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A personal trust is defined in subsection 248(1) of the Act and includes an inter vivos trust in which no beneficial interest was acquired for consideration. ... Paragraph 69(1)(a) of the Act deems property acquired from a non-arm’s length person for consideration in excess of fair market value to be acquired at fair market value, and paragraph 69(1)(b) of the Act deems property disposed of to a non-arm’s length person for proceeds less than fair market value to be disposed of at fair market value. In addition, where an RRSP trust disposes of property for a consideration less than fair market value of the property or acquires property for a consideration greater than the fair market value, the difference between the fair market value and the consideration is income of the annuitant in the year pursuant to subsection 146(9) of the Act. ...

For example, by the end of the series of transactions, it would appear that XXXXXXXXXX received strictly shares in XXXXXXXXXX as its consideration for the sale of its shares in XXXXXXXXXX. ... Other Issues It seems peculiar that the preferred shares issued by XXXXXXXXXX in transaction #3 reflect a FMV significantly less than the FMV of the consideration received two days later upon the surrender of those shares by XXXXXXXXXX. ... For example, we would be concerned if a capital gain (i.e. the capital gain that would have arisen had the consideration described in transaction #4 been received in transaction #3) has been converted into a deemed dividend. ...

It is also our view that the facts of the other cases are significantly different from the situation under consideration. 940101 XXXXXXXXXX M. ... Pursuant to this concept, a payment of in-kind consideration will only be regarded as a benefit to the extent that it can be converted to cash. ... While these cases involved decisions on whether economic benefits were received, it is our view that the facts are significantly different from those under consideration here. ...

The exception referred to in your letter is stated in the Act as follows: "at the time of the transfer the fair market value of the transferred property did not exceed the fair market value of the property received by the transferor as consideration for the transferred property;" Therefore, in order to qualify for this exception, "at the time of the transfer" fair market value consideration must be received from the transferee. Receipt of fair market value consideration at a date subsequent to the transfer date will not cease attribution unless as stated above, the original property, or property substituted is returned to the transferor. If the transferor takes back a debt as consideration (ie. sale of an asset for a promissory note) then interest (equal to the lesser of a Revenue Canada prescribed rate or an arm's length rate) must be charged and paid within thirty days of the end of each year the debt is outstanding or attribution will occur. ...

Principal Issues: 1.Where identical shares are acquired, how is the actual cost of newly- acquired shares taken into consideration? 2.Where the acquisition of newly-acquired shares, how is the 53(1)(j) bump in ACB taken into consideration? ... Therefore, if 1% of the shares sold in 1994 were determined to be newly-acquired shares, only 1% of the paragraph 53(1)(j) adjustment will be taken into consideration in calculating the 1994 capital gain. ...

A personal trust is defined in subsection 248(1) as including an inter vivos trust in which no beneficial interest was acquired for consideration payable to the trust or to a person who has made a contribution to the trust. ... Paragraph 69(1)(a) deems property acquired from a non-arm's length person for consideration in excess of fair market value to be acquired at fair market value, and paragraph 69(1)(b) deems property disposed of to a non-arm's length person for proceeds less than fair market value to be disposed of at fair market value. In addition, where an RRSP trust disposes of property for a consideration less than fair market value of the property or acquires property for a consideration greater than the fair market value, the difference between the fair market value and the consideration is income of the annuitant in the year pursuant to subsection 146(9). ...

Principal Issues: If the transferor receives a promissory note as consideration for property transferred (shares) to his spouse or spouse trust, is the adjusted cost base of the note equal to the value equal to the face amount of the note? ... Further, subsection 73(1) of the Act does not preclude a taxpayer from receiving a note or similar debt instrument as consideration for transferred property. ... Furthermore, the spouse or the spouse trust would be deemed to have acquired the shares at that time for an amount equal to such proceeds of disposition whether or not the transferor received a cash payment, a promissory note, or no consideration. ...

A policyholder will receive in consideration for his/her Membership Rights common shares in XXXXXXXXXX that can be traded XXXXXXXXXX. ... All Canadian Members will receive a fixed amount of consideration for the surrender of their Membership Rights of approximately XXXXXXXXXX. 10. In addition, Canadian Members holding participating policies will receive additional amounts linked to the size of their participating interest (XXXXXXXXXX), subject to a minimum amount as consideration XXXXXXXXXX. 11. ...

Position: no effect on benefit calculation re: the second class Reasons: 74.4(2)(f) specifically refers to taxable dividends paid on the shares that were issued as consideration for the transferred property so dividends paid on other shares would not be included in the calculation of a benefit in respect of the shares issued as consideration XXXXXXXXXX 5-983094 D. ... X transfers, at fair market value, a rental property to Holdco, elects under subsection 85(1) in respect of the transfer and receives a second class of special shares as consideration. ... It is our view that, as paragraph 74.4(2)(f) specifically refers to taxable dividends received on the shares that were received as consideration for the transfer of property, that is, the second class of special shares, the fact that dividends were paid on the first class of special shares does not affect the calculation of the deemed interest benefit on the second class of special shares. ...

For instance, paragraph 85(l)(e.2) would apply if X Co. receives consideration from Y Co. having a fair market value less than the fair market value of the land. Subsection 55(2) could apply to any deemed dividend arising on the redemption or cancellation of shares ("Consideration Shares") issued by Y Co. to X Co. as consideration for the land transfer, if it was concluded that the transfer to Y Co. was part of a series of transactions or events referred to in paragraph 55(3) (a) of the Act which also included a subsequent disposition of the shares of Y Co. to a taxpayer dealing at arm's length with X Co. Depending on the consideration received by X Co. from Y Co., subsection 85(2.1) could apply to reduce the paid-up of the Consideration Shares and thereby augment the effect of any application of subsection 55(2) on a subsequent redemption or cancellation of those shares. ...