Significant Changes to Duties on Transfers of Immovables

On March 17, 2016, The Minister of Finance announced changes to the Act respecting duties on transfers of immovables that apply to all transfers in the province of Québec as of March 18, 2016. This is to ensure integrity and fairness in the regime governing the transfer of immovables.

Unregistered property transfer

Some transfers of immovables may not registered in the Land Registry. Purchasers are still required to pay duties on transfers and are required to disclose related information within 90 days of the transaction using the Divulgation form. Once completed, it must be sent to the City of Westmount, along with a copy of the deed of sale and the nominee agreement as appropriate. A duties on transfers account will be issued by the city. Taxpayers who have questions can contact us at the following address: taxation@westmount.org.

Amendments to transfer duties exemptions now include:

• the introduction of an obligation to report transfers of immovables not registered in the Land Registry to the municipality where the immovable is located, within 90 days following its transfer
• the revocation of some exemptions applicable to transfers of immovables between two closely related legal entities
• an obligation to maintain exemption conditions for a period of 24 months for some transactions that are exempt from transfer duties
• clarification as to the method of calculation of share ownership for the purposes of certain exemption conditions

As a transferee, you have an obligation to disclose the information requested when any condition for exemption is no longer met. If your immoveable has not been registered in the Land Registry, you have an obligation to disclose the information requested. Transmit this information via the following forms.

Reporting Obligation – Notice of Disclosure

For transfers of immoveables not registered at the Land Registry

Under the former rules, transfer duties were payable only upon registration at the Land Registry. Transfer duties are now payable as of the transfer date of an immoveable (real property), regardless whether the transfer is registered.

You a required to a complete and submit Form A, if the transfer of your immoveable is not registered with the Land Registry.

DOWNLOAD A PRINTABLE VERSION OF THIS FORM BY REOPENING, AFTER IT IS SUBMITTED.

Reporting Obligation – Notice of Disclosure

Exemption

A buyer may be exempt from paying the duties on transfers in certain cases as set out in the Act respecting duties on transfers of immovables, R.S.Q., chapter D-15.1. The notary must mention the applicable exoneration, in accordance with the legislation, which exempt the buyer from paying the duties on transfers.

Main reasons justifying an exemption:

• Transfer to an ascendant or descendant in the direct line (sale from father to son; from grandmother to granddaughter);
• Where the transferor is a natural person and the transferee is a legal person with 90% of its issued shares with full voting rights are owned by the transferor;
• Transfer between married couples or between de facto spouses (as defined in the Act respecting duties on transfers of immovables). Same sex partners are included in the provisions of the law.

Common-law spouses who separate have 12 months after their separation to transfer the property rights. Beyond this deadline, the transfer will not be exempt. Married spouses who separate have 30 days after the date of the divorce judgment to make the transfer if this judgment does not assign ownership of the building to one or the other of the spouses.

The Act foresees several other exemption situations.

Exemptions from the payment of duties on transfers can be revoked. This is notably the case following a transfer of shares modifying the control of a company (90% or more of the votes). The purchaser of the immovable has the obligation to disclose the cessation of the right to an exemption by using the disclaimer form Divulgation exoneration. Once completed, this form will be sent to the City of Westmount offices. Taxpayers who have questions can contact us at the following email address: taxation@westmount.org.

When a condition for exemption is no longer met

To ensure that the transfer duty is collected when an exemption condition is no longer met, every transferee exempt from payment of transfer duty will be required to notify the municipality in which the immovable is located within 90 days after the date on which the exemption condition ceases to be met.

The transfer duty resulting from cessation of compliance with the exemption condition will be payable prior to the 31st day after the municipality sends the invoice to the transferee.

You a required to a complete and submit Form B, when an exemption condition is no longer met.

DOWNLOAD A PRINTABLE VERSION OF THIS FORM BY REOPENING, AFTER IT IS SUBMITTED.

These new rules also introduce corresponding amendments to the Taxation Act. The transferee of an immovable who does not file the aforementioned mandatory notice of disclosure within 90 days of a transfer, will be required to pay special duties equal to 150% of the transfer duties, plus interest. These special duties must be paid within 30 days of a notice of assessment being issued. Note that transfers made prior to March 18, 2016 on an exempt basis remain subject to the acquisition of control rules.

Special duties
Special duties are a form of compensation in lieu of transfer duties that are billed to buyers whose transaction is exempted.
The Act respecting duties on transfers of immovables – R.S.Q., chapter D-15.1), amended December 20, 1999, sets the amount of the special duties in accordance with the transferred values:

For more information, please contact us at:

• taxation@westmount.org
• 514 989-5234