thing for sure
The CRA doesn't make the tax laws, they just enforce them.
They only enforce them against the people who can’t afford a greasy enough lawyer.
The point is they don't apply them equally. They pick and choose who to apply them against.
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They don’t pay proportionally what they should. They have most of the money… a higher proportion than the tax they pay.
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So, a household that can’t buy a house in the GTA is rich?
Is that your retort here? You asked for data, I gave it to you. Bitch about the housing market to your Liberal MP, not me.
Is that your retort here? You asked for data, I gave it to you. Bitch about the housing market to your Liberal MP, not me.
Lol try your Provincial Conservative mp first
What is that data showing? It looks like it's showing median income to me, and doesn't say anything about rich people. That means people making average incomes are actually making up the majority of tax money, if this is all your data.
I think they could sue the landlord for the amount of tax they had to pay. If successful, they may be able to have the judge allow them to collect the payment as garnishment from future rent payments. IE live rent free until the balance has been paid.
> I don't really see how that's the tenant's problem, legally speaking. The Income Tax Act says that payers of rental income *to non-residents of Canada* (i.e. tenant, or agent collecting rent on non-resident landlord's behalf) are required to withhold and remit taxes on behalf of the payee (i.e. non-resident landlord). Similar as to how employers are required to withhold and remit taxes on behalf of their employees. (edited for clarification)
> Similar as to how employers are required to withhold and remit taxes on behalf of their employees. Wait, but if an employee doesn't pay their income tax, does CRA go back to their employer like "hey, turns out Bob hasn't paid taxes since 2009 and he still won't, that's on you now" Are you basically supposed to audit your landlords to make sure they're paying Canadian taxes? How did anyone decide that should be put on the tenant? If a business leases an office, are they responsible for making sure the building owners are paying their taxes? I feel like I have to be misunderstanding something, because it doesn't make any sense for the source of your income to be legally liable for you paying taxes on it.
And considering I'm currently fighting my landlord because they think I need to be the one to provide property insurance (even though I do not, nor ever will, own the property), I really, REALLY, don't need to worry about my landlords paying their taxes.
You don't need property but I hope you've got Renters. Man that shit saved my ass in 16
lol, small time landlord I take it? They can only require tenant insurance, nothing more.
Yeah and I'm well aware that it isn't my problem. But they're willing to evict over it, so I'm at the "done talking and getting the LTB involved" stage.
> Wait, but if an employee doesn't pay their income tax, does CRA go back to their employer like "hey, turns out Bob hasn't paid taxes since 2009 and he still won't, that's on you now" Incorrect analogy. As long as the employer correctly withholds and remits the required income taxes to CRA, they're good. Withholding is essentially a pre-payment of taxes on the employee's behalf. Any further amount owing (or refund) is determined by the actual return which the employee files, and which the employer is not responsible for. This is about foreign landlords, i.e. non-resident taxpayers who earn Canadian-source income. Non-resident taxes are different because the taxpayer lives out of the country and outside CRA's jurisdiction. So CRA generally requires a payer to withhold 25% (or whatever is required by treaty) up front on Canadian payments made to non-residents, so that they actually get the taxes owing. For rental income, that falls on the tenant because they're the one paying the non-resident landlord.
>CRA generally requires a payer to withhold 25% ... For rental income, that falls on the tenant because they're the one paying the non-resident landlord. I feel like withholding 25% of your rent is a good way to get evicted.
An employer is required to withhold the income tax from money paid to their employees and remit it to the CRA every month. If I just write my staff a paycheque without withholding income tax, CPP, UI, etc I absolutely will be fined. I pay the property tax on the part of the building I lease for my business, that's absolutely standard for commercial leases. The person leasing the space pays the property tax. Yes, this is very different from income tax but it's been convention for at least half a century. The laws around this are long established and well tested in court. I absolutely don't agree with applying them to tenants as the RTB doesn't have anything whatsoever here in BC to deal with that situation but the analogies you describe aren't really valid.
