GST/QST Rules for Assignments of Property (Cessions de Promesse d’Achat) in Quebec: When Assignors Must Charge Tax

Introduction

Assignments of purchase agreements — commonly called cession de promesse d’achat — are increasingly common in Quebec real estate, especially for pre-construction condos and investment properties.
However, many buyers and assignors do not realize that GST/QST often applies to assignment fees, depending on the nature of the property, the assignor’s intention, and whether the assignment is considered a taxable supply.
Revenu Québec audits assignment transactions frequently because misunderstandings lead to unreported GST/QST, incorrect invoices, and missing documentation.
This guide explains when GST/QST applies to assignments, how to structure compliant paperwork, and what documentation is required.

Legal and Regulatory Framework

Under the Excise Tax Act (GST) and the Quebec Taxation Act (QSTA):

• Assignments of rights in respect of new or substantially renovated housing are generally taxable.

• Assignment of a purchase agreement is considered a supply for GST/QST purposes.

• GST/QST applies to the assignment fee, not the purchase price of the property.

• Residential resale assignments may or may not be taxable, depending on intention and business activity.

• Builders and developers have special rules under ETA s. 254–256 and QSTA equivalents.

• Registrants must issue compliant invoices showing GST/QST collected on the assignment fee.

Authorities enforce:

• ETA s. 165/QSTA s. 16 (tax on taxable supplies)

• ETA s. 123/QSTA definitions of “supply” and “consideration”

• ETA s. 221/QSTA s. 22 (requirement to collect and remit tax)

• Documentation rules under ETA s. 169(4)/QSTA s. 39

Key Court Decisions

Courts have ruled that:

• Assignment fees related to new residential units are taxable, even if the final buyer occupies the property as a residence.

• Assignors must prove whether they were acting as investors (capital property) or as traders/flippers (business activity).

• “Intention at acquisition” is crucial. If the intent is resale for profit, GST/QST more likely applies.

• Yes — even an individual (not a corporation) may be considered a “builder” based on their conduct, triggering GST/QST.

• GST/QST may apply even if the parties fail to mention it in the assignment contract.

These cases show that tax treatment depends on intention, documentation, and the nature of the property.

Why CRA and Revenu Québec Target These Issues

Assignments are high-risk because:

• Many assignors do not register for GST/QST when they should.

• Assignment fees are often paid privately without proper invoices.

• Buyers do not know whether GST/QST is included or extra.

• Assignors often cannot prove their intention (investment vs. profit-making).

• Pre-construction condos trigger special new housing rules.

• Developers frequently report assignments to Revenu Québec.

High-risk situations include:
Pre-construction condos, new builds, flips, serial assignment transactions, and assignments by non-residents.

Mackisen Strategy

We assist assignors, buyers, investors, and brokers with complete GST/QST classification and compliance.

1. Intention & Activity Analysis

We determine whether the assignor:

• Intended to occupy the property

• Held the unit as a long-term investment

• Acted as a trader/flipper

• Falls under “builder” rules

2. Assignment Fee Taxability Review

We assess:

• Nature of the property (new vs resale)

• Relationship with the developer

• Whether GST/QST applies to profit, deposits, or both

• Whether self-supply rules might apply

3. Correct Documentation

We prepare:

• GST/QST-compliant invoices

• Assignment agreement tax clauses

• Proof-of-payment schedules

• Breakdown into taxable and non-taxable components

4. Registration & Remittance

If GST/QST applies, we manage:

• Registration (if required)

• Calculation of GST/QST

• Filing and remittance

• Adjustments for past unreported assignments

5. Audit Defence for Assignors

If selected for review, we prepare:

• Intention evidence

• Market valuation documentation

• Legal arguments

• Full representation before Revenu Québec

Real Client Experience

An investor assigned a pre-construction condo for a $60,000 profit and believed the amount was tax-free since the buyer would occupy the unit.
Revenu Québec assessed more than $8,500 in GST/QST on the assignment fee.
Mackisen reviewed the file, prepared intention evidence showing investment purpose, and successfully reduced the assessment by demonstrating capital-property treatment.
This case highlights how GST/QST depends on intention and documentation — not assumptions.

Common Questions

1. Do all assignment fees trigger GST/QST?
No — only taxable assignments, mainly involving new builds or commercial activity.

2. Is GST/QST charged on the deposit reimbursement?
Typically no — only on the profit portion, unless structured differently.

3. If I never lived in the unit, does that automatically make it taxable?
No. Intention and documentation matter more than occupancy.

4. Do flippers need to register for GST/QST?
Often yes — depending on the frequency and intention of transactions.

Why Mackisen

With more than 35 years of combined CPA experience, Mackisen CPA Montreal helps businesses stay compliant while recovering the taxes they’re entitled to. Whether you're completing your first assignment deal or navigating complex GST/QST filings, our expert team ensures precision, transparency, and protection from audit risk.

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Learn when GST/QST applies to assignment fees in Quebec. Mackisen CPA Montreal explains tax rules for pre-construction condos, assignment agreements, and investor compliance.