Achi news desk-
David Siscoe has some advice for fellow renters across the country: get proof that your landlord pays their taxes, or at least make sure you have a responsible property manager.
Mr. Siscoe is the Montreal tenant who was audited and assessed by the Canada Revenue Agency in 2018 and ordered to pay six years of his non-resident landlord’s withheld taxes, as recently reported by the Globe and Mail. Mr says Siscoe who did not know his landlord was non-resident.
He also did not know that tenants renting from a non-resident are required to withhold and return 25 per cent of their rent to the CRA each month, unless they have a property manager do so on their behalf, or if the non-resident has done so. alternative arrangements to pay their taxes.
“How come there is no responsibility on the CRA to make sure tenants are aware of this?” he asks. “I had no idea.”
The CRA had been unable to collect from his foreign landlord. He was then assessed for the unpaid withholding taxes, as well as compound interest and penalties that added up to about $80,000, he said. In March, 2023, he took the Minister of State Revenue to the Tax Court and lost.
Foreign landlord fails to pay taxes, CRA goes after tenant
The only break he was given was a reduction in the number of years he owed, from six to three. He says he now owes about $43,000, although he believes more interest and penalties have accrued since then. And he has already paid almost double that amount in accounting and legal fees.
Mr. Siscoe and his wife pay nearly $3,000 a month in rent for 501-4175 Rue Sainte Catherine ouest, in Westmount, Que., a suburb of Montreal. Mr. Siscoe is a 1988 Canadian Olympic athlete and two-time taekwondo world champion who owns a gym.
The 61-year-old said he had still not settled his debt with the CRA, and his lawyer told him it was unlikely they would be willing to negotiate.
“They acted like a dog on a bone,” he said of his initial communication with the tax agency. “They went on to suggest that we were deliberately paying money to a non-Canadian resident, and I was a bit surprised.”
“I said, ‘You’re trying to imply that I deliberately paid her 100 percent of the rent because I wanted to be a burden on her tax obligations? Is that what you are trying to suggest?’ I felt this was a joke somehow.” Mr explained. Siscoe says he has rented unit 501 for more than 20 years, going back to 1996. He says the landlord told him in 2010 to start making the rent payments to his sister. The new lease agreement had a Montreal address on it, and he had not paid attention to the fact that the new landlord had signed the document in Italy, he said. Mr said. Siscoe said she visited the flat a few times over the years, and it was only after it was inspected that she discovered she lived in Italy. After he realized he was on the hook for his tax bill, he and his wife and children moved out of the unit a few months later.
Mr. Siscoe for sharing his landlord’s contact information for this story, on the advice of counsel.
After the Siscoe family moved out, they heard that the former landlord had put the condo on the market, and informed Mr. The CRA said they had an opportunity to collect the taxes she owed. It was not known if they were trying.
In court documents, Mr. Siscoe that his landlord put a Canadian address on the deed of sale when he bought the unit; she had a Canadian social insurance number; and her rent checks were going to a TD Canada account in Montreal.
Also in court documents, the CRA provided evidence showing that the landlord had not filed income tax returns; she had no ties to property in Canada other than the rental unit; her leased telephone number was an Italian telephone number; she had used an Italian email address to correspond with Mr. Cisco; and she had told the CRA auditor that she lived in Italy.
Withholding tax has been around for decades. The problem for tenants arises when a non-resident landlord does not pay. And non-residential properties represent a significant portion of the secondary rental market in Canada.
Considering the risk to tenants – in the midst of a housing crisis – Mr. Siscoe wonders why CRA did not issue a lien against the rental property, or at least act to collect the debt when the property was sold.
Mr. Siscoe’s lawyer, Mr. Luu, that all the CRA has to do is establish liability to collect on the debt, and he said there doesn’t seem to be a guide on how they do that.
“Whether the CRA could have collected the rent in some other way does not affect its liability under the law. The CRA and the Tax Court must apply the law as it is written.
“That’s why if we want any meaningful change, we need to change the law and it’s up to the Department of Finance to step in.”
In an emailed response, Caroline Theriault, deputy spokeswoman and media relations manager for the Department of Finance, said the renter requirement helps ensure CRA gets information about rental income that non-residents may be earning in Canada. It also “helps to facilitate the collection of the resulting tax,” he said.
“This does not cost renters anything,” Ms Thériault said, adding that it was standard practice.
A CRA spokesperson said in an email that they encourage non-resident landlords to hire property managers. Otherwise, tenants are required to withhold the amount and complete Form NR4.
“If the non-resident fails to meet a remit, the tenant is responsible for the full amount,” the statement said.
CRA practice is to “make every effort” to assess the non-resident owner rather than the individual tenant.
The agency pointed to a legal website that offered tips on how renters can protect themselves, including a land title search on the landlord, asking the landlord for a certificate of occupancy, writing an indemnity clause in the lease agreement, and being watchful any requests to redirect rent payments to someone else.
Adam Chambers, the Conservative shadow Minister for National Finance, who oversees the CRA, took issue with the policy and called the CRA’s response “brutal measures in the tax code that penalize renters who have done nothing is unfair.”
Real estate lawyer Ron Usher, who is general counsel for the BC Association of Notaries Public, where one in 10 new condos is owned by a non-resident, says a clearance certificate from the CRA must be obtained for every sale by a non-resident. tax.
“Until CRA provides it, the notary will hold the amount in trust.”
To prevent Mr. Siscoe’s situation, he suggests a system where the CRA is notified of any tax-free real estate purchases. At that point, CRA would send a notice of tax liabilities to the buyer and issue an individual tax number if they are not eligible for a social insurance number.
Mr. said Siscoe said he was doing his best not to dwell on the situation. But he wants Canadian renters to be wary.
“Don’t get me wrong. If I was angry I could change the outcome, yes, I would be angry. But I’m not going to let them take more from me than they have,” he said.
“As an athlete, I spent my career traveling the world, holding the flag of my country … but your own country can say, ‘Let’s screw it over.'”
He and his wife are renting another place, but this time it’s different.
“Immediately I said [to the landlord]’I need to know that you pay your Canadian taxes, and I need it in writing.’”
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