Canadian renters are getting a rough introduction to the country’s foreign investor problem. The Canada Revenue Agency (CRA) just informed tenants they’re on the hook for any unpaid taxes their non-resident landlord may owe. In a bizarre decision, the nation’s tax authority is telling tenants who pay rent to non-resident landlords to withhold a portion and remit it on their behalf, or they may be liable for the amount with penalties. To complicate things further, one Ontario policymaker warns tenants that have inquired about withholding have been threatened with eviction.
Canada Tells Tenants To Withhold Rent From Foreign Landlords
Non-residents earning income in Canada are subject to a withholding tax, a general rate of income withheld to ensure the non-resident tax bill can be covered if they never file taxes. That includes any non-resident that receives rental income from property, and that withholding rate is generally 25% of the gross income. Not really surprising, since other countries also engage in this tactic.
What is surprising is the latest ruling, that requires the payer to submit those funds on behalf of their non-resident landlord. According to the CRA, a payer (tenant) or agent (property manager) must withhold 25% of the gross rental income paid or credited to the landlord, and then submit it to the CRA within 15 days after they’ve paid rent. In addition, the tenant of a non-resident is required to file an NR4 tax form.
If the payer fails to withhold, remit the amount, and file an NR4—they may be held liable. The CRA also threatens they may charge interest compounded daily, as well as additional penalties on top of the amount.
Ontario Lawmaker Warns Tenants May Be Threatened With Eviction
Sounds bizarre? It gets even more weird according to a provincial lawmaker in Ontario. MPP Jessica Bell warns that a lack of publicly accessible beneficial ownership registry means it’s entirely up to the property owner’s disclosure. That can be problematic, especially since the CRA deals at the federal level, but landlord disputes are provincially managed.
In an open letter to Ontario’s housing minister, MPP Bell outlines the hurdles a constituent faced navigating this situation. The CRA advised the tenant to withhold 25% of their gross rent if their landlord was a non-resident. However, the landlord refused to disclose their residency status. When the tenant advised the landlord they will be withholding the funds for the CRA, they were threatened with eviction via the provincial authority.
It’s hard to see a provincial court ruling over a federal tax ruling, but it’s also hard to see tenants being held responsible for paying their landlord’s taxes. This whole system is a mess.
In addition to the stress and frustration of doing their landlord’s taxes, renters may also be required to dispute an eviction. Even if things work out, it sounds like a strangely complicated way to deal with a relatively common issue.
Ontario NDP Wants Rule Changed, Tenants Protected From Liabilities
As wild as all of this sounds, it appears only the provincial opposition in Ontario has noticed (or cares). “The CRA should reverse its policy immediately, and not force tenants to pay their foreign landlord’s taxes or risk eviction, ever,” wrote MPP Bell in their open letter.
In addition to calling on the Federally-managed CRA to make changes, she also wants to see the province move to ensure these tenants are protected.
“The province should direct the Landlord and Tenant Board to deny any landlord’s application to evict if the tenant is being forced to withhold rent to pay their landlord’s taxes,” she noted.
Further adding the recommendation, “Ontario should establish a beneficial ownership registry so the identity of a property owners is part of the public record, and a tenant can easily know if their landlord is foreign or not.”
Canada needs to eliminate foriegn home owner rentals!
Limiting speculation to ones within our borders doesn’t really do much.
If the CRA wanted to pursue remedy, they could place a lien on the property for unpaid taxes. I don’t know how it’s easier or even legal to hold a tenant responsible for the unpaid taxes of the landlord, but this speaks volumes about how little the gov will do to upset real estate and how much they’ll push around a demographic that typically doesn’t vote.
What Canada need change people’s in gouverment who are insane 😳 property owners don’t have no more rights to their property ,tennants have their rights even they not on property title and tennants require pay landlord taxes 🤔 completely lunacy
This isn’t new. Had this happen to me in 1979 in London ON. The current government is not responsible for this policy, although I think it needs to be changed.
I could enumerate about 17 different ways in which this is just plain nuts. Surely the insanity of this will cause it to go away. This is even crazier than the blind trust debacle. Just to prove the point, here is a simple one. How do I figure out who has beneficial ownership of the property that I rent? Let’s lobby to fire whoever the idiot is who runs the CRA. Tell the CPAs to step up. And on and on.
Symbolic of just how far this gov will got to keep the real estate train going.
