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The Charter of the French language and its regulations govern the consultation of English-language content.

Transaction Proposal in a Tax Audit

Under article 2631 of the Civil Code of Québec, a transaction (amicable agreement) is a contract by which the parties prevent a future contestation by way of mutual concessions or reservations. In order for a transaction to be concluded, Revenu Québec and the taxpayer or mandatary must be willing to prevent or end a dispute by means of mutual concessions. Either party (the taxpayer/mandatary or Revenu Québec) can initiate settlement negotiations.

If the taxpayer or mandatary and Revenu Québec try to resolve a contentious point of a draft assessment or an assessment by means of a transaction, the content of negotiations and documents created in negotiations are protected by settlement privilege, subject to court-recognized exceptions. Accordingly, all verbal and written communications (such as statements, documents or information) concerning concessions and offers to settle made by the parties, as well as documents created solely for negotiation purposes, are protected. If the parties fail to reach a settlement, communications and documents cannot be used against them in any administrative or legal proceedings.

However, settlement privilege does not apply to information and documents that the taxpayer or mandatary would have had to provide to Revenu Québec, regardless of the negotiations, under Québec's self-assessment and self-reporting tax system.

Conclusion of the transaction immediately ends the dispute between the parties based on what was agreed upon. The parties are bound to comply with the terms of the transaction and can no longer file the same dispute with the Direction principale des oppositions or the Court. However, they can contest or bring before the courts anything that is not covered by the transaction or that the parties excluded from the transaction.

If the negotiations do not result in a transaction, the auditor makes an assessment, which the taxpayer or mandatary can contest or appeal.

For more information, see the Directive on Fiscal Transactions Made with Taxpayers and Mandataries Under Articles 2631 to 2637 of the Civil Code of Québec (in French only).

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