Search - consideration

Consideration to USCo includes a fixed monthly fee, a percentage of gross receipts, and a "Procurement License Fee" ("PLF"). ... Rejecting the taxpayer's contention that the PLF is consideration for a set of "procurement rights" distinct from the other franchise rights, CRA stated: [I]t can be argued the PLF is a substitute for the obligation to purchase products and equipment from USCo that would otherwise have been given as consideration for the grant of the Franchise Rights. ... Regardless of whether or not the PLF is separate consideration, it is not a rent, royalty or similar payment. ...

Child 2 will transfer all his Class B and common shares of DC to TC under s. 85(1) in consideration for TC common shares. Mother will transfer all her Class B shares of DC to TC under s. 85(1) in consideration for TC non-cumulative non-participating redeemable retractable non-voting Class A special shares. ... As part of such transfer, DC will transfer a percentage interest in the Mother insurance policy, and all of the Child 2 policy, to TC for proceeds determined in accordance with s. 148(7) as the greater of the value of the interest; the FMV of the consideration given therefor; and the adjusted cost basis of the interest and the consideration therefor, in each case being a non-interest bearing demand promissory note in the principal amount equal to the FMV of the policy. ...

In 2010, Parent sold his shares of Parentco to his child for FMV cash consideration (thereby realizing gain at which time the marketable securities were the only assets of Parentco.) The child shortly thereafter transferred the shares of Parentco to a newly incorporated corporation ("Childco") in consideration for a demand promissory note, and wound-up Parentco. ... What if Parent owned the marketable securities, and acquired the shares of Parentco as consideration for the transfer to Parentco of the securities? ...

MFT will be settled with nominal cash consideration by a Canadian third-party settlor in exchange for one MFT unit. ... MFT will transfer its assets (the same as in 4) to the Fund in consideration for the Fund units having a fair market value equal to the transferred assets. ... Subsequent to the filing of the ss. 132.2 and 132(6.1) elections, MFT will be wound up –with its one outstanding unit cancelled for no consideration. ...

Preliminary transactions Shareholder2 acquired all the marketable securities of Subco 1 in consideration for a demand note. ... Each of TC1 and TC2 will redeem its Class X Preferred Shares in consideration for issuing to DC two non-interest bearing promissory notes. ... TC1 will acquire from TC2 its interest in the Canco1 Loan Note for FMV consideration. ...

A, B and C will each transfer their DC shares to ACo1, BCo1 and CCo1, respectively, under s. 85(1) in consideration for common shares. ... In consideration for such transfers, each of BSub and CSub will assume DC’s liabilities in the same percentage proportion as described in 6 above and issue common shares for the balance of the FMV consideration. ... ACo2, BCo2 and CCo2 will each redeem all of its Class A Preferred Shares owned by DC in consideration for a non-interest bearing demand note. ...

2012 Ruling 2011-0392041R3- Incorporation of a Professional Partnership-- summary under Subsection 85(3) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(3) non s. 85(2) property allocated exclusively to liability assumption, and share/note consideration pre-allocated Background. ... Proposed transactions Newco (a CCPC) will issue one common share to each Partner for nominal consideration. In connection with the transfer by the Partnership of all the Property to Newco, Newco will assume a portion of the Liabilities equal in amount to the fair market value of Non-85(2) Property as sole consideration for such transfer (with a joint election being filed under s. 22 respecting the accounts receivable) and as consideration for the Partnership's transfer to Newco of the 85(2) Property, Newco will: (i) assume the "Remaining Liabilities" (i.e. the portion of the Liabilities remaining after the transfer of the Non-85(2) Property), (ii) and issue the "Promissory Notes" and the "Preference Shares" to the Partnership (with a joint s. 85(2) election being made). ...

After noting that under s. 248(3)(a) "the property which is transferred to the son is an interest in a deemed trust," CRA stated (TaxInterpretations translation): By reason of the consideration which the bare owner must pay to the Usufruct Grantor [father], the trust is not a personal trust. Subparagraph (b)(ii) of the definition of personal trust in subsection 248(1) indicates, among other things, that a personal trust is an inter vivos trust in which no beneficial interest was acquired for consideration payable directly or indirectly to any person who has made a contribution to the trust by way of transfer, assignment or other disposition of property. Furthermore, as the bare owner did not transfer, assign or dispose of any property to the deemed trust, we are of the view that paragraph 108(7)(b) cannot apply to deem the beneficial interest of the bare owner to have been acquired for nil consideration. ...

" Profitco will transfer all its shares of Subco to Lossco under s. 85(1) in consideration for non-voting redeemable retractable preferred shares of Lossco. ... " After the LP1 year end, Amalco will transfer the LP1 units to a newly-incorporated ULC ("Newco") under s. 85(1) in consideration for common shares. Amalco will transfer its common shares of Newco to Profitco under s. 85(1) in consideration for non-voting redeemable retractable preferred shares of Profitco. ...

For example, under the spin-off to Cco: Bco will transfer the Division 1 assets to Cco in consideration for preferred shares, electing under s. 85(1). ... Bco will purchase for cancellation its common shares held by Cco in consideration for issuing a non-interest bearing demand note, with the resulting deemed dividend designated as an eligible dividend. Cco will redeem the preferred shares held by Bco in consideration for issuing a non-interest bearing demand note, with the resulting deemed dividend designated as an eligible dividend. ...