Search - consideration

The CRA generally defines a superannuation or pension plan to be a plan where contributions have been made to the plan by or on behalf of an employer or former employer of an employee in consideration for services rendered by the employee and contributions are used to provide an annuity or other periodical payment on or after the employee's retirement in consideration for his or her employment services, and, in some cases, where amounts have been contributed under the plan by a government. ...

Our Comments As a result of the decision of the FCA in Manrell, where a taxpayer receives an amount as the consideration for granting a covenant not to compete, the amount received will not be considered the "proceeds of disposition" of any "property" for purposes of the Act (subject to the proposed amendments to the Act, i.e., section 56.4, Restrictive Covenants, announced by the Department of Finance on October 7, 2003, which are not applicable in this case because the proposed amendments apply after the time of the payment of the NCP). ... However, in the situation described, it appears that pursuant to the SPA and the NCA made in connection with the sale of the Business, XXXXXXXXXX received the NCP from an arm's length purchaser as consideration for granting a covenant not to compete. ...

Position: General comments re: relevant considerations when a "cost-plus" health services arrangement is implemented by a sole proprietor. ... When the plan represents (i) an undertaking by one person, (ii) to indemnify another person, (iii) for an agreed consideration, (iv) from a loss or liability in respect of an event, (v) the happening of which is uncertain, it will be considered to be in the nature of insurance. ...

Each of the Class A common shares, Class B common shares and Class C common shares was issued at the relevant time for an amount which was equal to the fair market value ("FMV") thereof and such consideration was paid in full by the subscriber to the issuer. ... Consistent with the Supreme Court of Canada's decision in Neuman, we agree that, generally, subsection 56(2) will not apply to arrangements involving the payment of dividends by a corporation, provided that the applicable taxpayer does not have a pre-existing entitlement to the dividends, and provided that proper consideration was given for the shares when issued. ...

Under paragraph 214(15)(b) of the Act, an amount paid or credited as consideration for an agreement to lend money is deemed to be an interest payment only when the non-resident lender would be liable to Part XIII tax on any interest payable on the obligation issued under the terms of the agreement. Otherwise, the amounts paid or credited as consideration for the agreement retain their basic characteristics and are not deemed to be interest payments. ...

One of the key considerations in determining whether an NPO is validly constituted and operated is whether profit is one of its objectives. ... Relevant considerations in such a situation would be the circumstances and purposes for which the property was acquired, the duration of the profitable rental situation and whether the income earned during the transition period is used for the NPO's not-for-profit objectives. ...

In the Southwind case, the court endorsed consideration of a series of factors that would be relevant, but not necessarily of equal significance. ... The emergence of e-commerce presents new considerations for tax administration purposes, which are still being studied. ...

B Co will acquire all of the shares of each of Newlossco1, Newlossco2 and Newlossco3, as well as the Newlossco1 Note A, the Newlossco2 Note A and the Newlossco3 Note A, from Parentco for FMV consideration consisting of cash. The FMV will reflect, inter alia, interest rates, statutory income tax rates, the estimated time of utilization of the non-capital losses of Newlossco1, Newlossco2 and Newlossco3, as the case may be, and other considerations. 3) Paragraphs 31 to 33 of the Ruling Letter are deleted and replaced by: 32. ...

You have asked us to consider the following: 1) Taxpayers X and Y were partners with several other practitioners in a XXXXXXXXXX practise (the "Partnership"). 2) The other partners had started the practise several years ago, and as such, had not paid an amount to acquire an interest in the Partnership. 3) When X acquired a XXXXXXXXXX% interest in the Partnership, as part of the consideration he paid approximately $XXXXXXXXXX in respect of goodwill associated with the Partnership, which at that time was valued at $XXXXXXXXXX. 4) When Y acquired a XXXXXXXXXX% interest in the Partnership, as part of the consideration he paid approximately $XXXXXXXXXX in respect of goodwill associated with the Partnership, which at that time was valued at $XXXXXXXXXX. 5) In XXXXXXXXXX, because the partners no longer shared common business interests, the Partnership was dissolved to allow the partners to practise independently. 6) Each partner received an undivided share in the Partnership's assets on dissolution, such that each partner's undivided interest in a particular property was equal to that partner's undivided interest in every other property. 7) The partners jointly elected in prescribed form, within the time set out in subsection 96(4) of the Act, to have each partner's proceeds of disposition of their interest in the Partnership and the cost to each partner of the property received on the dissolution determined in accordance with the rules in subsection 98(3) of the Act. 8) The adjusted cost base ("ACB") of X and Y's partnership interest immediately prior to dissolution was $XXXXXXXXXX and $XXXXXXXXXX respectively. 9) Immediately prior to dissolution, the Partnership assets consisted solely of $XXXXXXXXXX of accounts receivable, $XXXXXXXXXX of leasehold improvements and $XXXXXXXXXX of furniture and fixtures for a total of $XXXXXXXXXX. 10) The Partnership did not record any amount of goodwill in its financial statements. 11) Pursuant to subparagraph 98(3)(b)(i) of the Act, the cost to X and Y of their individual interest in the Partnership's assets was equal to their percentage interest in the cost amount of the Partnership assets to the Partnership immediately prior to dissolution. 12) X's percentage interest in the aggregate cost amount to the Partnership of all Partnership property received on dissolution was $XXXXXXXXXX (XXXXXXXXXX% of $XXXXXXXXXX). 13) There is a $XXXXXXXXXX difference between the ACB of X's partnership interest and X's percentage interest in the aggregate cost of the Partnership assets. 14) Y's percentage interest in the aggregate cost amount to the Partnership of all Partnership property received on dissolution was $XXXXXXXXXX (XXXXXXXXXX% of $XXXXXXXXXX). 15) There is a $XXXXXXXXXX difference between the ACB of Y's partnership interest and Y's percentage interest in the aggregate cost of the Partnership assets. ...

Such a determination will require full consideration of the unique facts in a given situation. ... Please note that any comments in our previous response that utilized the now repealed definition of “share of the capital stock of a family farm corporation” would continue to apply taking into consideration the appropriate adjustments for the revised definition of “share of the capital stock of a family farm or fishing corporation.” ...