National Revenue Minister Marie-Claude Bibeau rises during Question Period in the House of Commons on Parliament Hill in Ottawa on April 18.PATRICK DOYLE/The Canadian Press
The federal Revenue Minister is facing calls to formally amend a law to ensure that tenants are not on the hook for the delinquent tax bills of non-resident landlords.
Jessica Bell, who is the Ontario NDP’s critic for housing, says minister Marie-Claude Bibeau must go beyond a recent statement in which she insisted that tenants won’t have to withhold 25 per cent of rent from non-resident landlords, despite a court ruling obligating an individual to do so.
Ms. Bibeau’s comments Friday were aimed at cooling nerves raised by the case of David Siscoe, a Montreal gym owner found liable for the unpaid taxes of his landlord. She called his case an “extremely rare situation” and said the Canada Revenue Agency does not expect individual tenants to withhold rent from their landlords.
Specific tax rules apply to individuals who are considered non-residents, such as if they normally live in another country. Ms. Bibeau said she and Finance Minister Chrystia Freeland, who is responsible for tax policy, will work to clarify the law on withholding rent from landlords.
“I can assure Canadians that it does not, and will not, apply to them,” Ms. Bibeau said.
But Ms. Bell said Sunday that the federal minister’s comments are not enough to allay tenants’ fears. In a statement, she said it was Ms. Bibeau’s own ministry that defended the CRA’s ruling in court, forcing Mr. Siscoe to pay his non-resident landlord’s tax bill.
Ms. Bell said her office has received calls from some worried tenants. One said their landlord refused to say if they are a Canadian resident for tax purposes, and was advised by CRA to withhold a quarter of their rent and send it to the agency – but the landlord threatened to apply for eviction if they don’t pay the rent in full.
Last week, Ms. Bell wrote a letter to Ms. Bibeau and Ontario Housing Minister Paul Calandra, asking Ottawa to change the law and for the provincial government to block evictions for tenants who withhold rent for the CRA.
The CRA currently says on its website that tenants of non-resident landlords are expected to withhold a quarter of their rent and remit it to the CRA – and that has in fact been the letter of the law for decades. The site says that the “non-resident tax” is considered a tax obligation on a rental income.
“To properly protect renters, the CRA needs to reverse its policies, and the federal government needs to quickly repeal this fundamentally unfair law,” Ms. Bell said in her statement.
Mr. Siscoe, a Montreal tenant, said in an interview that when he signed his lease, his landlord listed an address in Pincourt, located west of Montreal Island. He deposited cheques in a Canadian bank. In 2018, the CRA told him he was being assessed for his landlord’s taxes.
He was then ordered to pay six years’ worth of his non-resident landlord’s withholding taxes. With compounded interest and penalties, the amount added up to about $80,000. In March, 2023, he took the Minister of National Revenue to Tax Court and lost.
He was, however, given a reduction in the number of years he owed for – down to three – leaving him owing around $43,000, in addition to the cost of his legal battle.
Asked about Ms. Bibeau’s statement over the weekend, Mr. Siscoe pointed to his case, saying, “I think I can state otherwise.” He hopes the minister’s comments mean the decision on his file will somehow be reversed. But he said that he’s “still on the hook” for now.
“I think the bigger picture here is to make sure that this doesn’t happen to anybody.”
When asked if the government is considering amending the law and if Mr. Siscoe will have his costs covered, a spokesperson for Ms. Bibeau, Simon Lafortune, said Sunday that the office will not be commenting any further on the court case itself.
Lawyer Michael Drouillard, a specialist in tenancy law and vice-chair of Landlord BC, said the minister’s statement is reassuring. But he said that, because of the state of the law, “it would take an amendment to the Income Tax Act expressly clarifying that the law does not apply to residential tenants to fully conclude the matter.”
With a report from Campbell Clark