The use of nominees: be careful!

Revenu Québec recently published an information bulletin on transactions involving a “nominee.”^[1]

Although these transactions are permissible, Quebec tax legislation will be amended to require parties to a nominee agreement to disclose this situation to Revenu Québec.

More specifically, nominee agreements disclosed to Revenu Québec must be made through a prescribed information return and must include:

• The date of the nominee agreement;
• The identity of the parties to the nominee agreement;
• A full description of the facts of the transaction(s) to which the nominee agreement relates.

Please note that the prescribed form should be available in September. In the meantime, parties are advised to send a letter with information regarding the nominee agreement to Revenu Québec.

Failure to file the information return will result in a penalty of $1,000 and an additional penalty of $100 per day, up to a maximum of $5,000, starting on the second day of the omission.

A. Nominee agreements entered into prior to May 17, 2019

• Disclosure is mandatory when the tax consequences of the agreement continue on or after May 17, 2019. The information return must be filed no later than September 16, 2019.

B. Nominee agreements entered into on or after May 17, 2019

• Disclosure is mandatory, and the information return must be filed no later than 90 days after the date on which the nominee agreement was concluded.

C. Actions to be taken

• List all your nominee contracts
• Document each transaction
• Complete the official form within the prescribed time limits

For example, a nominee agreement entered into on May 21, 2019 should be disclosed to Revenu Québec no later than August 19, 2019.

Should you have any questions, do not hesitate to contact our experts. We can help you implement the necessary actions.

[1] Information Bulletin 2019-5, May 17, 2019;