The Montreal apartment building where David Siscoe lives. Mr. Siscoe, the owner of a gym, lost a court case to Revenue Canada and was ordered to pay his landlord's taxes.ROGER LEMOYNE/The Globe and Mail
After a controversial decision forcing a Montreal renter to pay tens of thousands of dollars he failed to withhold from his landlord, the federal government now says it will not go after individual tenants for taxes owed by non-resident property owners.
In a statement posted on X, formerly Twitter, on Friday, Minister of National Revenue Marie-Claude Bibeau said the Canada Revenue Agency (CRA) “does not intend to collect any portion of any non-resident landlords’ unpaid taxes from individual tenants.”
“It is incorrect to state otherwise,” she said.
Yet, that is what happened to David Siscoe, a Montreal tenant who was audited and assessed by Canada Revenue Agency in 2018 and ordered to pay six years’ worth of his non-resident landlord’s withholding taxes, as reported by the Globe and Mail in April.
Asked about Ms. Bibeau’s statement, Mr. Siscoe pointed to his case, saying “I think I can state otherwise.”
Mr. Siscoe said at the time that he did not know his landlady was a non-resident.
He also didn’t know that tenants renting from a non-resident must withhold and remit 25 per cent of their rent to CRA each month, unless they have a property manager doing it for them, or if the non-resident has made alternate arrangements to pay their taxes.
The CRA had been unable to collect from Mr. Siscoe’s overseas landlord. He was then assessed for the unpaid withholding taxes and compounded interest and penalties that 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, from six to three, leaving him owing around $43,000, in addition to the cost of his legal battle.
The case caused widespread shock and worry among tenants that they might be unwittingly on the hook for their non-resident landlords’ unpaid taxes – a status they might not even be able to confirm.
In a letter to Ontario Minister of Municipal Affairs and Housing Paul Calandra and Ms. Bibeau earlier this week, MPP Jessica Bell, the Ontario NDP’s housing critic, said her office has been receiving phone calls from worried tenants.
In one instance, she said, a tenant whose landlord refused to say whether they were non-resident threatened to evict the tenant if they withheld 25 per cent of their rent for the CRA. Meanwhile, the CRA also declined to confirm the landlord’s status and told the tenant they could charge interest and issue fines if they failed to withhold taxes and the landlord was foreign.
The CRA “should reverse its policy immediately, and not force tenants to pay their foreign landlord’s taxes or risk eviction, ever,” Ms. Bell wrote.
In her Friday statement, Ms. Bibeau called Mr. Siscoe’s case “an extremely rare situation.”
“This law has existed for nearly a century, and there is not a single instance of an assessment made to an individual tenant in the last decade,” she said, adding that the CRA “does not expect individual tenants to withhold 25 per cent of the rent from their landlords.”
Lawyer Michael Drouillard, a specialist in tenancy law and vice-chair of Landlord BC, said in an e-mail Saturday that the minister’s statement regarding the government’s current policy is reassuring. But 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,” Mr. Drouillard said.
Ms. Bibeau said she is working with Minister of Finance Chrystia Freeland “to provide absolute clarity on the law and to ensure that tenants have the certainty they need.”
She added: “I can assure Canadians that it does not, and will not, apply to them.”
Mr. Siscoe hopes this means the decision in his file will somehow be reversed, but for now, “I’m still on the hook,” he said in an interview Saturday.
More importantly, “I think the bigger picture here is to make sure that this doesn’t happen to anybody,” he said.