Section 215

There was no written assignment or other convincing evidence that a loan that an Australian corporation ("Giant") had made to the taxpayer had been assigned by Giant to its Canadian subsidiary ("922"). Furthermore, the taxpayer was unsuccessful in its submission that because 922 was liable for withholding tax under s. 215(3), the taxpayer should be considered to be relieved of liability under s. 215(1). Mogan TCJ. stated (p. 1899) that:

"... when the initial Canadian payor knows that he is paying an agent resident in Canada acting on behalf of a non-resident principal ... the initial Canadian payor and the agent are jointly liable under subsections (1), (3) and (6) of section 215."

He also stated (p. 1899) that:

"It seems to me that the liability imposed by subsection 215(6) is dependent upon the knowledge of the payor but I am not required to decide that precise issue on the facts herein."

On January 17, 1989 the taxpayer withheld $535,579 of tax on a payment to a non-resident. On February 14, 1989 it mailed a cheque for that sum to the Receiver General, and on February 20, 1989 the cheque was received in Ottawa. In finding that the taxpayer was subject to the 10% penalty under s. 227(9) for failure to "forthwith remit" the withholding tax, Brulé J. stated (p. 1003):

"'Remit' means the receipt by the Receiver General of the tax. 'Forthwith' means as soon as possible, given the circumstances of the Appellant. No circumstances emerged as to why it was only remitted thirty-four days later."

Rip, J. stated, obiter, that "the words 'or otherwise' in subsection 215(2) provide that an agent or other person who pays or credits an amount on behalf of the debtor in a manner other than by redemption is to withhold or deduct tax and if he fails to do so, subsection 215(2) makes him liable to pay the tax he has not withheld or deducted."

There was no written assignment or other convincing evidence that a loan that an Australian corporation ("Giant") had made to the taxpayer had been assigned by Giant to its Canadian subsidiary ("922"). Furthermore, the taxpayer was unsuccessful in its submission that because 922 was liable for withholding tax under s. 215(3), the taxpayer should be considered to be relieved of liability under s. 215(1). Mogan TCJ. stated (p. 1899) that:

"... when the initial Canadian payor knows that he is paying an agent resident in Canada acting on behalf of a non-resident principal ... the initial Canadian payor and the agent are jointly liable under subsections (1), (3) and (6) of section 215."

He also stated (p. 1899) that:

"It seems to me that the liability imposed by subsection 215(6) is dependent upon the knowledge of the payor but I am not required to decide that precise issue on the facts herein."

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 lessor, Ms. Trimarchi, who lived in Italy (and who had acquired the leased property before the years in issue from some apparently-resident siblings). St-Hilaire J quoted with approval (at para. 38) the statement in J.K. Read that:

Subsection 215(6) of the Act is a charging provision that makes the payer liable for the payee's tax if the payer fails to deduct or withhold at the time of payment tax that is payable by the payee. In contrast, subsection 227(8) of the Act is a penalty provision. A due diligence defence can be mounted against the latter but not the former.

St-Hilaire J further added (at para. 42):

[W]hen the legislator wants to limit a resident’s liability to circumstances where they have knowledge or belief, it expressly does so.

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.

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

After noting that the University of Waterloo and Human Resources and Development Canada had failed to withhold Part XIII tax on pension income and Canada Pension Plan and Old Age Security payments made to the taxpayer, Miller J. stated (at para. 9):

"Subsection 215(6) does not shift a tax burden to the University of Waterloo and the HRDC. The University of Waterloo and the HRDC are liable for the tax they failed to deduct; however, this does not aid Mr. Soloman as both entities can recover the taxes from him."

Sales contracts which the Canadian taxpayer ("Havlik") entered into with a Chinese supplier required Havlik to obtain irrevocable letters of credit in favour of the seller. When a particular letter of credit was due, the bank would draw the face amount of the letter of credit from Havlik's account and make payment to the supplier.

It was held that a failure of the bank to withhold from payments made under amended versions of the letters of credit in respect of interest gave rise to liability to Havlik because under s. 215(6), the debtor and the person who paid or credited an amount on behalf of the debtor are jointly liable.