On September 24, 2020, the National Assembly of Québec enacted provisions included in the Bill 42, An Act to give effect to fiscal measures announced in the Budget Speech delivered on 21 March 2019 and to various other measures. This legislation, among other things, amends the Taxation Act (the “Act”) by introducing new mandatory disclosure requirements for nominee agreements.
More precisely, new provisions have been inserted under previously existing mandatory disclosure requirements specified in the Act to address how the Minister is to be informed about nominee agreements. These new requirements include:
- Mandatory disclosure of all nominee agreements having tax consequences under the Act no later than December 23, 2020 (90 days after the provision received assent on September 24, 2020) or 90 days after the conclusion of such agreements (under section 1079.8.6.4 of the Act); and
- Sending the information to the Minister by registered mail, in prescribed form and containing specific details, including:
- The date of the nominee agreement;
- The identity of the parties to the agreement, along with that of any other person affected by the transaction; and
- Other prescribed information.
In addition, under Failure to Disclose provisions, the following new punitive measures have been enacted:
- A penalty up to $5,000, which may be incurred by all parties to a nominee agreement that failed to be disclosed (under section 1079.8.13.3); and
- Suspension of the usual prescription period for all taxpayers (including members of partnerships) that are parties to undisclosed nominee agreements (under section 1079.8.15.1).
However, these penalty provisions only apply to nominee agreements entered into after May 16, 2019, or before May 17, 2019, where the tax consequences of the transaction in the course of which the nominee agreement was entered continue after May 16, 2019.
If you have any questions about how these changes might affect your organization, please do not hesitate to contact the Ryan TaxDirect® line at email@example.com or 1.800.667.1600.