The only way this makes sense is as a punitive measure against foreign landlords, where the tenant (as the tax payer) gets some measure of ownership over the property, which doesn't seem to be the case.

rather than the person who is receiving the income.

Yes, this seems deeply fucked up.

From the article:

He also didn’t know that tenants renting from a non-resident are required to withhold and remit 25 per cent of their rent to CRA each month, unless they have a property manager doing it for them, or if the non-resident has made alternate arrangements to pay their taxes.

Why would Canadian law require that? I've never heard of a country forcing people to pay other people's income taxes outside of countries that still have forced inheritance of debt, like South Korea. Makes absolutely no sense. As in this case, the requirement about non-residents is inane, because the renter has no way to assess resident status.