Search - consideration

Since the liabilities transferred are contingent in nature, it is your view that such liabilities are not considered as part of the consideration for the property transferred. ... In particular, you refer to paragraph 241(4)(e) of the Act which permits the disclosure to the purchaser of tax information obtained from the vendor where the tax cost of the assets transferred is not equal to the consideration paid by reason of a provision of the Act. ... From the information in your memorandum, the issue at hand is not whether the tax cost of the asset differs from the actual cost or consideration paid but rather involves a determination of the amount that was actually paid as consideration. ...

Consideration for the transfer would be debt of NEWCO equal to the cost amounts of the assets and one preferred share of NEWCO with a $1 paid up capital and $1 redemption value. ... F) NEWCO causes the preferred shares of OPCO to be redeemed with the consideration for the redemption in turn being used to repay the debt to OPCO. ... In the above situation, the stock dividend is used to facilitate a transfer for net consideration of $1 and there is no appropriate reduction in Mr. ...

Each brother could sell his shares of Farmco to his Newco, pursuant to an election under subsection 85(1), taking back shares of the transferee in consideration. ... Farmco would elect with each Newco to transfer to each 50% of Farmco's assets in consideration for the assumption of debt and high/low preference shares of the transferee. ... Following the transfer of assets, the Newcos would redeem their preference shares and Farmco would acquire its common shares held by the Newcos for cancellation for consideration in each case equal to the proceeds of redemption received on the Newco's preference shares. ...

However, we make the following comments with respect to this question: 1) With regard to the rollover from the parent corporation to Subco under subsection 85(1) of the Act, we assume that there was no non-share consideration received by the parent for the goodwill, (or at least that any such non-share consideration for the goodwill had a fair market value of no more than $1.00). ... However, paragraph 85(1)(e.2) will not apply if the $100,000 fair market value of the goodwill does not exceed the consideration received therefor (that is, the amount in subparagraph 85(1)(e.2)(i)). As indicated in our comment in 2) above, we assume that the only consideration received by Subco for the goodwill was in the form of an interest in the partnership. ...

The operating company would transfer the non-business assets to the new corporation using subsection 85(1) of the Act taking back shares of the new corporation with a fair market value of $800,000 as consideration. The cross shareholdings would be redeemed in consideration for notes and the notes, which would be equal as to principal amount and fair market value, would then be offset. ... These shares are transferred to a new corporation in consideration for shares of the new corporation with a fair market value of $1,000,000. ...

This specified amount would not exceed the fair market value of the consideration for which the share was issued. ... That is, will the Department accept the fair market value of the consideration as the specified amount by default? ... The specified amount does not exceed the fair market value of the consideration for which the share was issued. 3. ...

Consideration for the transfer consisted of shares of Corporation Y, (equal to 66 2/3% of the value of the shares of Corporation X transferred to Corporation Y), and assumption by Corporation Y of debt owing by Mr. ... Further, since all or substantially all of the consideration received by Mr. ... A from Corporation Z in respect of the shares of Corporation X was not shares of Corporation Z (because 33 1/3% of the consideration consisted of assumption of debt owing by Mr. ...

However, no tax consequences will arise under subsection 84.1(1) if the maximum amount that will be received by the transferor from the transferee corporation as proceeds in the form of any non-share consideration and the paid-up capital of any share consideration does not exceed the greater of the paid-up capital of the transferred shares and what might be referred to as the transferor's arm's length actual adjusted cost base of the shares, as determined by taking into account the provisions of paragraphs 84.1(2)(a), (a.1) and (a.2) of the Act. ... Where a taxpayer disposes of property that is an eligible property, within the meaning assigned by subsection 85(1.1) of the Act, to a taxable Canadian corporation, as defined under paragraph 89(1)(i) of the Act, for consideration including shares of the capital stock of the corporation, the taxpayer and the corporation may file a joint election pursuant to subsection 85(1) of the Act. Whether any tax consequences will arise on the transfer will depend on the agreed amount in respect of the subsection 85(1) election, the cost amount and the fair market value of the transferred property, and the fair market value of any non-share consideration and any share consideration received. ...

In your letter, you refer to Interpretation Bulletin IT 239-R2 which states that, if a guarantee has been given for adequate consideration, it will generally have been considered to have been given for the purposes of gaining or producing income. ... You further comment that, in your view, the Bulletin seems to suggest that where a guarantee of a loan has been given for adequate consideration and the guarantor has been called upon to honour the guarantee so given, the loss that is sustained on the debt is necessarily a capital loss. ... The foregoing comments are not meant to suggest that a capital loss will result in every situation where a guarantor has received adequate consideration for granting a guarantee. ...

However, we make the following comments with respect to this question: 1) With regard to the rollover from the parent corporation to Subco under subsection 85(1) of the Act, we assume that there was no non-share consideration received by the parent for the goodwill, (or at least that any such non-share consideration for the goodwill had a fair market value of no more than $1.00). ... However, paragraph 85(1)(e.2) will not apply if the $100,000 fair market value of the goodwill does not exceed the consideration received therefor (that is, the amount in subparagraph 85(1)(e.2)(i)). As indicated in our comment in 2) above, we assume that the only consideration received by Subco for the goodwill was in the form of an interest in the partnership. ...