Sometimes in politics, a problem comes like a thunderbolt out of the blue, and in those cases you can at least sympathize when a government is caught utterly wrong-footed. Agree or disagree with how different governments handled the COVID-19 pandemic, for example, but you can at least concede that they were mostly improvising in the face of rapidly changing and often unknowable facts. Some problems, though, start off small but build slowly over a period of weeks, months, or even years.
That seems to be the case for David Siscoe, a former Olympian and commercial tenant in Montreal and the protagonist in one of the more absurd recent examples of Canada’s real-estate policies in action. Siscoe discovered that the landlord he’d been paying rent to for years was not a Canadian resident. That wouldn’t normally be a big deal, except that he discovered it only when the Canada Revenue Agency audited him in 2018 and demanded that he pay years of back taxes that his landlord had declined to.
The case was heard by the Tax Court of Canada. In a March 2023 decision, the judge sided with Siscoe’s landlord and the CRA, saying that the language of federal law left no room for interpretation: a century-old provision in the federal income-tax act (going all the way back to when income taxes were still novel, having been adopted to fund Canada’s participation in the First World War) requires tenants to collect the taxes on behalf of their non-resident landlords. It’s precisely the kind of law you’d imagine seeing in a country that had only recently dropped property requirements for voting. In any case, nothing in the law gives tenants any kind of relief on the grounds of, for example, having no idea their landlords are non-residents.
The law is a century old. Siscoe’s case has been going on for years. But tenants could be forgiven for having had no idea that they were theoretically on the hook for their own landlords’ taxes until Siscoe’s story blew up in the news in recent weeks. A cursory search of message boards like Reddit reveals evidence of a number of Canadian tenants understandably losing their minds because of the uncertainty Siscoe’s case has created. Is your landlord a resident? Are they paying their taxes? How could you even know? It took the federal Liberals weeks to respond, first with a non-responsive statement to media and, eventually, with something more substantial.
“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,” Marie-Claude Bibeau, the federal minister of national revenue, said on Twitter last week.
Well, except for poor Siscoe’s case, where the CRA very much was trying to collect taxes from an individual tenant. And whatever the minister may tweet, the law says what it says, and the federal court has ruled on what it means, and both of those things carry a great deal more weight than even the most focus-grouped social-media post. The very prominence of this story suggests that Ottawa could have a bigger problem on its hands in the future: after all, every non-resident landlord who can read a newspaper just learned that some of their taxes are basically optional in Canada.
Whatever the justification for this section of tax law was in 1923, times have changed, and governments have plenty of other options to deal with delinquent foreign landlords. It’s well established that governments can put liens on property or even seize it outright for tax delinquency. Provinces could go further and impose restrictions on foreign landlords who need to access things like the services of a sheriff for eviction. In a globalized world, non-resident landlords are just going to be a policy problem to solve, unless we want to go the route of Prince Edward Island and strictly control any kind of non-resident property ownership. But it’s absurd to have a situation where landlords can functionally offload their tax liability onto tenants.
Housing policy is often hard: it requires working across multiple different jurisdictions with competing interests and somehow trying to get a coherent result. This, however, isn’t one of those cases. This is an area of sole federal jurisdiction — it’s a question of how the national tax collector interprets federal income-tax law. And the situation still cries out for a solution more durable than a tweet.
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