[Updated August 26, 2019 : see at the end of this text]
On May 13, 2019, Quebec’s Finance Minister announced various measures to combat aggressive tax planning as part of the action plan to ensure tax fairness.
Among these measures, those relating to nominee companies deserve our attention. Tax legislation will be amended to require parties to a nominee agreement to disclose the nominee contract between them. It will also be established that any disclosure made by one of the parties to the nominee agreement will be deemed to have been made by the other party.
As of May 17, 2019, all nominee contracts must be disclosed to the Minister of Revenue within 90 days of being entered into.
The information to be disclosed (there may be a prescribed form) is :
- date of the nominee agreement;
- identity of the parties to the contract;
- complete description of the facts of the transaction to which the contract relates;
- identity of any person or entity in respect of whom this transaction has tax consequences;
- any other information required by the form that may be available.
Penalty
Parties who fail to file the declaration within the prescribed time limit may jointly and severally incur a penalty of $1,000, up to a maximum of $5,000, and an additional penalty of $100 per day, starting on the2nd day of the omission.
Application
These provisions also apply to any nominee agreement entered into prior to May 17, 2019, in which case the information described above must be disclosed to Revenu Québec no later than September 16, 2019.
Prescribed form
As of August 2, 2019, no prescribed forms were available. So what to do?
a) It has been brought to our attention that T5013/T2 forms contain a checkbox to indicate whether the taxpayer filing the return is a party to a nominee agreement. If this box is checked, we understand that the same information as that required and mentioned above must be provided; therefore, if this has been done (it should be verified with the accountant or auditor), then we believe that the taxpayer has already complied with the requirements to disclose the nominee agreement.
b) If the box on form T5013/T2 has not been checked, and the prescribed form is still not available by September 16, 2019, we suggest that you send the Minister of Revenue the required information by written notice.
On August 22, Revenu Québec announced that the September 16, 2019 deadline had been extended and that the information return must be filed no later than :
1. the 90th day following the date of conclusion of the contract;
2. the 90th day following assent to the forthcoming bill containing disclosure measures for a nominee contract.
Please note that no bill to this effect has been published as of August 26, 2019.
By Jean Proulx