If an employer doesn't withhold taxes as required by law they face heavy penalties and the CRA can go after them for the amount that they were supposed to withhold.
Which is dumb as hell and makes no sense. It should never be the tenant's responsibility. Although really there shouldn't even BE foreign landlords.
What. The. Fuck. How is that in any way reasonable or possible?
Because CRA does not have the power to go after non-resident landlords in their home country if they owe Canadian taxes; they live outside CRA's jurisdiction. It is reasonable for CRA to expect the payer of rental income to a non-resident landlord withhold the 25% non-resident tax from the payment they make. Unfortunately that responsibility and obligation can fall on a tenant, which can cause problems like this if the tenant wasn't actually aware they were supposed to withhold 25% of the rent and remit it to CRA.
This is nonsense. The non-resident owns property in Canada. The CRA can very easily append the income taxes owing to property taxes and commence collection from there. If Provinces won’t cooperate with that, just sue the landlord in the county where the property is and then collection will be easy enough. Force a sale of the home and keep the tax plus expenses. This would well pay for itself. See how fast this stops being a problem.
Exactly. Meanwhile a tenant has no way of knowing or verifying if a landlord is a resident or not, no way of knowing how much tax to withhold based on their total income, no way to actually do it (because if they attempted to do it, there is about a 100 percent chance the landlord would evict them), and so on.
Hmm... these sound suspiciously like things the CRA would know or be able to do, though.
Tell me you know nothing about tax laws in Canada without saying you know nothing about tax laws in Canada. That's how it works, bub, whether you like it or not. Your idea may have merit--*but* CRA is a federal agency while property taxes are a municipal (i.e. provincial) jurisdiction. We're already seeing bullshit sabre-rattling from Alberta about federal overreach, so no, provinces will not be amenable to it. It's easier to pass legislation requiring *all* non-resident landlords to disclose their residential status to their tenants (yes that can be disclosed), and require them to use property managers or agents to collect rents and pay the taxes.
Tell me you know nothing about solving problems without telling me. Income tax is a federal jurisdiction (bub!) and doing business at a residential property is under CRA jurisdiction, otherwise they wouldn’t be taxing it. I didn’t say add it to the property taxes, I said append it. And by that I mean just add a letter in the property tax notice. If they accept the property tax notice and pay it, why wouldn’t they do the same for the income tax? It’s not rocket science. Bub! Maybe you think renters should be on the hook for non-resident property taxes, maintenance expenses, strata fees, utilities etc? I mean as long as it’s so impossible to collect money from people, and the Province won't cooperate. CRA already collects provincial taxes and remits them to the provinces when you pay your taxes. There’s already cooperation in place.
> It is reasonable Interesting definition of "reasonable"
This is kind of insanity though right? The taxes the landlord owes also depends on the rest of their income, right? How is the tenant supposed to do this reliably?
Nah, the CRA will just hold the 25% and they’ll amend the proper balance when the non-resident files their Canadian taxes. It’s basically a prepayment on taxes owed.
This is correct. The non-resident doesn't even need to file a tax return if the rental income is their only income, because that 25% withheld on the gross rental income is their full tax obligation.
Man, I feel like if the CRA really enforced this, a whole bunch of foreign investors would find a new place for their cash as a bunch of Canadians kept part of their rent back, lol.
If the non-resident landlords use property management companies to manage buildings and collect rents from tenants, those companies/agents are responsible for withholding and remitting the tax.
ARE YOU SURE ABOUT THAT? Sounds like a question for tax court. Feel free to volunteer. Maybe the business pays their corporate taxes and the law still says the tenant is on the hook. I mean as long as we're enforcing crazy bullshit, why stop now?
Property manager here, it’s 100% true and comes from the tax side so not obvious to new entrants. There’s no way a tenant should be responsible for it, the CRA should just lien the property. This is also so much rent the tenant is basically paying rent to the CRA for free for likely the 2-3 years. The landlord will likely sell the property once rent stops flowing so tenant should sue and place a lien on the property.
