CRA indicates that a Canadian payer must withhold on rent paid to a s. 94 deemed resident trust

Regarding the application of Part XIII to a non-resident trust that is deemed to be resident in Canada pursuant to s. 94 and which owns a Canadian rental property, CRA indicated that such trust is not subject to Part XIII tax on amounts paid or credited to it, but is not considered to be resident in Canada for the purposes of determining the liability of a person other than the trust to withhold and remit under s. 215 – so that there is still a requirement for the Canadian tenant(s) to withhold and remit Part XIII tax on the rent paid by them. Per s. 94(3)(g), to the extent that the amount on which the Part XIII tax is paid has been included in computing the trust’s income, the withholding amount is deemed to have been paid on account of the trust tax under Part I for the particular taxation year.

Neal Armstrong. Summaries of 4 June 2024 STEP Roundtable, Q.13 under s. 94(3)(a)(viii) and s. 94(3)(a)(ii).