Be Prepared for Revenu Québec’s New Disclosure Requirement for Nominee Agreements

The Québec Ministry of Finance released new and expanded measures in May 2019 to combat aggressive tax planning in the province. One measure that will have an impact on many Québec businesses is the new disclosure requirement for nominee agreements, often referred to as prête-nom agreements in Québec.

Nominee Agreement

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

Effective May 17, 2019, the amendments to legislation will require disclosure of certain information by all parties to a nominee agreement, made as part of a transaction or series of transactions, to Revenu Québec. Nominee agreements concluded prior to the changes and still effective on May 17, 2019 must be disclosed no later than September 16, 2019. Nominee agreements concluded on or after May 17, 2019 must be disclosed no later than 90 days after the date on which the nominee agreement is concluded.

Although the prescribed form has not yet been made available to the public, the release provides that the following information will be required:

• The date of the agreement;
• The identities of the parties to the agreement;
• A full description of the transactions to which the agreement relates (and the identity of any party with tax consequences as a result of the transactions); and
• Other information as would be provided on the prescribed form.

Until the prescribed form is made available, it is recommended you begin gathering the relevant information ahead of time should it need to be communicated to Revenu Québec on short notice.

Penalty Start at $1,000 a Day

Failure to file the prescribed form within the prescribed time period will result in all parties to the agreement being jointly liable for a penalty of $1,000 and an additional penalty of $100 per day, up to a maximum of $5,000, beginning on the second day of the omission.

If you require more information on the new nominee agreement disclosure requirement and process, contact your local MNP Tax Advisor or:

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 514.861.9724 or [email protected].