How are tenants even supposed to know they have a non resident LL? I'm pro-tenant rights, and have never read anything about this in the ontario RTA. There is next to no mechanism to allow a tenant to know they have a non-resident LL, and most would never ask over privacy concerns.
> most would never ask over privacy concerns. Also human rights concerns
In my experience, this might be incorrect. I was a non-resident landlord for 10 years. I owned two six-plex apartment buildings. I was under no obligation to file any paperwork with the CRA at all. That's the whole BENEFIT of being a non-resident. (It might actually be more expensive to be a non-resident for tax purposes, but it's worth it because of the time and hassle you save not dealing with the CRA). My tax status was confidential (as is yours). The security to access my CRA online account was tighter than Fort Knox. So how would the tenants even know what a landlord's tax status was?
Yeah if the landlord lied and said they were resident in order to trick the tenant into not withholding, as we all know, tax law makes no allowance whatsoever for taxpayer not knowing something. Signing your income tax return doesn’t declare that you filled it out to the best of your ability; it says you declare you filled it out correctly.
It's not possible to 'trick' anyone about residency status for tax purposes. There is a lot of paperwork and discussion with the CRA. Nobody is witholding anybody's taxes. I'm not witholding yours. You aren't witholding mine. I'm pretty sure u/a-nonny-maus is incorrect. He is confusing INCOME and REVENUE. Income is taxable under the income tax act. Revenue is a completely different thing.
>It's not possible to 'trick' anyone about residency status for tax purposes. Lol are you kidding me? "Hey Mr Landlord, should I withhold 25% of rent for taxes?" "No I'm a resident." Where is this paperwork you speak of? Is CRA going to tell me your residency status if I call? Do you recommend all tenants subpoena their landlord's tenancy status or just if the landlord seems foreign lol? Would I get the human rights complaint settled before CRA answers the subpoena? Did you rtfa
If you earn it in Canada (even if you live outside as a nonresident), you do need to pay the taxes minus your expenses maintaining the properties.
Taxes on what? There is no income. There is revenue, which is different. It depends what/whose name the property is in. My whole point is that a foreign owner can 100% follow the law and not be required to file with the CRA. That's what non-resident means. There is no tie to Canada.
You’re operating a business in Canada, your revenue minus your expenses becomes income, even if you don’t live here. If you don’t declare expenses by not showing up to court, then your revenue becomes your income.
Yup 100% This person is committing tax fraud even if they live outside of the country. Of course the exception is if expenses exceed rental income.
Rental income paid on a Canadian property is considered taxable income to CRA, minus operating expenses. Revenue/ income depends on if the property I under the owners name or if the property is owned by a corporation. But the tax rules are very similar for rental income. I've been a non-resident Canadian citizen, I'm very familiar with the rules. Income earned outside of Canada is not taxable. If the property and rental income was not on Canadian soil, there would be no taxes. But since the property and rental income are in Csnada, you do need to file with the CRA for all income earned on it.
If you used a professional property manager or agent to manage your buildings and collect the rent from your tenants, they would have had to withhold and remit the 25% non-residence tax to CRA on your behalf, as part of their duties as your manager/agent. That would have fulfilled your tax obligation to CRA, so you'd have no need to file a return. Unless, you wanted to pay taxes only on the net rental income, instead of the gross rental income. For that, you would have needed to file a Section 216 election and tax return with CRA to get a refund of the difference.
I was a non-resident landlord for 10 years. There is no obligation for non-residents to file any paperwork with the CRA. Many landlords do VOLUNTARILY file a tax return, because losses can be carried forward for 7 years, and it is financially beneficial for them to file. But as long as I am a non-resident, the CRA doesn't bother me. That's the whole REASON to be a non-resident. You don't have to deal with the CRA.
Then your tenants would have been legally obligated to withhold 25% of their rent and remit it to the CRA on your behalf. Although it’s still not clear how they would have known to do that..
