Feds offer clarity on rent ruling after Ontario Housing Minister, MPP raise concerns

The Canadian government says it does not intend to collect ”any portion” of a non-resident landlord’s unpaid taxes from tenants after a recent court ruling prompted Ontario's Housing Minister to request a review of the current laws.

“I want to reassure Canadians that the Canadian 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,” Minister of National Revenue, Marie-Claude Bibeau, wrote in a statement on social media.

A day earlier, Ontario’s Minister of Housing and Affairs, Paul Calandra, penned a letter to Bibeau, urging her to address recent concerns from tenants over a recent ruling at the Tax Court of Canada. In it, the court dismissed an appeal by a Montreal tenant after the Canadian Revenue Agency (CRA) turned to him to pay his landlord’s unpaid taxes.

Under Canada’s Income Tax Act, non-resident owners are taxed on any property income collected from Canadian residents. If an owner doesn’t pay those taxes, however, the onus shifts to the residents to withhold and remit the tax from their rental payments, the act states.

When the CRA came after the Montreal tenant, his landlord, seemingly residing in Italy at the time, hadn’t paid the relevant tax in five years, the ruling reads. The tenant appealed the order to pay, arguing he hadn’t known where his landlord lived; however, the court ruled there’d been sufficient evidence to support the landlord had been living in Italy in recent years. The tenant’s appeal was dismissed and he was ordered to pay the owed taxes.

The decision stirred confusion for some tenants. On Wednesday, a day before Calandra's letter, MPP Jessica Bell told members of the Ontario legislature she’d been contacted by a concerned tenant who’d heard of the ruling and withheld a portion of their rent as advised. They were in turn threatened with eviction, she said.

“This is unfair—no tenant should risk eviction because their landlord fails to pay their tax bill,” Bell said, urging the province to protect tenants from eviction in such cases and the CRA to change the rule altogether.

In Bibeau’s statement on Friday, she called the Montreal tenant's case an “extremely rare situation.”

“This law has existed for nearly a decade and there is not a single case of an assessment made to an individual tenant in the last decade,” she said. “The CRA does not expect residents to withhold 25% of the rent from their landlords.”

Bibeau said she is reviewing the legislation with the assistance of Minister of Finance Chrystia Freeland, but that in the meantime, she assures Canadian residents that it “does, and will not, apply to them.”