This Tax Bulletin was initially published on December 22nd, 2017, on Fasken.com, under the title “Introduction of Exemptions From the Payment of Transfer Duties on the Transfer of an Immovable Involving a Partnership“.
On December 20, 2017, the Minister of Finance published an Information Bulletin (2017-14, dated December 20, 2017) indicating that amendments would be made to the Act respecting duties on transfers of immovables (the “Act”) to provide an exemption from duties (“Duties”) for transfers involving partnerships made after December 20th, 2017.
Duties are imposed on the transfers of immovables in Québec, unless an exemption applies.
The Act provides exemptions from the payment of Duties in certain cases, such as, for example, where the transfer of an immovable involves a transferor or a transferee that is a legal person.
However, currently no exemption from the payment of Duties applies if a transfer is made to or from a partnership.
Québec has decided to provide an exemption from the payment of Duties on the transfer of an immovable involving a partnership, in circumstances similar to those for legal persons (i.e. for transfers between closely related legal persons).
The proposed amendment will provide for an exemption from the payment of Duties on the transfer of an immovable involving a partnership, where the percentage of a partner, that is the transferor or the transferee of the transfer, of the income or losses of the partnership is at least 90%. This, presumably, includes transfers by or to corporations and partnerships.
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Duties on Transfers of Immovables in Québec: Implementation of Previously Announced Amendments
On November 16, 2016, the Minister, Carlos J. Leitão, tabled Bill 112 giving effect to several fiscal measures announced in the Budget Speech delivered on March 17, 2016.
Among the measures set out in Bill 112 are the modifications announced to the Act respecting duties on transfers of immovables (CQLR c. D-15.1) (the “Act”). Bill 112 must still go before a parliamentary commission before its adoption.
The measures announced in the Budget Speech revolve around the following three main changes:
- Imposing mutation duties at the time of the transfer of an immovable, as opposed to the time of its registration in the land register – thereby imposing off-title transfers of an immovable;
- Amending the conditions of certain exemptions from payment of mutation duties, in particular in respect of transfers between closely-related parties, and introducing a requirement that the exemption conditions underlying the exemption be maintained for a period of 24 months following an exempt transfer;
- Introducing new conditions applicable to exemptions, specifically in respect of transfers between former de facto (common-law) spouses and transfers in favour of an international governmental organization that has entered into an agreement with the Government with respect to its establishment in Québec.
It is worthwhile noting that the measures will only apply to transfers of immovables occurring after March 17, 2016.
Bill 112, entitled An Act to give effect mainly to fiscal measures announced in the Budget Speech delivered on 17 March 2016, details the means by which these amendments will be implemented. One should note that Bill 112 will only come into force on the date of its passage by the National Assembly and its assent thereto by the Lieutenant-Governor.