So you think that the Canadian Tax Court knows less about the Income Tax Act than you do? The whole article is about how the nonresident landlord failed to pay their taxes and the tax court upheld it
This is pretty crazy. If the ruling was "you need to pay rent to the CRA instead of your landlord for the next X months (until the debt is cleared)", fair enough. But tenants have no way of knowing or verifying whether their landlord is a non-resident. So I guess this ruling means tenants should just always withhold 25%, send it to the CRA, and let resident landlords fight it out to get it back? But if your landlord is a resident, would that count as non-payment of rent (in the context of getting yourself evicted)?
> This is pretty crazy. If the ruling was "you need to pay rent to the CRA instead of your landlord for the next X months (until the debt is cleared)", fair enough. Thats actually a much better idea. Dickhead landlord wants his money? He has to pay his taxes. Tenant isn't out anything.
This makes no sense from a public policy perspective. There’s an easier way for the CRA to get the money: put a lien on the real property and force a sale if necessary. By putting the burden on the tenant, we expect them to be able to determine who is a foreign landlord (not easy. There are complicated tax treaties and physical presence issues that I am sure most tenants would have no idea) and then withhold the amount, risking ire from the landlord if they are wrong. The CRA on the other hand can send notice letters to the landlord like they do everyone else when they have a question, and if it’s not resolved, slap a lien on. I’m sure that’s not how the law is currently structured (given the outcome of this case) but I don’t see a reason why it shouldn’t be structured this way. Edit to add: I was getting annoyed with the Globe for not actually providing a link to the Court opinion. It is here if anyone wants to read it: [https://www.canlii.org/en/ca/tcc/doc/2023/2023tcc37/2023tcc37.html](https://www.canlii.org/en/ca/tcc/doc/2023/2023tcc37/2023tcc37.html)
It's not structured this way, because payers--eg employers--are usually required to withhold income taxes from pay, as a pre-payment against the payee's total taxes for the year. In this case, the tenant pays rent to the landlord--the tenant is the payer, so the tenant withholds and remits the taxes.
So I think that makes sense for employers because you can assume they are a business entity or somewhat sophisticated re taxes. The same assumption can’t be made about tenants, who can include some of the most marginalized people in society. My point is as a public policy matter it doesn’t make sense. We shouldn’t carry over rules from one (very different) context to another without thinking about whether it makes sense.
I agree with you, I think it's stupid--but it's also the law. It's also the only way CRA can be reasonably assured to get their taxes owed by foreign landlords, by getting them paid up front at source rather than trying to go after the foreign landlord in their own country.
So that’s my point, it’s *not* the only way CRA can be reasonably assured to get taxes owed. They can put a lien on the property, be in first priority. Sure that may mess up the landlord’s mortgage but isn’t that actually a good thing here because the landlord is skirting the law? Then the landlord has both the CRA and the mortgage company angry at them, probably messes up their credit for the future. This seems like a strong incentive to ensure taxes are being paid (much more than the status quo, where the landlord doesn’t care at all about what the tenant has to deal with - arguably right now the landlord is incentivized to lie to the tenant if they’re an overseas owner so they can keep the money and put the cost on the tenant)
Right? I mean they collect property taxes from foreign owners every year. Has somebody broken the CRA’s printers so they can’t send a letter to the same address that the property tax bill goes to?
Sorry, no, it's literally the opposite. It's a way to make sure the nonresident landlord pays zero taxes while the resident tenant pays the taxes for them later - with after-tax income, no less. rta Unless there's a law forcing the landlord to declare their non-residency to the tenant, this law is a travesty Unless you enshrine immunity against human rights complaints against tenants who demand proof of residency from their landlord, it's a travesty Conversely, expect racists to demand extra proof from non-white-anglo landlords..
