TP1097

Information

Where more than one vendor is involved in a disposition, a separate notice must be filed for each vendor. A separate notice must also be filed for each disposition of property, unless a number of properties have been or will be disposed of simultaneously by the same vendor to the same purchaser. In that case, a single notice is sufficient.

Taxable Québec property referred to in section 1097 of the Taxation Act

Property is taxable Québec property referred to in section 1097 of the Taxation Act (TA) if

• it is not excluded property or property referred to in section 1102.1 of the TA (see “Excluded property” and “Property referred to in section 1102.1 of the TA” below); and
• it is, for example,
  • immovable property situated in Québec;
  • property used in Québec by the vendor in carrying on a business (other than an insurance business);
  • an interest in or option in respect of property referred to in one of the two previous points;
  • a share that is not listed on a designated stock exchange where the vendor is a corporation and, in the 60-month period prior to the disposition, the value of the share is derived primarily from immovable property situated in Québec, Canadian resource property or timber resource property;
  • an interest in a partnership where the vendor is a corporation and, in the 60-month period prior to the disposition, the value of the interest is derived primarily from immovable property situated in Québec, Canadian resource property or timber resource property;
  • an interest in a trust⁵ where the vendor is a corporation and, in the 60-month period prior to the disposition, the value of the interest is derived primarily from immovable property situated in Québec, Canadian resource property or timber resource property; or
  • an interest in or option in respect of property referred to in one of the three previous points where the vendor is a corporation.

Excluded property

Excluded property refers to, for example,

• property that is exempt property under a tax agreement;⁶
• property used in Québec by the vendor and included in the inventory of a business (including an interest in or option in respect of such property);⁷
• a share listed on a recognized stock exchange (including an interest in or option in respect of such a share); and
• a unit of a mutual fund trust (including an interest in or option in respect of such a unit).

Property referred to in section 1102.1 of the TA

Property referred to in section 1102.1 of the TA includes, for example,

• depreciable property;
• immovable property situated in Québec and included in the inventory of a business;
• Québec resource property;
• Québec timber resource property;
• life insurance policies; and
• any interest in or option in respect of the aforementioned property.

---

5. An income interest in a trust resident in Canada is not taxable Québec property and, therefore, is not property referred to in section 1097 of the TA.
6. In the case of a disposition of such property between related persons, the property constitutes excluded property only if the purchaser sends us, within 30 days after the acquisition date, a notice setting out the acquisition date, the amount paid to acquire the property, the vendor’s name and address, a description of the property sufficient to identify it and the name of the country with which Canada has entered into the tax agreement concerned.
7. Immovable property situated in Québec and included in the inventory of a business is property referred to in section 1102.1 of the TA and is not excluded property. Therefore, a notice of disposition or proposed disposition may be filed in respect of such immovable property, but form TP-1102.1-V must be used in that case (see “Property referred to in section 1102.1 of the TA” above).

A person who wishes to notify us of the disposition or proposed disposition of property referred to in section 1102.1 of the TA must use form TP-1102.1-V. If the property is a life insurance policy, the insurer must send us form TP-1102.3-V. For more information, refer to those forms.

Obligation to file a notice of disposition

A notice of disposition must be filed further to the disposition of taxable Québec property referred to in section 1097 of the TA, unless

• a notice of proposed disposition has already been filed in respect of the property;
• the purchaser mentioned in the notice of proposed disposition and the actual purchaser are the same;
• the proceeds of disposition are not more than the proceeds of disposition indicated in the notice of proposed disposition; and
• the adjusted cost base (ACB) immediately prior to the disposition is not less than the ACB indicated in the notice of proposed disposition.

If one or more of the aforementioned conditions are not met, you must, within 10 days after the disposition, send a notice of disposition by registered mail to us at:

Revenu Québec
3800, rue de Marly
Québec (Québec) G1X 4A5

Any notice of proposed disposition should also be sent to us at the same address.

Issuance of a certificate of compliance

If the disposition of property results in a taxable capital gain and the vendor remits the amount on account of tax payable calculated in Part 5 (or provides acceptable security), the Minister will issue to the vendor and the purchaser a Certificate in Respect of the Disposition or Proposed Disposition of Taxable Québec Property by a Person Not Resident in Canada (form TPF-1098-V).

The certificate issued relieves the purchaser of any liability for income tax arising from the transaction.

However, in the case of a proposed disposition, the certificate issued does not relieve the purchaser of such liability where the actual proceeds of disposition are more than the proceeds of disposition indicated in the notice of proposed disposition. In such a situation, the vendor must file a notice of disposition and, in order for a new certificate to be issued, the vendor must remit an amount on account of tax payable in respect of the additional capital gain realized on the disposition. The new certificate issued relieves the purchaser of any liability for income tax arising from the transaction.

Supporting documents

You must enclose a cheque or money order (or proof of security) and a copy of the documentary evidence substantiating all the amounts of proceeds of disposition and ACB that you have indicated. Such evidence may include

• the offer to purchase (proposed disposition);
• the contract of sale (disposition);
• the acquisition contract;
• form TP-274-V, Designation of Property as a Principal Residence, and, where applicable, form TP 274.S-V, Reduction of the Capital Gain deemed to have been realized on a Principal Residence, in the case of a disposition of a principal residence;
• form TP-518-V, Transfer of Property by a Taxpayer to a Taxable Canadian Corporation, where an election under section 518 of the TA is made in respect of the disposition;
• the deed of transfer, in the case of a disposition by way of an inter vivos gift; and
• an appraiser’s report or certificate of appraisal indicating the fair market value of the property at the time of disposition, in the case of a disposition of property between related persons.