And, finally, the Appellant argues that the penalties ought not to apply because Sebastiana Trimarchi actively dissimulated her non-resident status.

I had to look up the word "dissimulated"

dissimulate /dĭ-sĭm′yə-lāt″/ intransitive verb

To conceal (one's intentions, for example) under a feigned appearance. synonym: disguise.

The unit was 501-4175 Sainte Catherine West in Westmount, Quebec

Here is the building the unit was located in: https://www.realtor.ca/real-estate/26622741/4175-rue-ste-catherine-o-302-westmount

[25] In response to the Appellant’s submission that the Minister was "“easy”" on Ms Trimarchi but "“hard”" on the Appellant, Counsel for the Respondent stated that everyone had been assessed as is expressly authorized under the Act.

First thing I notice is that this is a commercial tenancy. Edit: That is incorrect. Actually it goes on

[10] David Siscoe is the tenant who occupied unit 501 as his personal residence.

He just also owns a gym.

This is the leaseholder:

• David Siscoe - Siscoe Gyms | LinkedIn
• Siscoe gym fitness and martial arts center - Siscoe Gym

In addition, she provided two phone numbers, a Montreal number and an international number. Mr. Siscoe testified that he highly doubts that he would have paid attention to either of those numbers. I note that the international number is the number at which the auditor reached Sebastiana Trimarchi in October 2018 (Exhibit R-11).

Wild

[16] Little can be gleaned from the email correspondence between Mr. Siscoe and Sebastiana Trimarchi introduced into evidence other than the fact that her email address ended in .it rather than .ca or .com and the fact that one email contains language that Mr. Siscoe recognized as most likely Italian, stating that he speaks Italian, although not that well.

[43] With respect to the penalty imposed in this matter, I agree with the Appellant that a defence of due diligence is available but, of course, that defence has to be made out. The Appellant has not proven that it has exercised reasonable care to ensure compliance with its obligations. The courts have found that to be successful in mounting a defence to the imposition of a penalty, it is expected that the taxpayer seeking to invoke a due diligence defence must show that they exercised a high degree of diligence to comply with their obligations under the Act (see for example, Ogden Palladium Services (Canada) Inc v R, 2001 DTC 345). In the circumstances of this case, the Appellant took no steps to ensure compliance with its withholding 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. I therefore find that the Minister was justified in assessing the penalty pursuant to section 227(8) of the Act.

The judge who made the ruling is Gabrielle St-Hilaire. Government of Canada announces judicial appointment to the Tax Court of Canada

[46] The appeal is dismissed without costs.

Signed at Ottawa, Canada, this 30th day of March 2023.

This whole thing happened over 1 year ago.

(I will start using a fancier copy/paste method to include links in my quotes) (Also I added linebreaks and subquotes for readability in this specific comment.)

[38] The Appellant suggested that the general obligation to withhold and remit should be interpreted as providing for a defence of due diligence as has been recognized in the case law for the interpretation of some penalty provisions. I agree that the case law has consistently held that a taxpayer can present a due diligence defence with respect to some penalty provisions but I do not agree that a due diligence defence can be mounted with respect to the obligation to withhold and remit pursuant to subsection 215(6).

Support can be found in Justice Hogan’s decision in J.K. Reed Engineering Ltd v R, 2014 TCC 309 at para 17 wherein he stated:

“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.”

It is worth reiterating that subsection 227(8) of the Act is an actual penalty provision for failure to withhold and remit any amount as required by section 215, added to support the collection of taxes imposed by the charging provision.

I would add that, in any event, in this case, there is no suggestion nor evidence of due diligence on the part of the Appellant.

[37] The Appellant further argued that an interpretation that would have subsection 215(6) apply to impose Part XIII tax on a tenant that has no knowledge that the landlord is a non-resident would be unjust and submitted that cannot be what the legislator intended. He implored the Court to choose an interpretation that is sensible, one that people can accept, rather than one that causes an injustice. Counsel acknowledged that the text of the provision does not contain a requirement that the payer have knowledge that the payee is a non-resident and stated he had no evidence of the legislator’s intention.

[31] As part of her audit procedures, Ms. Jiofack verified whether Sebastiana Trimarchi, the recipient of the rental payments was declaring this income. She discovered that Sebastiana Trimarchi had a social insurance number but did not file any income tax returns nor did she find any information returns such as those related to employment or interest income. In addition, other than providing her address at 1402-4175 Sainte Catherine Ouest, the Equifax report the auditor requested came back "“empty”." Ms. Jiofack testified that, after consulting the land register, she was unable to find property, other than unit 501, tying Sebastiana to Canada.

Is it possible in Canada to find out what income someone is declaring if you are not a CRA auditor??

[32] Through information obtained from family members, Ms. Jiofack reached Sebastiana Trimarchi in Italy. I note that the telephone number used is the same one as that provided by Sebastiana on the lease she signed in 2010. During that conversation, Sebastiana stated that she was living in Italy. Ms. Jiofack testified that there was no contestation and no ambiguity that she was living in Italy and they had a discussion about Sebastiana’s tax obligations as a non-resident.

Is this kind of investigation what is expected of a tenant?

when the legislator wants to limit a resident’s liability to circumstances where they have knowledge or belief, it expressly does so. Subsection 116(5) is one such example.

[39] To summarize the Appellant’s reasoning, since David Siscoe did not know, and had no reason to believe, that Sebastiana Trimarchi was a non-resident, section 215 should not apply to the Appellant.

[40] Counsel for the Respondent argued that liability under subsection 215(6) is not dependent on the taxpayer’s knowledge that payments were made to a non-resident.