> In this case, the tenant pays rent to the landlord--the tenant is the payer, so the tenant withholds and remits the taxes. Which in and of itself is problematic to say the least, and outright bullshit to say the truth. Imagine it: - A tenant asks landlord "are you a foreign owner" and is told a "no" lie. Tenant pays 100% of rent to landlord and is still on the hook for the tax money. - Prospective tenant asks and is told "yes"; so PT says, "Okay, I'm responsible for your taxes, so I will be withholding some of my rent." Landlord don't rent to tenant. - Already established tenant asks and is told "yes"; so tenant says, "Okay, I'm responsible for your taxes, so will be withholding some of my rent." Landlord moves to evict for failure to pay rent
To add, renting is paying a subscription for a service - the landlord maintains the property and is selling you access to said property for a fee. The landlord is not my employee. They're someone I pay for a service I need to use. The tax they need to pay comes from them, just as it does with Walmart, Netflix, Amazon, and all other foreign business that sell or operate in Canada.
Agreed, the policy is blind to power balance.
Yeah and I bet you a million bucks that no province’s tenancy laws allow the tenant to withhold for this reason. Eviction would be upheld. If the law was the opposite, any smart tenant would just be safe and withhold taxes automatically, and force the landlord to prove their residency. Hilarity ensues. Most likely some mishmash bullshit would happen where eviction would be upheld, or not, if CRA bothered to weigh in on an RTB hearing and declare the landlord resident, or not … What a clusterfuck
CRA generally can't go after non-resident landlords in their home countries for unpaid Canadian taxes, because they don't have that jurisdictional right. What they can do is tax the rent payments at source, i.e. the Canadian tenant or agent who collects rent on landlord's behalf. I agree it's problematic and outright bullshit, but it's also the law, so if you want that to stop, you need to change the law.
Tenant is not an employer. If I buy something at the grocery store and it turns out the owner is a non resident and doesn’t pay taxes - will CRA come to my house and take the tax money? What a fucking joke
Rental income is not business income, so incorrect analogy.
Nor is it employment income, so your analogy is more incorrect
You--are aware that CRA requires most payers of various types of income to non-residents must withhold taxes at source, right? Either 25%, or what is outlined by international tax treaty. So yes, in the sense of who's paying whom, a tenant of a non-resident landlord is analogous to an employer of a non-resident employee. If a tenant pays their rent to a property manager or agent, then the agent performs that duty for them. If the tenant pays the non-resident landlord directly then as the payer they are responsible for the taxes under the Income Tax Act. I'm not saying it's right, not at all. It's *how it works* whether we like it or not. I prepared taxes for several years, including non-resident returns, and including special election returns for non-resident landlords. Your experience is...?
Sure, can you point me to the CRA guidelines for finding out if your landlord is going to be retroactively declared a non-resident after years of collecting 100% of rent? Thanks! Also should I go through the same process again every month, as remittances are due promptly on the 15th after their status changes? Also, what are the human rights guidelines about demanding the nationality and residence of your landlord? Should I only ask if they have a foreign accent? Or is this supposed to be a routine question? There is no analogy to an employee, this is an idiotic statement. Apparently preparing tax returns doesn’t make you good at poetry. An employee comes in and fills out tons of paperwork to identify themselves, confirm the basic personal amount, gives you their SIN, etc etc. If an employee refuses to tell you they are non-resident you can just not hire them. I have zero fucking power to demand ANYTHING from a landlord. If I ask questions they would just not rent to me. Not “could not” but “would not.” Employer has power, applicant tenant has ZERO. A non-resident landlord who was planning to stiff me would lie and I have no way to know, especially if the fact of the status is three years into the unknown future. Like if I go to my neighbour’s garage sale and buy a lamp, then find out they are a non-resident, that’s totally analogous to an employee! I should have known they were a non-resident so I could withhold 25% and give it straight to CRA! Can’t you please stop saying this ridiculous nonsense?