They would rather avoid upsetting foreign investors by pissing off renters they know have no capital or resources to fight them.
Its not a new law this has been around for long time even before this government.
Yes indeed. That’s what they been doing for years in Québec.
Should you have access to the tax assessment authority website in your province, type in the address of the property, obtain the PID (parcel identifyer) then search land titles and for $11 you’ll know the name, occupation and address of the owner. If the owner’s address is in Canada… you’re good to go and that means the financial institution is liable for mortgaging a person using an incorrect address….
Canada’s “emergency” spending is now just its regular spending and its desperate to recoup anything it can find.
It’s acting like that broke roommate you had in university that spent all their tuition funds on beer & fast food, and now needs to ask everyone to repay cash they didn’t borrow in hopes they forgot.
The CRA lost the plot. I seriously need anyone at the federal gov to try and defend this.
The same gov went through this bizarre cycle:
1. There’s no foreign buyers, racists liars are tricking you.
2. There are too many foreign buyers. We don’t know who they are.
3. Ban foreign buyers!
4. Quietly make exemptions, because we need them or no one will buy a home.
5. Foreign buyers won’t pay taxes, so the lowest income people are responsible for collecting it or it’s on them.
All within 2 years. Impressive!
Well said!
Absolutely correct!
True. I don’t understand why this mean and evil obsession against those poor foreign buyers from the liberals’ part ! Unbelievable, how far they will go to basically reject them from Canada in a very sneaky way, by taxing them to death and people who deal with them as if they were criminals. That is so Canadian… In the meantime, Canadians don’t care about invading other countries and that’s perfectly normal to them. Just double standards. All of that to gain a few votes. Then they complain the economy is not doing well. It’s basically self induced. Canada used to be a great country where everybody was welcome. Now, it’s just the opposite. How sad. People are leaving in great numbers and never coming back.
This whole system is a mess. Mess? Rilly?
Not at all, sorry.
System allowed money laundering thru real estate at first.
Now they want money and simplest option – force ordinary citizen pay for that.
It’s like gang wanted money from local business “for protection” but forces locals to bring that money.
This country is completely broken.
FUBAR.
It’s so strange how little coverage this story is getting. The Tax Court ruling was March 2023 and Kerry Gold in the Globe wrote about it last month. I sent it to a realtor friend and asked if she knew about it and she said “yes, we were all horrified when it came out last year.” But not horrified enough to talk about the implications publicly. Apparently you are safe if you pay your rent to a property management company because they are supposed to be trained in this angle and if they don’t withhold the tax bill sticks to them. At least BC has a beneficial registry but they need to make it free to the renting public. I also sent the ruling to 2 friends who are paying Chinese landlords from the mainland. Both landlords seem to have a BC addresses, but like the court case in question. that might be a relatives address. Most shocking was a BC Real Estate lawyer who said the CRA should be advised when a non-resident buys property. The fact that this isn’t being done is beyond belief. A joke and a mess. BTW, the tax bill in the case in question was $80,000.
The NR6 form and guide appeared back in 2017 as well. Kerry Gold is always a great and under appreciated source, especially on this end of the country since Vancouver seems to experience national issues ahead of the rest of us.
What triggered the sudden discussion over the past week is the minister in charge stating this is the expectation, and they don’t believe this issue impacts many people (though by their own admission, they still have no clue what who owns what and are still investigating).
Pierre Poilievre may have found his next issue.
Trudeau’s Canada :
– rolls out the red carpet for foreign money launderers
– viciously torments honest hardworking Canadian renters
What a shit show. the incompetence of this regime is matched only by the incompetence of his father’s regime…
100% true.
The rent peasant paying the foreign oligarchs taxes so that the foreign oligarch will become richer and buy more Canadian properties.
…is this satire?
More unbelievable is the government confirming this is the case, and hedging it with the statement it’s rare. About 2-3% of tenants impacted is rare enough for them to not care, it appears.
This is utter insanity because it essentially places renters in the position of a bank without any of the power or resources of a bank.
In Canada, for the same tax reasons as outlined in the piece above, banks are required to withhold a portion of dividend and interest payments on investment account holders who are non-residents. The CRA seriously expects low-income renters, single moms etc, to exercise the same authority on wealthy foreign landlords that banks exercise over non-resident account holders. This is asinine!
