[BUYING AND SELLING REAL ESTATE IN CANADA - QUÉBEC]
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as the case may be, takes the place of the certificate and articles of incorporation and by- laws, and will govern the issuance of partnership units and the operations of the entity. Typically, in a limited partnership, the general partner (which is often a shell corporation) is responsible for all the obligations and liabilities of the limited partnership. The liability of the limited partners is restricted to the amount of their respective contributions, provided that they do not become involved in the management of the limited partnership. To retain limited liability protection, the limited partner must remain a passive investor rather than an active participant in the operation of the limited partnership. Both general and limited partnerships formed under Quebec law or carrying on business in Quebec must register with the REQ and provide information analogous to that required of a corporation. Trusts A trust carrying on a commercial enterprise, such as a business, investment, or real estate trust (whether or not profitable), which is not managed by a registered trustee (such as a trust company) must also register with REQ in the same manner as a sole proprietorship, partnership, or legal person (corporation)
all Québec taxpayers must file prescribed form TP-1079.PN disclosing all nominee agreements: • Signed on or after May 17, 2019, on the later of (i) 90 days following the date of signature and (ii) December 23, 2020; or • Signed before May 17, 2019, but having income tax consequences continuing on or after May 17, 2019 ( e.g., deduction of expenses, attribution of rental income, imposition of a capital gain, principal residence exemption claims, creation of tax attributes such as adjusted cost base, etc.) by or before December 23, 2020. Nominee agreements signed before May 17, 2019, but not having income tax consequences on or after that date need not be disclosed. The information to be disclosed includes the date and a copy (if in writing) of the nominee agreement or other document evidencing same, the identity of the parties, a full description of the transaction (or the series of transactions) covered by the nominee arrangement and the identity of any person or entity for which there are resulting tax consequences. Disclosure by one party to the nominee agreement is deemed to be disclosure by all parties. Failure to disclose a nominee arrangement can result in an initial penalty of $1,000 plus an additional daily penalty of $100 (up to a maximum total penalty of $5,000). As well, Revenu Québec can suspend the taxpayer’s tax assessment period, such that prescription does not begin to run on any tax claims for that period. VII. CLOSING COSTS / ADJUSTMENTS Mutation (“welcome”) tax The buyer must pay the mutation or transfer tax (colloquially referred to as the “welcome tax”) to the Québec Minister of Revenue under the Mutation Tax Act (Québec) within 31 days
within 60 days of beginning operations. Nominee or prête – nom agreements
Nominee or “prête - nom” agreements are commonly used in real estate transactions to register property in the name of a nominee corporation, which holds legal title only, with the beneficial ownership retained by the true owner(s). Nominee corporations are often used to collect rent and pay expenses, or to acquire family assets such as a residence. Even if already disclosed in the taxpayer’s tax return,
ILN Real Estate Group – Buying and Selling Real Estate Series
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