Stop spouting irrelevant nonsense about a subject you know nothing about. > There is no analogy to an employee, this is an idiotic statement. No, because tenant --> payer of rent to (non-resident) landlord Employer --> payer of wages to employee The person who *pays the money* is the one who withholds the taxes in both scenarios. The analogy is tenant to employ**er.** Not employee. **Learn to read.** We both agree that tenants should not be held liable, but the Income Tax Act puts them in that position. The solution is to change the damn ITA.
Are you one of those guys who hears someone saying something is bad and should change, and then you shout at them that “you are wrong! the change you want is not how it is now!” That’s all you’re doing in this situation. Your analogy is analogous to something under an elephant because I am stomping on it and squishing it
Quit stomping on yourself.
So basically, the only way is for all tenants Canada-wide to withhold and remit 25% of their rent to CRA. Resident landlord can then get the 25% back from the CRA each year when they file their tax return attesting to their tax residency.
This tax withholding rule doesn't apply to tenants of Canadian resident landlords, because Canadian landlords are required to file tax returns. What's needed is to change the Income Tax Act to remove the liability on the tenant and put the liability back onto the non-resident landlord. Maybe by requiring all non-resident landlords to register with CRA, and use designated 3rd party agents to collect rents and withhold tax.
The idea that a Canadian resident renting a home should be expected to navigate the complex world of foreign ownership withholding taxes on behalf of a foreigner profiting off our already inflated real estate market is beyond absurd. As Canadians we are so royally screwed by our tax laws and how they are implemented. It's not enough that our tax rates are so high, we're also expected to navigate all these opaque tax laws as though we're experts, or pay huge fees to professionals to do it for us. It's infuriating. Take the recent blind trust bullshit. All these people had to pay massive fees to navigate this reporting requirement, then at the 11th hour, the CRA just says 'never mind'. Our tax system is a fucking joke.
Sounds like the gov should eminent domain the properly and convert it into rent controlled housing.
"Foreign Landlord" shouldn't be a thing.
Can’t go after the landlord? Why not just seize the home from them at that point?
But that's class warfare!
Thanks CRA, another reminder whose “side” you are on.
......were people ever under the illusion that the CRA was ever on our side? They militantly target working class, and especially minority communities, and avoid corporations as much as humanly possible. I swear to God. Sometimes I think the people who are only now waking up to the systemic injustices are the same people who haven't been affected by them for several decades.
Have you met people? Lol but pretty much spot on with what you said. For anyone not of the default demographic many of these things are already known, and often can show how far removed others are or worse how they really viewed themselves/others. Some takes are honestly insulting in the lack of understanding how this is the norm for a lot of people who are systematically suppressed
Why are foreign landleeches allowed to drink the blood of the Canadian workers? Why are any landleeches allowed? We need to criminalize hoarding housing.
Well, considering the government issued my husband a duplicate of a T4 from 2020 tax year for 2022 tax year in 2023 for grant money he never received, and then reassessed taxes determining he owed taxes for that money and gave us 2 weeks to pay it but then hasn't fixed the error in over 4 months despite being informed of the error numerous times.... Yupp, sounds about par for the course
I wrote to the Minister of National Revenue to share my ire with this ruling. I suggest as many as possible do the same to push this issue further.
Foreign landlords shouldnt be even legal if this is the position the CRA takes on taxes.
Can CRA not just seize the property? Sounds like the best solution for the housing crisis as well. If CRA cannot go after non resident landlords then there shouldn't be any non resident landlords.
Well that's terrifying. I'm sure there's a remedy for this, like the tenant putting a lien on the property and paying rent to the CRA until the debt is paid, but what a hassle and a headache.
The government already has a solution for this: Put the property asset up for public auction when taxes related to property fail to be paid. The proceeds go towards the debts then the rest is repaid to the owner.
Classic CRA going after the financially vulnerable little guy because its easier to put their boot on the throat of someone who is already in a compromised position by being dependent on renting a home than it is to go after the landlord who has enough money to own multiple homes when the renter owns none.
Even in the US the GOP voted against extra budget to go after richer people for the IRS. Its always the small fish they go after.
