Search - consideration

As consideration, the Husband would pay for the Securities using cash, in-kind consideration or a loan at the CCRA prescribed rates. ... If the election is made and fair market value consideration was received by the transferor, subsection 74.5(1) of the Act provides that the gain or loss from a disposition of the property by the spouse will not be attributed to the taxpayer in any year in which the spouse subsequently disposes of the property. ...

Less than two years later, the friend "purchased" the home for consideration of the outstanding balance of the mortgage, $7,000 and the amount of a number of mortgage payments that were missed. ... Approximately one-and-one-half years later, your friend purchased the home from you and your wife for consideration of the outstanding balance of the mortgage, the amount of mortgage payments that he missed and $7,000. ... Your stated concern is that the proceeds of disposition will be considered to be $155,000 instead of the actual consideration that you received as described above. ...

Canco can establish that throughout the period in the year under consideration, more than five Leaseco employees or the equivalent of more than five Leaseco employees are employed full time in the active conduct of Leaseco's real property development or leasing business utilising property owned by Leaseco. 7) When certain other U.S. real properties were acquired, a new Ownerco was incorporated by Holco to hold the property in respect of each such acquisition. ... Leaseco employees perform the following functions on behalf of each Ownerco: a) preparing detailed investment policies, b) finding and investigating real estate investment opportunities, c) negotiating major leases and approving all others, d) attending meetings pertaining to Ownerco business, e) arranging for the acquisition of Ownerco investments by co-ordinating and supervising the acquisition, f) investigating and hiring property managers, g) inspecting each property owned by the Ownerco's at least quarterly, h) preparation of quarterly financial reports for each Ownerco, i) negotiating with lending institutions and mortgage brokers, j) advising on and co-ordinating the disposition of properties including the selection of sales agents, k) dealing with auditors, accountants and counsel, l) general supervision to ensure all debts are serviced and taxes, insurance and maintenance payments are made, m) general supervision of all persons rendering services for property owned by each Ownerco, n) operating bank accounts in the Ownerco's name for the purpose of receiving and making payments relating to the Ownerco's business, and o) maintaining books of account of all receipts and disbursements by each Ownerco. 9) Leaseco will receive a fee from the Ownercos the aggregate amount of which will reflect Leaseco's contribution to earning of the profits of the particular Ownerco's business and will therefore in general, be equal to or greater than an arm's length fee and not less than the cost to Leaseco of compensation paid or accruing to the employees that performed the services. 10) Subject to the application of subparagraph 95(2)(a)(i) of the Act, all the income of each Ownerco for the period in the year under consideration is income from property (i.e. the property referred to in paragraph 7 above). 11) If all the property of all the Ownerco's were transferred into Leaseco, all the income of Leaseco could be considered to derive from a single active real estate development and leasing business. Our Comments Provided that Canco establishes that Leaseco has an active real estate development and leasing business with respect to property owned by Leaseco throughout the period in the year under consideration and is also able to establish that the facts set out in paragraphs 7 and 8 above are accurate, it is our view that in the above circumstances, the income from property of each Ownerco in respect of that period would be included in its income from an active business pursuant to subparagraph 95(2)(a)(i) of the Act. ...

Under the common law, "a gift is a voluntary transfer of property owned by a donor to a donee, in return for which no benefit or consideration flows to the donor" (The Queen v Friedberg, [1992] 1 CTC 1, 92 DTC 6031 (FCA)). Generally, for purposes of sections 110.1 and 118.1, a gift under common law is made if a taxpayer has donative intent, and all three of the following conditions are satisfied: there must be a voluntary transfer of property to a qualified donee; the property transferred must be owned by the donor; and no benefit or consideration must flow to the donor. The amount of the advantage is defined as the total value, at the time the gift is made, of any property, service, compensation, use or other benefit that the taxpayer obtained, received or enjoyed as consideration for, in gratitude for or in any other way related to the gift. ...

