3792391 Canada – Tax Court of Canada confirms that s. “215(6) is devoid of any requirement that the payer have knowledge that the payee is a non-resident”

The taxpayer was assessed under s. 215(6) for failure to withhold and remit Part XIII tax on rents paid by it in its 2011 to 2016 taxation years to its ultimate lessor, Ms. Trimarchi, who lived in Italy (and who had acquired the property subject to the lease before the years in issue from some apparently-resident siblings). St-Hilaire J stated that “subsection 215(6) is devoid of any requirement that the payer have knowledge that the payee is a non-resident” Although the taxpayer was able to point to some minor indicators suggestive of Canadian residence of Ms. Trimarchi (e.g., a Canadian bank account to receive the rent payments, a Canadian SIN, and a Montreal address shown on some documents), the preponderance of the evidence (presented by the Crown, even though the onus was not on it) suggested that Ms. Trimarchi was a non-resident.

Regarding the penalty imposed under s. 227(8), she agreed that a due diligence defence was available, but stated:

The Appellant has not proven that it has exercised reasonable care to ensure compliance with its obligations. … Counsel submitted that the Appellant was justified in not taking steps to ensure compliance because it had no reason to believe that Sebastiana Trimarchi was a non-resident. Unfortunately, that is not enough to meet the standard of a high degree of diligence.

The assessments under ss. 215(6) and 227(8) were confirmed.

Neal Armstrong. Summaries of 3792391 Canada Inc. v. The King, 2023 TCC 37 under s. 215(6) and s. 227(8).