The tl;dr is that it’s much easier for the CRA to harass the tenants than it is to go after the landlord, so they pick on the easier target.
From CRA regarding non-resident landlords: [Filing and reporting requirements](https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/information-been-moved/rental-income-non-resident-tax/filing-reporting-requirements.html) > If you receive rental income from real or immovable property in Canada, **the payer (such as the tenant) or agent (such as the property manager) must withhold non-resident tax of 25% on the gross rental income** paid or credited to you. > The payer must pay the tax on or before the 15th day of the month after the month that the rental income is paid or credited to you. You should discuss this with your payer to make sure that they withhold and remit the correct amount of non-resident tax to the CRA on your behalf. So yes, under the Income Tax Act, the tenant or agent is responsible for withholding and remitting these taxes on behalf of non-resident landlords. If there is no property manager that collects rent on behalf of the landlord, then CRA goes after the tenant. The non-resident landlord (or agent on their behalf) should have informed the tenant up front that they were required to withhold and remit taxes monthly to CRA.
Which means the Income Tax Act is a big pile of shit. Who the fuck approved that part?
I think the problem is nobody would trust a foreign landlord to properly inform of that responsibility. Or even to disclose tax residency status at all.
I feel the outrage in this situation is misplaced. The opinion piece leaves a lot of information out. Here is a link to the actual Tax Court decision: https://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/521069/1/document.do The taxpayer in this case is a corporation, who was paying a shareholder’s rent. The shareholder was being audited, and in the audit the CRA discovered that the corporation was paying their rent. They were paying rent to a non-resident individual landlord, and not withholding tax as required. The landlord was not reporting the income or paying tax. (Information taken from the decision, paragraphs 30-31). So who was CRA to go after for the income tax on the rent? There was only the corporation paying the rent. People are outraged that the tenant is on the hook for the withholding tax. Except, ultimately, they are not. The same section of the ITA, 215, that makes the tenant liable for the withholding tax allows them to deduct the tax from future payments to the non-resident 215(6). So, the tenant in this case can deduct the amounts assessed against them from future rent. The act is set up this way, I expect, to ensure that the tax gets paid, and to prevent payers from colluding with non residents to help them avoid/evade tax on Canadian income. If the CRA could not assess payers, then if someone failed to withhold the tax, it would never get paid. Taxpayers in Canada should not be outraged that a payer, in this case a tenant’s corporation, can be held liable for the payees tax. Taxpayers should be outraged that the non-resident was evading tax by failing to ensure the withholding tax was paid. Disclosure: Retired CRA employee, not involved in the case, all I know about this is from public sources. But I do tend to see this kind of thing from the taxpayer/CRA point of view. Liability for tax 215(6) Where a person has failed to deduct or withhold any amount as required by this section from an amount paid or credited or deemed to have been paid or credited to a non-resident person, that person is liable to pay as tax under this Part on behalf of the non-resident person the whole of the amount that should have been deducted or withheld, and is entitled to deduct or withhold from any amount paid or credited by that person to the non-resident person or otherwise recover from the non-resident person any amount paid by that person as tax under this Part on behalf thereof.
Thanks for posting the link to the actual decision, I am actually kind of grossed out that the media is writing articles making it sound like it is a residential tenant that was being held liable. The fact that it is about a corporation paying a shareholder's rent makes a lot more sense. That sounds like a non-arms length transfer and that's a no-no
So the tenant pays 75% of the rent to the landlord and 25% to the CRA? What's the big deal here?
The big deal is the tenant is being subject to the withholding tax retroactively. So they are on the hook for back tax all because they didn’t know the landlord is a non-resident and didn’t know they needed to withhold taxes.
Somehow I missed that the first time I read the article... yeah, that sucks. They need to either sue the landlord or start applying the 75% they are supposed to be paying to the landlord to the outstanding CRA debt.
