DISCLOSURE OF A NOMINEE AGREEMENT TO THE TAX AUTHORITIES
[Updated August 26, 2019 : see the end of the article for update]
On May 13, 2019, the Québec Minister of Finance announced various measures designed to counter aggressive tax planning as part of its Tax Fairness Action Plan.
Among these measures, those relating to nominee corporations are noteworthy. Accordingly, tax legislation will be amended to provide that the parties to a nominee agreement have the obligation to disclose such agreement. In this regard, disclosure by one of the parties to the nominee agreement will be deemed to have been made by the other party as well.
As of May 17, 2019, all nominee agreements must be disclosed to Revenu Québec within 90 days of their execution.
The information to be disclosed (on the prescribed form to be eventually released) includes:
- date of the nominee agreement;
- identity of the parties to the nominee agreement;
- full description of the facts of the transaction to which the nominee agreement relates;
- identity of any person or entity for which such transaction has tax consequences;
- any other information requested in the prescribed form to be released.
The parties to the nominee agreement who fail to file this information within the prescribed delay are jointly liable for 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.
These amendments will also apply to a nominee agreement executed prior to May 17, 2019. In such a case, disclosure of the information described above must be filed with Revenu Québec no later than September 16, 2019.
As of August 2, 2019, no such form was available. What should be done?
a) It has come to our attention that the T5013/T2 form contains a box to be checked if the taxpayer filing the return is a party to a nominee agreement. If this box is checked, it implies that all the information required above has been provided. If this has been done (to be verified with the accountants or auditors), we believe that the taxpayer has already complied with its obligation to disclose the nominee agreement;
b) If the box on form T5013/T2 has not been checked, and if the above-mentioned prescribed form is not available on or before September 16, 2019, we recommend that the required information be communicated to Revenu Québec by way of written notice.
August 22nd, Revenu Québec announced a change to the deadline: the date of September 16, 2019 is postponed to the later of:
1. The 90th day after the nominee agreement was entered into; or
2. The 90th day following the day the legislation introducing the new measures receives assent.
As of August 26, 2019, no bill was published.
By Jean Proulx