Canada: Amendments to intergenerational transfer rules (Quebec)

Quebec is amending its intergenerational transfer rules

Quebec is amending its intergenerational transfer rules

Quebec is amending its intergenerational transfer rules to provide that eligible individuals can continue to qualify for existing provincial relief, following changes to the federal rules.

Under this provincial relief, an individual who disposes of certain eligible shares to a non-arm's-length corporation in a “genuine” intergenerational transfer may be able to designate all or part of a resulting deemed dividend as a deemed capital gain, if certain conditions are met.

This amendment allows certain individuals to access Quebec's relief—despite the new federal intergenerational transfer rules. Specifically, the amount an eligible individual can designate as a deemed capital gain under Quebec's current rules cannot exceed the federal deemed dividend amount (which may now be reduced if the new federal intergenerational transfer rules apply). Quebec's amendment addresses this issue to provide that the amount an eligible individual may designate under the provincial relief is not affected by these recent federal changes.

These amendments apply to eligible transfers on or after 29 June 2021 (the date when the federal intergenerational rules in Bill C-208 entered into effect).

Read an August 2021 report prepared by the KPMG member firm in Canada

 

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