Subsection 49(1) - Granting of options
See Also
The Special Commissioners concluded that under an arrangement whereby the respondent ("SPI") granted an option to Citibank International PLC...
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| Tax Topics - General Concepts - Ownership | commercially realistic prospect of put and call not being exercised | 161 |
Before finding that a clause in a lease giving the lessee the unilateral right to compel the lessor to sell helicopters to the lessee at their...
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| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | 143 |
A right of first refusal contained in a lease was not an option. An option gives to the optionee at the time it is granted a right which he may...
A right of first refusal, unlike an option, is only a personal right rather than an interest in land, and therefore is not subject to the rule...
Administrative Policy
22 January 2020 External T.I. 2014-0559281E5 F - T5008 -- attach -- Subsection 49(1)
Respecting the application of s. 49(1) to the writing and sale on an exchange of a naked call option and the reporting of the “cost” of the...
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| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) | option writer can deduct its expenses from deemed s. 49(1) proceeds | 125 |
| Tax Topics - Income Tax Regulations - Regulation 230 - Subsection 230(2) | “cost” of call options closed out by writer is nil, not the cost of offsetting call option purchase/cost re short sale is the FMV of the borrowed shares | 351 |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | cost of short sale is FMV of borrowed shares | 59 |
18 July 2011 External T.I. 2010-0370561E5 F - Location avec option d'achat -- attach -- Subsection 49(1)
Where there is a real estate lease with a purchase option, is the landlord deemed to have disposed of the option when granting it, and is a...
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| Tax Topics - General Concepts - Substance | lease is a lease in the absence of sham | 92 |
| Tax Topics - Income Tax Act - Section 68 | where lease is coupled with bargain purchase option, a portion of the rents must be allocated to option proceeds | 147 |
Income Tax Technical News No. 44 13 April 2011 [archived] -- attach -- Subsection 49(1)
CRA stated:
[W]hen a holder of an exchangeable debenture exercises the right to exchange the debenture for the target shares, the holder would...
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| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | inter-provincial loss shifting | 69 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) | exchangeable debenture appreciation not recognized | 102 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(f) | exchangeable debenture appreciation not recognized | 120 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(c) | FMV basis in contributed property | 72 |
| Tax Topics - Treaties - Income Tax Conventions - Article 10 | use of s.à r.l. | 131 |
13 September 2007 External T.I. 2007-0251081E5 F - Transactions d'options d'achat d'actions -- attach -- Subsection 49(1)
In order to effectively convert an otherwise-expiring non-capital loss to a net capital loss, a CCPC (Aco) sells covered options (Options #1) on...
21 December 2006 External T.I. 2006-0170851E5 F - Option d'achat de biens immeubles -- attach -- Subsection 49(1)
Where the owner of a farm granted an option for consideration to sell his farm in 2005 and received a further sum in 2006 to extend the option,...
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| Tax Topics - Income Tax Act - Section 49 - Subsection 49(4) | refiling when option exercise in subsequent year | 83 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) | recapture of depreciation previously claimed for farm was farming income | 21 |
4 April 2005 External T.I. 2004-0099411E5 F - Transfert de contrat de crédit-bail -- attach -- Subsection 49(1)
CRA noted its position that where a lease had a bargain purchase option, a portion of each lease payment was to be treated as allocable to...
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| Tax Topics - Income Tax Act - Section 68 | purchase price for lease with bargain purchase option likely to be allocated to the embedded option | 178 |
Discussion of CRA position that where a lease contains a bargain purchase option, a portion of each rent payment may be considered to be a payment...
7 November 2000 External T.I. 2000-0040615 F - OPTIONS ET CLAUSE DE CAPACITE DE GAIN -- attach -- Subsection 49(1)
The shareholders, in consideration for granting the acquirer an option to acquire their shares in two years for a nominal sum, were entitled to...
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| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) | IT-426 cost-recovery method not available where earnout is embedded in the variable proceeds received for the granting of a share-sale option with nominal exercise price | 153 |
Warrants issued in connection with a "poison pill" arrangement are a form of option and, therefore, are subject to the usual option rules.
