He wonders how many non-resident landlords are not paying the tax. “How many tens of thousands of situations are there where this isn’t being done? The exposure to tenants is enormous. … I think the story at this point is that it’s weird, it’s amazing, and it appears to be the law.” He added that “it’s breathtakingly difficult” to figure out if someone is a resident or non-resident. “We’re talking about tax residency, not physical residency. They could be in San Diego, but they really are a tax resident, so there’s this complication.” Lawyer Michael Drouillard is vice chair of Landlord BC and specialist in tenancy law. Mr. Drouillard said he knew about the potential for tenant liability long ago when he was a property manager, but he was still surprised to see a tenant held liable. “I’m surprised to see that they actually did this in the context of a residential tenancy,” he said. “I just don’t think it’s very nice for CRA to pursue a residential tenant who has no idea. You’re not told at any time that you have this lingering liability, and [are held to] this high degree of diligence. “How can you expect that of a residential tenant?” he asked. “They have enough things to figure out. They don’t need some potential massive tax liability that they weren’t even aware of.” The government considers a person a non-resident if they reside in Canada less than 183 days out of the year, or does not “ordinarily” reside in Canada. Generally, non-residents are subject to tax on income earned in Canada, including rental income. On the government of Canada website, it states: “To make sure the correct amount is deducted, it’s important to tell Canadian payers [such as renters] that you’re a non-resident for income tax purposes.” Tenant Mariana Makulkina, who found her apartment on Facebook Marketplace, says she only learned that her landlord lived overseas when she did her own research. She has a property manager, but without that third-party protection, she wouldn’t have known to ask her landlord when she signed the lease. Also, what landlord wants to be asked if they are paying taxes in Canada? “It was never brought to my attention, and I could almost guarantee that nobody would know about that,” said Ms. Makulkina. Property manager Donald Mackenzie, of Bodewell Rental Property Management, said his company routinely files remittances for their non-resident landlords, which make up about 10 to 15 per cent of his clients. However, he has had the occasional non-resident say that they did not want to pay the tax. “And then I say, ‘I don’t want to work with you.’ It’s that simple. But most owners will say, ‘make sure we are compliant.’” However, Mr. Drouillard wonders why there isn’t more upfront clarity for tenants, who are often desperate to find an affordable apartment and who might not have a clue that their landlord is living outside Canada. To protect themselves, tenants could start asking for statutory declarations from their landlords, attesting to their tax residency status, said Mr. Drouillard. But the landlord could move out of the country and their status changes, and the tenant doesn’t know. B.C.’s residential tenancy agreement forms do not ask landlords to provide proof of their residency status. But when a homeowner sells a property, they must state their tax residency. That’s intended to protect the buyer from liability in case there are outstanding taxes owed. Tenants should have that same protection. “In the context of a housing crisis, making them also investigate the residency status of their landlords?,” said Mr. Drouillard. “I’m not saying that that’s not the law, and the tenant has to be careful of that. The question is, is this the right thing for the CRA as a matter of policy to be doing?” The CRA did not respond to requests to comment.
