Quebec Tax Alert - October 1, 2020

The National Assembly of Québec has granted assent to Bill 42, An Act to give effect to fiscal measures announced in the Budget Speech delivered on March 21, 2019 and to various other measures. The September 24, 2020 announcement included the disclosure of nominee contracts; this measure will have an impact on many Québec businesses. 

Backgrounder: 

A nominee arrangement is where a person acts on behalf of another person but gives the appearance of acting in one's own name. These agreements are frequently used in real estate transactions, either to allow confidentiality of beneficial ownership or to facilitate corporate reorganizations and third-party transfers. 

New Disclosure Requirement: 

Nominee contracts entered as part of a transaction entailing tax consequences must henceforth be disclosed to Revenu Québec in the form and terms prescribed for this purpose. The disclosure must be made by the later of the following: 

• 90 days following the date the nominee agreement was concluded; or
• 90 days following the date of assent to Bill 42, i.e. December 23, 2020.

Failure to comply with this new disclosure obligation will result in penalties of up to $5,000, as well as suspension of the limitation period with respect to the tax consequences resulting from the nominee agreement. 

Production Time 

The parties to such a contract entered into before May 17, 2019, are also required to file a disclosure no later than these dates, insofar as the tax consequences of the transaction or series of transactions, in respect of which the contract relates, continues after May 16, 2019. Members of a partnership that is party to such a contract are also subject to the disclosure obligation. 

Disclosure Obligation 

The disclosure must be made with Form TP-1079.PN, transmitted under separate cover and by registered mail.  

Click here for the prescribed form. 

What This Means to You and Your Business 

If you enter into nominee contracts as part of a transaction or series of transactions, you must disclose this contract or face penalties. Further details on this new disclosure requirement can be found here. For more information on these and other measures included in Bill 42, please contact your local MNP Business Advisor. 

Our Québec Tax Team 

Jacob Nataf, Partner, Tax Services, at 514.228.7824 or [email protected] 

Anne-Marie Dupras, Partner, Tax Services, at 514.904.7360 or [email protected]. 

Sean Sprackett, Regional Tax Leader at 514.228.7822 or [email protected] 

Philip Chandra, Partner, Tax Services, at 514.315.3673 or [email protected] 

Albert Pesce, Partner, Tax Services, at 438.469.4730 or [email protected]