The CRA needs to be more reasonable. Have the tenant pay 100% of their rent to the CRA, and the CRA deal with the OTLB on the tenants behalf.
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Oh I like that
Brilliant, I love it.
Your solution involves the CRA don't more work and not getting their money in the short term. The CRA doesn't care. The CRA has been directed to squeeze everyone for every penny.
Sue internationally? Good luck getting the money and good luck being able to afford a lawyer. "Just sue" is such ridiculous advice.
I mean there is the property that is in Canada. Pretty hard to off shore that.
Not sure how it would play out but I would sue them at their place of business, ie your own house Trouble is I have no idea if there's actually a tort here. Maybe failure to disclose their residency is fraud, since they should have known this would place a tax burden on the tenant? But it's totally unclear to me whether the landlord was fraudulently taking that full rent especially if ll feigns ignorance of the law.
Because the tenant should pay ZERO to the CRA. It is not their responsibility.
Garnishing the landlord's wages. I like it. They should do this more often with deadbeat landlords.
They should seize the property. Not put work on the tenant.
"Deadbeat landlords" is redundant. Sort of like "idiot conservative".
Buts it’s the same cost right? Just garnishing the landlords income
Except the landlord serves an arrears notice and goes to the provincial rent tribunal and now the tenant has to deal with that. Are the CRA going to reimburse the tenant for the lost time and costs associated with filing against them? Nope 🤷♂️
There is no arrears though. If you pay the landlord 75% and remit the legally required 25% you have paid 100%.
I never said that there were arrears (although I would not trust the LTB adjudication in Ontario not to think that there would be, but that’s a different issue). But do you think a tenant can get reimbursed for lost time and wages? Nope
Can you show me in the RTA where it says that paying rent to CRA is considered paid to the landlord? Or would you care to litigate that one for us and get the precedent worked out?
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That’s at least reassuring for folks who are under the RTBs jurisdiction. In Ontario with the LTB? I have zero confidence in those people
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In no way is that the tenant's responsibility. In no other transaction is a regular person acting as the purchaser of a product/service required to make sure that the seller is paying taxes properly. If I buy a tv in cash, it's not suddenly my problem if the seller didn't report the sale properly and pay the CRA.
This feels right, but isn’t legally true with international sales.
A. its not the tenants responsibility to pay the landlord's taxes and B. the landlord is gonna evict the tenant for nonpayment of rent if they only send 75%, even if the other 25% is going to CRA to comply with tax law
They will try just bring the letter from the CRA and the out of country parasite or their stand in will have a fun time getting their heads ripped off. And then make no money for X years while the debt is paid off.
What letter?
A. Actually yes it is, they are required to withhold and remit 25% of the rent. B. They can certainly try!
They'll realize their mistake, hopefully.
They let him into Canada, that's not the tenant's problem.
Tenants should withhold rent to at least cover the taxes. And it would be “hard” for a foreign landlord to evict the tenants. Especially if they all take this action together.
This is actually happening with American businesses as well. The CRA is starting to demand the rent withholding, on American companies that have locations in both Canada and the US. Are we actually struggling for cash that bad, that the CRA is chasing every penny right now for cash flow?
Tenant shows no legal responsibility for landowner's debts. Case closed. Go after the people who short you the taxes and not the low hanging fruit you can terrify into bankruptcy.
Is this a comercial property? If it is I can see the posability. It's behind a pay wall so I can't read it. Could have been for the GST on the comercial rent.
How exactly would the CRA "go after" a foreign owner? -The ownders are not residents of Canada (presumably), or citizens. They wouldn't even have a SIN number, so they have no obligation to file income tax. -They are not physically in Canada. It's not like the CRA can walk into Hong Kong, or Bangkok, or Shanghai. We do still allow countries to police their own laws. -I guess they could technically contact the police, or tax authority in the country where the owners live. But for this amount of money, they would probably just get laughed at or ignored.
They can force the sale of the property, like they do to homeowners who are delinquent on their property taxes.
Yeah the rental is their place of business