Foreign landlord fails to pay taxes, CRA goes after tenant

Can't they put a lien on the big, solid, not going anywhere asset the landlord happens to have in the country?

I'd love to be able to grab these people who do these things, sit them down in a nice sterile nondescript room far away from their support structures that give them confidence to do or say stupid things without someone correcting them, and just ask them, in simple terms, why they believe their actions are appropriate, and try to give them an example of a thing they can do instead, that would be the smart thing to do from both financial AND pr point of view.

For this, the people who contacted the tenant. "why do you believe you should penalize the renter, and not the property owner who did the illegal thing?" and every time they start giving me some bullshit beurocratic answer, just treat them the way we would be treated. With hostility and contempt. "oh come on Derek, we both know that's a bullshit excuse. Come on Derek, I like you. I want to help you out here. I'm just looking for the truth."

Until finally someone cracks and admits they fucked up and we're too embarrassed to admit it so they would rather see someone's life get trashed than admit to an error that could potentially threaten their yearly review.

This may have gotten a little personal...

Justice served. This was probably one of those deadbeat renters that wasn’t even tipping their landlord.

So. The tennant now pays rent to the government for a year and a half to fix the landlords fuckup right?

If the tennant is required to withold tax and they didn't the tennant also paid a year and a half in advance too so they also get a year and a half rent free only having to pay 25% for taxes.

Right? That's what is going to happen right?

Landlords who evade taxes are some of the worst scum imo.

They're more than happy to charge people for using their things. They love that part. In fact, it's their favourite bit.

However, when a country comes along and says "yeah, so, about that whole charging people for using our stuff...thing" they'll act like they just asked to fuck thier mum.

Then they'll look you dead in the eye and claim its a moral issue, without a hint of shame.

If I’m reading this right, all Canadian renters should start withholding 25% or more of rent in order to protect themselves from this liability. Here’s why:

Not knowing a landlord is a non-resident is not considered a valid excuse.

If that’s true, then it appears a tenant is legally obligated to assume a landlord is a non-resident in the absence of proof to the contrary. And since this is a legal requirement and liability is on tenants, the minimum proof tenants accept should be sufficient to prove that status to the court (or at minimum, to release the tenant from liability).

My first question is: does the Canada Revenue Agency, or any Canadian government agency, for that matter, enable tenant to easily determine the residency status of their landlords for a given month? The article states determining a landlord’s tax residency is difficult, so I must assume it does not.

Ron Usher, long-time lawyer and general counsel for The Society of Notaries Public and visiting professor at Simon Fraser University … [said] “it’s breathtakingly difficult” to figure out if someone is a resident or non-resident.

“We’re talking about tax residency, not physical residency. They could be in San Diego, but they really are a tax resident, so there’s this complication.”

Lawyer Michael Drouillard, … vice chair of Landlord BC and specialist in tenancy law, … [suggests that] To protect themselves, tenants could start asking for statutory declarations from their landlords, attesting to their tax residency status … But the landlord could move out of the country and their status changes, and the tenant doesn’t know.

Would these statutory declarations be sufficient if they were found to be fraudulent? I’m no lawyer, but my guess would be that, given the precedent here, they would not release the tenant from liability to the CRA.

The tenant can only be relieved of this liability if a law / tax code provides that relief or if the CRA provides it. Therefore, in the absence of a procedure that a tenant can follow, the tenant would need to submit the statutory declarations to the CRA and receive confirmation that the CRA accepts them as genuine and further, that if they are found to be fraudulent, the tenant will nonetheless not be held liable.

This would also be true in situations where a property manager who ensures the withholding is handled properly is part of the equation. If the property manager were to improperly withhold these funds, i.e., by embezzling them and then leaving the country, would the tenant ultimately be liable to the CRA? As a tenant, the assumption must be yes until provided assurances by the CRA to the contrary.

As such, it appears that, to account for this liability, all tenants in Canada should start withholding 25% of rent until the CRA releases them from liability for these withholdings. Tenants who have been renting a property for multiple years and who have not received documentation sufficient to eliminate this liability should withhold more than 25% rent - up to 100% - until they have as much withheld as they could possibly be liable for. Of course, once relieved of this liability, the tenant must remit those withheld funds immediately. It’s unfortunate that the CRA has made it so difficult to be certain that you’ve been relieved of this liability, though - I believe it would require a statement by CRA to this effect. E.g., the tenant might be provided proof (verified by the CRA) that withholdings are not necessary or that they have been received for a given year.

To be clear, the portion of rent the tenant withholds is not in addition to rent paid, but is instead of that rent paid, as this liability is first by the landlord. The tenant is simply doing this to protect the landlord and themselves. It is a legal requirement, after all.

I don’t believe an escrow account is required, but tenants should confirm that themselves. My recommendation would be to store the funds in a dedicated high interest savings account.

Also, unless provided assurances from the CRA to the contrary, a tenant would need to resume withholding rent every year. Tax residency status can change on a yearly basis, after all. That’s assuming residency status is determined in advance - if it’s determined after the year is finished, then tenants would be best advised to always withhold 25% of rent and to only remit those funds once they receive confirmation that their liability has been eliminated.

required to withhold and remit 25 per cent of the rent

Is this normal in Canada?

So, avoid moving to Canada. Got it!