Tenant forced to pay landlord's income taxes | Hacker News Reader

Tenant forced to pay landlord's income taxes

theglobeandmail.com

"they were a Canadian resident paying rent to a non-resident landlord, and were therefore required to withhold and remit 25 per cent of the rent to the CRA."

Well, good to know.

Yeah, I'm a Canadian and I didn't know this. Seems like it shouldn't be the tenants problem to know if the landlord is a resident or not.

Perhaps not entirely in scope for HN, but I had never heard of such thing before. This was in Canada, does the US have similarly absurdly unfair tax codes?

I know it is the same if the UK. If the landlord is not resident and bit registered with tax authorities then tenant or agent must withhold 20% tax from rent.

I had no idea about this. It's so backwards!

Does that mean if I'm a tenant I need to keep track of my landlord's residential status?

Say I was aware of this regulation. I signed a contract with a landlord who is in fact a UK resident. If my landlord changes his residency without telling me, am I liable for his taxes?

Furthermore, how can I actually verify my landlord's residential status in the first place? Is that publicly available information?

Looking in to it and yes, if you landlord changes residency you are on the hook for his taxes if he doesn't pay. This is true even it he doesn't tell you, ignorance is not a defense. I think you can verify residency through the tax bureau. But you'd have to do it every month to sure.

The taxman always wants to be paid and as they make the law they can go after the easiest target. In this case the money is with the tenant/agent so that's who they go after.

Of course the landlord would then owe the money to the tenant if the tenant had to pay out of their own pocket.

I also expect that a non resident landlord would usually use an agent, in which case the tenant should be 'safe'.

Our tax system in Canada is probably based on the UK system.

If you pay a contractor more than $600 over the course of a year, you're required to file a Form 1099 with the IRS and send a copy to the contractor. That's if the contractor has provided you with a Taxpayer Identification Number (Social Security Number if it's an individual).

However, if the contractor doesn't give you the number, you, as the person hiring the contractor, are required to withhold 24% of the payment and fork it over to the IRS (the contractor can get it back if there's an overpayment at the end of the year).

That seems pretty similar.

Before everyone panics because they did not withhold 24% when they had a new water heater installed in their home or a level 2 charger installed in their garage, it should be noted that those requirements are when a business hires a contractor.

When you are an individual and hire a plumber or electrician or handyman or similar to do work on your home it does not apply.

Were I the tenant, I would try to tell my landlord that I paid the taxes for him and deduct the tax from future rent.

Probably risky.

Can the tenant sue the landlord to recover the amount of taxes he had to pay for the landlord?

The headline is clickbait. The tenant wasn't paying the taxes, just withholding them and paying them to government instead. Exactly the same as an employer.

Ok, so I got downvoted on this one. Fair enough.

I would concede that it's probably not that reasonable for a consumer (mostly) to handle this sort of thing. I reckon there there is some combination of:

- surprise factor for the tenant.

- a general intent to discourage offshore property ownership. Agreed, this would work a lot better in a rental market with a reasonable vacancy rate (not sub-one-percent), as then many tenants would simply say 'not my bag, g'bye'.

- tackling non-arms-length transactions (eg., renting from family to facilitate money transfer).

Now then...

I will still observe that (at least legally) there's an established obligation for purchasers to pay tax on things they buy. Everyday example: 'Sales Tax' is mostly implemented as 'sales and use tax', where technically the purchaser is liable for the tax; sales tax paid offsets the use tax owing. Generally the vendor collects and remits (ie., does not 'charge') the tax amount, and the purchaser is then relieved of the tax liability. Vendors are required to collect and remit the sales tax, so for intrajurisdiction transactions the purchasers are off the hook. (Vendors are easier to audit!).

Mail-order is an issue, but historically it's far enough in the noise that nobody bothers to check this.

This is pretty much across the board: the US implements it this way, so it's not a canuckistan thing.

Counterexample is for interprovincial/interstate vehicle purchases: the amount is big enough to be worth going after, and the paperwork ensures that it gets someone's attention. This example comes up in the press from time to time, but not in an 'omig-d, really???' framing, more in a 'be an informed consumer' one.

This shows that there are no limits to the madness of our governments. It is completely beyond my understanding what kind of scumbag can invent such rule. Do they go to some backward countries for training?

Take your local taxman out for dinner to see the kind. This isnt even novel in the tax world

>"Take your local taxman out for dinner"

I'll pass on that offer. Feeding poisonous snakes takes priority

Doesn't have to be dinner, there's always Talking with the Taxman About Poetry.

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