The 2016-2017 Budget tabled by Finance Minister Carlos
Leitão on March 17, 2016, announced significant changes to
the Act respecting duties on transfers of immovables (the
Act). Although these changes apply to the transfer of an
immovable in Québec as of March 18, 2016, no bill has yet
been tabled and taxpayers currently have to rely on the brief
explanations of the changes, as provided in the Budget.
Before the Budget was tabled, the Act provided that transfer
duties were only payable from the time the deed of the transfer was
registered in the land registry. The Budget announced a significant
change to this regime: transfer duties will now become payable as
of the date of the transfer of an immovable, whether or not the
deed of transfer is registered.
The Budget also provides for a tightening of the statutory
exemptions, some of which are based on an ownership test of 90% of
the voting shares or 90% of the fair market value of the shares.
The Budget provides for the following:
a single test of 90% of the number of votes attached to the
issued shares; and
the obligation to maintain this exemption condition for 24
months following the transfer of the immovable and, in the case of
a transfer between a legal person and a natural person
(individual), for 24 months before the transfer.
These criteria are more restrictive than the current provisions
relating to acquisitions of control.
Lastly, the Budget announced the establishment of a mandatory
disclosure mechanism when:
the deed of transfer of an immovable is not registered in the
land registry; or
the exemption condition relating to the ownership of 90% of the
number of votes ceases to be met within 24 months following the
transfer of an immovable.
The transferee of an immovable who does not file a mandatory
notice of disclosure within 90 days will be required to pay special
duties equal to 150% of the transfer duties, plus interest.
Once the draft legislation is published, it will be possible to
analyze the changes in more detail.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.
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