Principal Issues: Whether the Minister can rely on paragraph 225.1(6)(b) in order to commence collection actions against a non-resident where rental income is received by a non-resident from Canadian sources to which withholding is required by subsection 215(1), but for which no amount of tax was withheld or remitted?
Position: No, but the Minister may commence collection actions without delay against the payor.
Reasons: Paragraph 225.1(6)(b) provides that the collection restrictions in subsection 225.1(1) do not apply in situations where an amount is required to be deducted or withheld and remitted or paid under the Act or Regulations. Since subsection 215(1) requires a person who pays, credits or provides an amount on which a tax is payable under Part XIII to deduct or withhold from it the amount of tax and remit it to the Receiver General, paragraph 225.1(6)(b) of the Act would be applicable.
In the case of a non-resident recipient, the amounts are not amounts that the non-resident was required to withhold and deduct. Therefore, the exemption from the collection restrictions in paragraph 225.1(6)(b) does not apply. On the other hand, paragraph 225.1(6)(b) would apply to an assessment against the person who paid the rent to the non-resident owner of the property. Therefore, collection actions could not be commenced immediately against the non-resident owner of the Canadian property, but could be commenced against the Canadian renter or agent.