The steps of the reorganization would be as follows: Parentco transfers shares of Subco1 having an ACB of $200 ($2,000 x $20,000/$200,000) and a FMV of $20,000 to Newco on a rollover basis in consideration for shares of Newco. Subco1 transfers shares of Subco2 to Newco on a rollover basis in consideration for shares of Newco. ... CRA Response We recently received a ruling request with respect to a similar reorganization and we were unable to issue a favourable ruling in that regard based on the following considerations: Let’s consider the following distinct possibilities if there was no reorganization: If Subco1 sold all of its assets at FMV, a total capital gain of $198,000 would be realized by Subco1. ...

In connection with the FTS offering, the Issuer may retain an underwriter (an “Underwriter”) to assist it with finding Investors to participate in the Issuer’s FTS offering and to provide other related services, in consideration for which the Issuer will pay the Underwriter a fee which may be in the range of 3 to 6% of the FTSs subscription price (an “Offering Assistance Fee”). Alternatively, in some circumstances involving smaller FTS offerings, the Issuer may not retain an Underwriter and, instead, the Promoter will agree to assist the Issuer with finding Investors to participate in the Issuer’s FTS offering and the Issuer will pay an Offering Assistance Fee to the Promoter in consideration for that assistance. ... YOUR QUESTION You have asked whether, in a circumstance where the Issuer does not retain an Underwriter in connection with its FTS offering, the payment by the Issuer to the Promoter of an Offering Assistance Fee as consideration for the Promoter assisting the Issuer with finding Investors to participate in the FTS offering and providing other related services, would result in the FTSs issued under that FTS offering becoming prescribed shares within section 6202.1 of the Regulations. ...

On January 2 of Year 11, A and B initiated a divisive reorganization (“Reorganization”) in the course of which the following transactions were undertaken: a) B incorporated a new corporation (“Newco”). b) B disposed of her Opco common shares to Newco in consideration for common shares in Newco. c) Opco disposed of a portion of the Business Property to Newco in consideration for preferred shares in Newco. d) The shares that Opco and Newco held into one another were cross-redeemed in consideration for the issuance of a non-interest bearing promissory notes (“Notes”), and e) The Notes will be extinguished by way of legal set-off. 5. ...

Paragraph 84.1(1)(a) of the Act provides, in certain circumstances, for a paid-up capita lreduction for each class of the shares of a purchaser corporation from which shares were issued as consideration for its acquisition of the shares of another corporation. Where no shares of the purchaser corporation are issued as consideration for the shares acquired by it, this provision would not be applicable.      Paragraph 84.1(1)(b) of the Act, in certain circumstances, treats a purchaser corporation as having paid a dividend to the transferor of the shares it has acquired where the aggregate of the amount of the increase in the legal paid-up capital of its shares arising as a result of the share transfer and the fair market value of the non-share consideration given by it for the transferred shares exceeds the total of (a)     the greater of  the adjusted cost base, as modified under paragraph 84.1(2)(a) or (a.1), to the transferor of the transferred shares and the paid-up capital of the transferred shares, and (b)     the total paid-up capital reductions required by paragraph 84.1(1)(a) to be made by the purchaser corporation.       ...

Furthermore, even if the debt had been disposed of, subparagraph 40(2) (g) (ii) would deem the capital loss to be nil because the debt was not laid out for the purpose of earning income from business or property nor was it part of the consideration in the disposition of property. ... In our view, the Department would not be justified in determining capital gains on this disposition without consideration to the repayment of the debt by the Taxpayers.  ... Based on the above, in our opinion, the repayment of the loans should be taken into consideration in the calculation of the capital gain on the Taxpayers' disposition of the shares. ...

The vendor's representative,        19(1) 19(1)    is of the view that the proceeds of disposition on the sale of the  property for the purposes of section 116 of the Act include the consideration represented by the purchaser's assumption of the take-or-pay obligation, and that the deduction available to the vendor pursuant to subsection 20(24) of the Act may be deducted in the computation of the proceeds of disposition of the property in determining the taxes payable as described in paragraph 116(5.2)(a) of the Act. ... In both cases, the cash consideration would be $175, although, in both cases, the total paid for the property would be $200. ... So far, our views coincide with 19(1)   as, incidentally, both do with David Ross, a tax lawyer specializing in oil and gas matters, on page 7 of his article "Tax Considerations Relevant to the Purchase of Assets and the Purchase of Shares" in the Canadian Petroleum Tax Journal, Vol. 1, No.1. ...