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Revenu Quebec Nominee Agreements

Did you know that it is necessary to disclose the agreements nominated for Revenue Quebec? Let`s take the example of a rental property purchased on July 17, 2019, subject to a Nominee agreement. Disclosure of the agreement must take place no later than October 15, 2019, otherwise the tax period is suspended for rental income collected by the economic beneficiary for the year 2019 and all subsequent tax years until disclosure. Following Finance Quebec`s 2019-5 Newsletter of May 17, 2019, which states that Quebec`s tax legislation would be amended to make it mandatory to disclose nominatory agreements with tax consequences (changes) to Revenue Quebec (QPP), Bill 42 (essentially the bill), which reaffirms the amendments proposed in the newsletter , finally adopted on 24 September. To maximize compliance with the new commitment, On May 17, 2019, the Quebec Ministry of Finance issued the 2019-5 Newsletter announcing the introduction of a new mandatory disclosure mechanism for nominary contracts. Nominee agreements concluded prior to that date, but for which “the tax consequences of the transaction or a series of transactions covered by the Nominee agreement” are ongoing on May 17, must be communicated to the revenue proceeds by December 23, 2020. In the event of non-supply of the information prescribed by the applicable deadline, the parties to the corresponding nominating agreement are jointly fined USD 1,000, plus an additional penalty of USD 100 per day, from the second day of the omission, up to a maximum of USD 5,000. As the Bulletin`s requirements are essentially confirmed by law, our clients should disclose all nominatable agreements affecting income tax and be concluded on May 17, 2019 of: (i) 90 days after the date of execution of the Nominee contract and (ii) December 23, 2020. According to RQ, these would be typical nominating agreements used in the real estate sector. “E-commerce has a significant impact on municipal revenues, which depend to a large extent on retail and business tax revenues. The digital economy does not need new premises, which poses a great challenge to municipalities in terms of revenue sources,” added Nicolas Plante. A Nominee agreement must be disclosed within the following time frame: If you are a party to an agreement that could be considered a “nominated contract,” you should speak to your tax advisors immediately to ensure that you are complying with the new disclosure obligation in a timely manner.

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