Beneficial Ownership and Taxes: Lessons from Girard v. Revenu Québec

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Imagine helping your child qualify for a mortgage by putting your name on the title. Years later, the tax authorities step in and say: you’re actually the real owner, and you owe tax on the profit. That’s exactly what happened in a recent Quebec court case, and it’s a powerful reminder about beneficial ownership.

On April 23, 2024, the Court of Quebec released its judgment in Girard v. Agence du revenu du Québec (2024 QCCQ 1665). The case involved Claude Girard, his daughter Emanuelle, and several real estate transactions between 2006 and 2009.

What Happened in the Case?

Mr. Girard claimed he was only a “prête-nom” — a nominee — for his son Mathieu. He said he appeared as co-owner on three properties only to help with bank financing, but he wasn’t the true, beneficial owner.

Revenu Québec disagreed. After auditing the family’s real estate dealings, they reassessed Claude beyond the normal limitation period and added unreported income of $11,218 in 2007 and $34,221 in 2008. They treated these profits as business income, not capital gains, and applied gross negligence penalties of $1,679 and $4,197.

Why the Court Rejected His Argument

The court looked closely at the evidence and found several problems with Claude’s claim:

  • He provided no documentation to prove he was just a nominee. He could have shown his son’s credit file, a letter from the bank requiring his co-signature, or a notarized declaration clarifying ownership.

  • His wife had done exactly that when helping their daughter, and the court accepted her arrangement. Claude had nothing similar.

  • Mathieu had already bought two properties on his own and made substantial profits, showing he had the financial capacity without his father’s help.

  • Claude was an experienced businessman in construction, and the properties were flipped quickly, some within months. The court considered this activity to be commercial in nature.

The Court’s Decision

For Claude:

  • The nominee argument failed. He was considered a beneficial owner.

  • The profits were treated as business income, not capital gains.

  • The penalties were cancelled, but only as a benefit of the doubt.

For his daughter Emanuelle:

  • She sold part of a subdivided property to her brother for $70,000 in 2009.

  • Revenu Québec treated it as business income, but the court found it was a capital gain.

  • She could not claim the principal residence exemption because the land she sold had no building on it.

  • Again, the penalties were cancelled.

For more information , please read https://www.canlii.org/fr/qc/qccq/doc/2024/2024qccq1665/2024qccq1665.html

Watch video –https://youtu.be/C1VW5RMLedE

Key Lesson for Families

If you’re putting your name on a property just to help someone else, you need clear documentation. Without it, tax authorities may treat you as the real owner. That can mean taxes on the gains, penalties, and years of litigation.

At Cloudiverse CPAs, we help families avoid this exact outcome. We coordinate with notaries and lawyers to set up proper agreements, ensure tax reporting matches the legal reality, and protect you from unexpected assessments down the road.