Quebec’s Ministry of Finance recently published measures in Information Bulletin 2019-5 (1) that has a significant impact on the obligation of taxpayer disclosure in a nominee relationship. Effective May 17, 2019, any nominee contract made on or after that date must, subject to penalties in the event of non-compliance, be disclosed to Revenu Québec within 90 days. Nominee agreements entered into before May 17, 2019 must be disclosed before September 16, 2019 if the contract relates to a transaction or series of transactions with tax consequences that continue on or after May 17, 2019.

A nominee agreement is a contract of mandate where one party (the nominee) agrees to hold title to certain property on behalf of the true beneficial owner, and act as its agent to execute transactions. Given that the intent of the nominee relationship is often to conceal the identity of the true owner of the property, nominee agreements are used in the context of asset protection, financing transactions, project management and for investment confidentiality.

Prior to the aforementioned new disclosure requirements, Revenu Québec recognized the existence of the nominee relationship under the conditions listed in Interpretation Bulletin TVQ.16-30/R1 (2):

  • The nominee agreement must have been made at time of, or before, the acquisition of the assets and must comply with the provisions of the Civil Code of Québec governing the agency; and
  • The true owner and the agent must have disclosed the nominee contract and revealed its contents to Revenu Québec when producing their tax returns for the current year in which the income for the year in which the nominee contract was made.

While the penalties for non-disclosure are a significant factor to consider, it is equally important to consider the tax consequences of non-disclosure.

From an income tax standpoint, the tax authorities recognize that when a nominee acting as agent for the true owner transfers the title of the property to the true owner, no sale will have occurred.  Accordingly, the transfer should not have resulted in tax consequences. However, for this to be the case, the legal relationship between the nominee and the true owner must in and of itself be deemed valid and recognized by the authorities. Disclosure is an important step in making sure the relationship is recognized and no tax is paid when the nominee arrangement is terminated.

In the context of sales tax, we have seen situations where the failure to disclose the nominee agreement by the parties has resulted in the purchaser of a property being denied the benefit of GST and QST exemptions. Furthermore, if a registrant does not disclose that he is a nominee, the registrant will be liable for taxes upon purchasing a property. It is also important to note that the true owner should be registered on the GST and QST rolls, since only that party is entitled to claim input credits and refunds (ITC/ITR) relating to purchase, sale or supply transactions.

In the context of land transfer tax, we have seen situations where municipalities have questioned the authenticity of a nominee agreement, resulting in the purchaser of a property being denied the use of an exemption from paying “welcome tax”. Accordingly, we often recommend that to avoid this problem, nominee agreements be notarized. When having the agreement notarized is not possible, it is advisable to disclose the nominee contract to the municipality prior to a specific transaction rather than wait until the 90-day deadline from which the nominee agreement was concluded.

If you are party to a nominee agreement or intend to enter into one, our attorneys are available to discuss your disclosure obligations and the tax consequences of your particular nominee arrangement.


  1. MINISTÈRE DES FINANCES, Information Bulletin 2019-5, « Measures to protect the integrity and fairness Quebec’s tax system,” May 17, 2019.
  2. REVENU QUÉBEC, Interpretation Bulletin TVQ.16-30/R1, “Nominee Contract,” December 29, 2011.