Foreign landlord fails to pay taxes, CRA goes after tenant
www.theglobeandmail.com
A Montreal tenant was audited and ordered to pay the tax he had failed to withhold on the monthly rent to his non-resident landlord

Absolutely insane ruling but unsurprising that the government would fuck over renters in yet another way. They say it's the tenants responsibility to know if their landlord resides in another country and to plan for that. This is just going to incentivize foreign landlords to not pay taxes and pushing all the responsibilities onto the tenant.

Real back to colonial absentee landowners vibes

  • glans [it/its]
    ·
    8 months ago

    [43] With respect to the penalty imposed in this matter, I agree with the Appellant that a defence of due diligence is available but, of course, that defence has to be made out. The Appellant has not proven that it has exercised reasonable care to ensure compliance with its obligations. The courts have found that to be successful in mounting a defence to the imposition of a penalty, it is expected that the taxpayer seeking to invoke a due diligence defence must show that they exercised a high degree of diligence to comply with their obligations under the Act (see for example, Ogden Palladium Services (Canada) Inc v R, 2001 DTC 345). In the circumstances of this case, the Appellant took no steps to ensure compliance with its withholding obligations. Counsel submitted that the Appellant was justified in not taking steps to ensure compliance because it had no reason to believe that Sebastiana Trimarchi was a non-resident. Unfortunately, that is not enough to meet the standard of a high degree of diligence. I therefore find that the Minister was justified in assessing the penalty pursuant to section 227(8) of the Act.

    • glans [it/its]
      ·
      8 months ago

      2001 CanLII 483 (TCC) | Ogden Palladium Services (Canada) Inc. v. The Queen | CanLII

      I ctrl-F skimmed the reference, here is what I think is the relevant bit

      hidden because it's too in the weeds

      [41] The issue then becomes one of whether the appellants can positively prove that all reasonable care was exercised to ensure that errors not be made (see Pillar Oilfield Projects Ltd. v. The Queen, [1993] G.S.T.C. 49 (T.C.C.)). This Court has said that a taxpayer is expected to comply with the requirements of the Act with a high degree of diligence, using the sources of information, facilities and resources available to that taxpayer. (See Bennett v. The Queen, 96 DTC 1630 and Somnus Enterprises Ltd. v. The Queen, [1995] G.S.T.C. 4.)

      [42] In the present case, I agree with counsel for the respondent that the appellants did not produce any evidence as to the steps they took with respect to their withholding obligation. Counsel for the appellants contended that the appellants had obtained advice from their professional advisors and that the appellants were justified in believing that no tax was payable by Marco just on a common sense interpretation of the Licence Agreements.

      [43] I wonder why those agreements were not filed in evidence if counsel wanted to rely on them to invoke the due diligence defence. Certainly, without having those agreements in evidence it is very difficult for me to evaluate the correctness of the interpretation put forward by counsel for the appellants.

      [44] Furthermore, no evidence was adduced other than the Agreed Statement of Facts. I do not see in that Statement anything to the effect that the appellants consulted professional advisors before making their decision not to withhold any amount on the payments made to Marco. There is no evidence before me regarding what the appellants did once Marco's request for a waiver was denied.

      [45] The appellants, as payors, had a duty to ensure that they had fulfilled all their obligations under the Act. I see no evidence showing that the appellants took any action in that regard. The fact that Marco had obtained a waiver in the previous year is not a valid defence, as a non-resident is required to make such a request in advance of the payment to be received. It is the Minister who has the authority, pursuant to subsection 153(1.1) of the Act to reduce the required withholding under section 105 of the Regulations.

      [46] It is only upon receipt of a waiver that a payor is released from the obligation of withholding an amount from payments made to a non-resident. Without such a waiver, the payor's obligation must stand. The burden remains on the non-resident to show that no tax is payable in Canada and to request a refund, if any is due.

      [47] For all these reasons, I am of the opinion that the appellants did not discharge their burden of showing that they exercised due diligence. The penalties shall therefore be maintained.

      [48] The appeals are dismissed, with costs.

      Signed at Ottawa, Canada, this 12th day of March 2001.

      "Lucie Lamarre"

      J.T.C.C.