In the case of 792391 Canada Inc. v The King (2023 TCC 37), the Tax Court of Canada
determined that under Part XIII of the Income Tax Act (ITA), a
tenant is liable for failing to withhold taxes on rental payments
made to a non-resident landlord, even if the tenant was unaware of
the landlord's non-resident status for Canadian tax purposes.
This ruling underscores the importance for tenants to verify the
residency status of their landlords from the outset to avoid
significant tax liabilities.
In this case, the Appellant, 792391 Canada Inc, entered into a
lease agreement for commercial property with Anjar Investments Ltd
in May of 1996. Subsequently, without the Appellant's
knowledge, Anjar sold the property to Trimarchi in 2006. The
Appellant, oblivious to the transfer, signed a three-year lease
with Trimarchi as the landlord in 2010. Consequently, between 2011
to 2016, the Appellant paid rent to Trimarchi without withholding
the requisite Part XIII tax. The Appellant
