Search - consideration

An investment that you wish to take out of your RRSP (including a mortgage) because it has little or no value, can be sold from the RRSP to anyone (including yourself) for fair market consideration. However, subsection 146(9) of the Income Tax Act states that if an asset is transferred (sold) from an RRSP for consideration that is less than the fair market value of the property at the time of the transfer, or for no consideration, the difference between the fair market value of the property and the consideration, if any, shall be included in computing the income of the annuitant of the RRSP. Therefore, if a property is transferred from your RRSP into your name personally for no consideration, there will be no income tax consequence as long as the fair market value of the property was nil at the time of the transfer. ...

Principal Issues: 1.A shareholder will transfer a life insurance policy to a corporation it controls for consideration equal to the fair market value of the policy. ... The policyholder is a shareholder who controls a corporation and the shareholder wants to transfer the policy to the corporation for consideration equal to the fair market value of the policy. ... Where the shareholder is receiving consideration equal to the fair market value of the policy there would not be a shareholder benefit pursuant to subsection 15(1). ...

The Department does not require that the consideration received on such transfers be less than the fair market value of the property transferred nor do we require a reduction of the paid-up capital of any shares. Where the consideration includes shares of the Purchaser, we are often unable to rule that the provisions of subsection 55(2) of the Income Tax Act will not apply on the redemption of those shares. ... There may also be situations in which we are unable to give a favourable ruling with respect to the application of subsection 181(5) where fair market value consideration is received on a transfer. ...

Woolley (613) 957-2139 XXX Attention: XXX February 17, 1992 Dear Sirs: Re: Gift of Real Property This is in reply to your letter of January 9, 1992 wherein you requested our views on whether a taxpayer who donates real property with a substantial fair market value to a Canadian municipality, and receives consideration of $1, would be considered to have gifted the real property to the municipality if payment of such consideration was merely a legal formality to avoid adverse consequences with respect to land transfer tax. Our Comments It is our opinion as outlined in paragraph 29 of Information Circular IC 80-10R, dated December 17, 1985, that a gift is "a voluntary transfer of property without consideration. ... " Whether receiving nominal consideration disqualifies a transfer from being gratuitous, and accordingly "taints" the gift, is unclear from existing jurisprudence. ...

The Department does not require that the consideration received on such transfers be less than the fair market value of the property transferred nor do we require a reduction of the paid-up capital of any shares. Where the consideration includes shares of the Purchaser, we are often unable to rule that the provisions of subsection 55(2) of the Income Tax Act will not apply on the redemption of those shares. ... There may also be situations in which we are unable to give a favourable ruling in respect to the application of subsection 181(5) where fair market value consideration is received on a transfer. ...

An apportionment of a royalty payment agreed to by arm’s length parties under a mixed contract, to the extent that it is reasonable and realistic, in the sense that it is reflective of the actual consideration paid for a copyright described under subparagraph 212(1)(d)(vi), will generally be accepted by the CRA. ... Whether a particular apportionment of the consideration paid is reflective of the actual payments described in the exemption under subparagraph 212(1)(d)(vi) depends on the legal nature of what is being provided under the mixed contract, the relationship between the parties and the facts of the particular situation including the commercial reality of the parties and the consideration paid in these circumstances. In determining if an apportionment provided under a mixed contract is reflective of the obligation of the parties under subsection 212(1), consideration would be given, amongst others, to the terms of the mixed contract and to whether the parties have divergent interests in respect of this apportionment. ...

Smith will hold only share consideration in AB Ltd. after the amalgamation.  ... Smith will hold both share consideration in AB Ltd. and non-share consideration in the form of cash or debt of AB Ltd. after the amalgamation.  ... Smith received consideration other than shares of AB Ltd. upon the amalgamation of A Ltd. and B Ltd.  ...

Smith will hold only share consideration in AB Ltd. after the amalgamation. ... Smith will hold both share consideration in AB Ltd. and non-share consideration in the form of cash or debt of AB Ltd. after the amalgamation. ... Smith received consideration other than shares of AB Ltd. upon the amalgamation of A Ltd. and B Ltd. ...

As consideration, the Transferor receives shares of the Transferee having a fair market value of $800 and transfers liabilities to the Transferee in the amount of $700. The Transferee redeems $500 worth of shares and as consideration surrenders its receivable from Transferor of $500 for cancellation. ... The Transferee then redeems $800 worth of shares and, as consideration, issues to the Transferor an interest-bearing demand note having a principal amount of $800. ...

Position: Yes Reasons: Payments made as consideration for entering into a contract of employment are deemed to be remuneration for services. 2009-035262 XXXXXXXXXX Rita Ferguson 519-645-5261 May 19, 2010 Dear XXXXXXXXXX: Re: Nursing recruitment This is in response to your letter of December 23, 2009 inquiring about the taxation of payments made by the XXXXXXXXXX (the "Employer") to new nursing graduates. ... Subsection 6(3) of the Act states that payments made to a person are deemed to be remuneration for purposes of section 5 if they are received "(a) during a period while the payee was an officer of, or in the employment of, the payer, or (b) on account, or in lieu of payment or in satisfaction of an obligation arising out of an agreement made by the payer with the payee immediately prior to, during or immediately after a period that the payee was an officer of, or in the employment of, the payer, [...] unless it is established that, irrespective of when the agreement, if any, under which the amount was received was made or the form or legal effect thereof, it cannot reasonably be regarded as having been received (c) as consideration or partial consideration for accepting the office or entering into the contract of employment, (d) as remuneration or partial remuneration for services as an officer or under the contract of employment, or (e) in consideration or partial consideration for a covenant with reference to what the officer or employee is, or is not, to do before or after the termination of the employment." (emphasis added) It is our view that the terms of the Contract indicate the payments are made as consideration for entering into the contract of employment. ...