Under the provisions of the Taxation Act (the “Act”), certain construction contracts entered into between a contractor and a subcontractor require a Certificate issued by Revenu Québec certifying that the subcontractor complies with the Québec tax laws and does not have any overdue account with Revenu Québec (the “Certificate”).
Contracts requiring a Certificate:
- the contract is entered into between a contractor and a subcontractor after February 29, 2016 and provides for construction work requiring a licence issued under the Building Act; and
- the total cost of all contracts concluded between the same contractor and subcontractor during one calendar year is equal to or exceeds $25,000 (before taxes).
Who needs to obtain the Certificate?
- The subcontractor must, between the date a bid is submitted for a contract and the 7th day following the beginning of the work (the “Start of the Work Period”), hold a Certificate and provide a copy to the contractor.
The contractor must:
- during the Start of the Work Period, obtain from the subcontractor a copy of the Certificate and ensure that it is valid; and
- not later than the 10th day after the start of the work, verify its authenticity with Revenu Québec;
(collectively, the “Contractor’s obligations”).
Pursuant to the Act, a contractor means “a person that has an establishment in Québec and carries on a business in Québec, and causes to be carried out, in whole or in part, construction work for which the person must hold a licence required under Chapter IV of the Building Act”. The Building Act provides that “any person shall be presumed to be a contractor if it offers for sale or exchange a building or a civil engineering structure, unless he is able to demonstrate that the construction work of such building or structure was not carried out for the purpose of sale or exchange.”
The definition of contractor under the Building Act, combined with the dispositions of the law, means that the owner of a condominium project shall be considered a contractor and shall be subject to the Contractor’s obligations.
These new obligations must be reflected in every construction contract and partnership contract and in all documentation relating to construction financings.