The last thing we need is another govt registry with all the expensive overhead that entails. Let the CRA slap an owner with a property lien, but why on earth would CRA make tenants responsible for someone else’s tax burden??? The Liberal lunatics really have come unglued.
Someone has to pay for all the subsidized EV battery plants.
force renters in home ownership?????
On the other hand, in a system where foreign landlords are almost untouchable, could this be a way or last ditch effort for CRA to get access to these landlords unpaid taxes by requiring the tenant not to pay their rent. Maybe this could work if provinces legal system and authorities are on board?
-don’t pay the rent
-no evictions are enforced
-force foreign landlord to the open, requesting help
-Canadian government requests unpaid taxes 1st,…then help
-landlord is forced to capitulate and/or sell…
-Tennent stays in home…
maybe possible????
Why not just seize the property in question?
We need to shore up the regulations that make foreign landlords untouchable. The U.S. Justice and Commerce departments have been hounding Canada for years on our lax laws that make us a “snow washing” capital. Putting the onus on tenants, many of whom are struggling, is unfair and cruel. I spoke last night with a Ukrainian I helped find housing last year. She rented a room in a large, once beautiful art deco home that is essentially close to being a slum. For $1000 per room plus utilities (they have to use space heaters since the heat in the house doesn’t work) I was embarrassed. I asked about her landlord whom they pay directly since I know he also owns the derelict houses next door. She said he works mostly in Taiwan but part time in Victoria. When I told her about this law she was confused and shocked. I may email my MLA to see if these tenants can get access to the BC beneficial registry.
Foreign property buyers have been manipulating the real estate game for decades with assistance from realtors, lawyers, notaries, charities and Banking institutions (e.g., TD Bank is being investigated for laundering $2 Billion). Some elected officials have been exposed for flipping properties, and they still hold federal office. The taxpayers are still paying their salaries and benefits and potentially an indexed pension sometime in the future.
Is there a registry where a tenant can access which contains the names of non resident owners of the property they are renting? If not, why should the Onus be tenant, unless the property owner confirms in writing that he or she is a non resident, to deduct the amount required.
There isn’t, even the gov can’t figure it out right now. That’s the wild part.
They’re finding out years later how many people left (nice population counts by the way), and then circling back to tenants.
Really they should be placing a lien on the property for any unpaid taxes.
Only BC has been trying to develop a searchable “beneficial ownership registry” but I think you have to pay to use it. Very troubling that in 2015 Trudeau promised to convene a meeting of provinces to shore up the loopholes in our financial and real estate industries including a beneficial ownership registry. But he did zip. The U.S. Depts of Justice and Commerce have been complaining about these loopholes for decades, meanwhile the snow washing continues. And now we’ve got politicians saying that tenants would never have to pay these taxes even as the CRA website said they would.
The NDP is useless and all talk ZERO ACTION. They’re the ones who also pushed above guideline rent increases in Ontario. This is all political theater, as usual
The CRA could hire some competent staff who are loyal to serve the taxpayer than keep those useless employees who are on their phones all day while piles and piles of applications are left at their desks.
This is not the case. The law is a century old, and the one case that made it to tax court is not changing the fact that no, renters do not have to do this.
https://globalnews.ca/news/10503736/tenant-landlord-tax-rules-cra/amp/
This is absolutely Ridiculous. If enough tenants are evictedid I can see some class action suits coming up against the government. Which in the end will cost all of us. I just hope the government opens their eyes and realizes what they are doing to the little people.
Crazy
Well this is just out their if I had to pay taxes on a place I’m renting from a Foreigner I guess that would make me part owner we lost are grandfathers Properly because of someone paying some taxes on place .They had the right to take over the land and place I’m so in Disbelief
This is totally False information! Last week the Canadian Gov commented on the issue saying that the CRA will not charge tenants for a foreign landlords lack of tax payment!
Please do your homework before putting out articles that are not true!!
Literally an email from the CRA sent to reporters last week stating that is the expectation.
https://x.com/jackhauen/status/1790796594561900633
Are you under the impression the CRA made new forms and hired enforcement officers just for fun? Goddam rubes.
This is not false, but it’s the politicians finally reacting to the huge blowback. The CRA website even confirmed a few weeks ago that tenants must verify this tax status info. My tenant who is a tax accountant said that the government is trying to minimize this while they fix it. Now it may be that not many tenants are being thusly assessed but the government needs to change the law to ensure it cannot happen. Actions are needed and not words.