EXEMPTIONS FROM PAYMENT OF TRANSFER DUTY FOR PARTNERSHIPS

December 22nd, 2017

On December 20, 2017, the Quebec ministère des Finances issued Information Bulletin 2017-14 in which it announced that the Act respecting duties on transfers of immovables (the “Act”) will be amended to introduce an exemption from payment of the transfer duty when a partnership (limited partnership, general partnership or joint venture) is involved in a transfer of an immovable in circumstances similar to the circumstances provided in subparagraphs (a), (b) and (c) of the first paragraph of section 19 of the Act in respect of a legal person.

These amendments to the Act apply to the transfer of an immovable made after the day of publication of the bulletin, that is, commencing on December 21, 2017.

The Act will be amended to provide that an exemption from payment of the transfer duty will be granted for the transfer of an immovable in the following situations:

  1. by a transferor who is a natural person to a transferee that is a partnership if, immediately after the transfer, the transferor’s share of the income or losses of the partnership is at least 90%;

  2. by a transferor that is a partnership to a transferee who is a natural person if, throughout the 24-month period immediately preceding the transfer, the transferee’s share of the income or losses of the partnership is at least 90%;

  3. by a transferor and a transferee that are either two partnerships or a partnership and a legal person. The exemption condition will be similar to the condition applicable to transfers between two closely related legal persons, with the necessary adaptations, in order to meet the 90% test applicable to the income or losses of the partnerships.

The bulletin states that the Act will also be amended so that the necessary adaptations are made to provide that the disclosure mechanism already in the Act, where the exemption condition ceases to be met in the 24-month period following the date of transfer of the immovable, applies to the transfer of an immovable in which a partnership is involved, and to provide exceptions, for both legal persons and partnerships, from the obligation to file the disclosure notice where the exemption condition ceases to be met in the 24-month period following the date of transfer of an immovable.


The information provided in this article is for information purposes only. For further information about the application of the Act or any other question concerning the foregoing, please contact Alain Castonguay at (514) 397-6906 or Patrice Picard at (514) 397-6712 at our Montreal office.