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 38 | |
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(e) | 53 |
Articles
Discussion of whether s. 49 applied to an offering of "appreciation rights" by Canadian Pacific.
Paragraph 49(1)(a)
Administrative Policy
17 April 2007 External T.I. 2007-0230381E5 F - Option d'achat de biens immeubles -- attach -- Paragraph 49(1)(a)
CRA indicated that where an option was granted on a farm consisting of a principal residence and the farmland:
[T]he portion of the consideration...
Subsection 49(2) - Expired option — shares
See Also
The taxpayer received £399,750 for granting an option to buy land at a sale price of over £4M, but subject to a condition that the taxpayer was...
Subsection 49(3) - Where option to acquire exercised
Cases
It was argued by a taxpayer who had granted an option to purchase his land that the Act included no provision permitting the taxation of payments...
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|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Land | 45 | |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | 112 | |
| Tax Topics - Income Tax Act - Section 68 | 55 |
See Also
Major J. noted, with respect to a clause in a lease that gave the lessee the unilateral right to compel the lessor to sell helicopters to the...
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| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | 106 |
Administrative Policy
10 October 2024 APFF Roundtable Q. 9, 2024-1028901C6 F - Exercice d’une option d’achat et vente du véhicule -- attach -- Subsection 49(3)
An individual, after having paid $12,500 in lease expenses during the first 48 months of an automobile lease, exercises the option under the lease...
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| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) | vehicle lease payments converted into recapture on option exercise and vehicle sale | 116 |
17 February 2021 External T.I. 2018-0768051E5 F - Contrat de crédit-bail -- attach -- Subsection 49(3)
Regarding a lease to “Aco” of a truck tractor (the “Vehicle”) with a term of 48 months and a bargain purchase option at maturity, CRA...
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| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | leasing contract cannot be recharacterized as a secured loan funding an acquisition of depreciable property | 246 |
| Tax Topics - Income Tax Act - Section 68 | lease payments for vehicle lease with bargain purchase option are allocated between ACB of option and deductible lease payments | 301 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) | acquisition of leased vehicle pursuant to bargain purchase option followed by sale of vehicle could engage s. 13(5.2) | 131 |
| Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) | truck tractor is prescribed property | 26 |
| Tax Topics - General Concepts - Substance | lease payments, but not the lease itself, could be recharacterized | 93 |
25 April 2005 Internal T.I. 2004-0108301I7 F - Coût d'une automobile -- attach -- Subsection 49(3)
The cost (for purposes of C of the standby charge formula under s. 6(2)) of an automobile acquired by the employer at the end of its lease...
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| Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) - Element C | cost of automobile acquired pursuant to exercise of bargain purchase option increased under s. 49(3) by portion of each preceding lease payment treated as an option premium | 154 |
A lease is amended to add an option to purchase and to increase the annual lease payment by an amount that would be in excess of the fair market...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 159 |
S.49(3) did not apply to deem the exercise of employee stock options held by a non-resident former employee to not be a disposition of the...
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| Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) | no acquisition of property by the obligor corporation when its debt repaid or employee stock option exercised | 131 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 131 |
Special warrants to acquire shares that if not exercised prior to the specified expiry time are deemed to be exercised at that time without any...
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| Tax Topics - Income Tax Act - Section 66 - Subsection 66(15) - Flow-Through Share | 26 |
Articles
Consequences of grant of option to acquire partnership interest (p. 8)
- A and B formed Partnership, each contributing $100. Partnership then...
Subsection 49(4)
Administrative Policy
21 December 2006 External T.I. 2006-0170851E5 F - Option d'achat de biens immeubles -- attach -- Subsection 49(4)
Regarding where the owner of a farm (the correspondent’s father) granted an option for consideration to sell his farm in 2005 (resulting in the...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | capital gain when amount received for extending an option | 52 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) | recapture of depreciation previously claimed for farm was farming income | 21 |