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Upon further consideration we are not able to confirm this opinion, but would offer the following alternative comments. ... The borrower, however, is considered to have acquired the shares and the consideration paid to the lender is the obligation of the borrower to deliver identical shares to the lender at some time in the future. While a question of fact, it is arguable that the value of this consideration is equal to the fair market value at that time of the shares acquired. ...

Ordinarily the source of the shareholder's funds would not be a consideration. ... In the case of an interest free loan to the shareholder from an operating company, it appears section 80.4 would include an interest benefit in the shareholder's income, in which case the shareholder's source of funds would not be a consideration. 2. ... The Queen [[1990] 2 C.T.C. 10] 90 DTC 6322 that in determining the amount of the benefit the shareholder's interest free loan to the corporation to enable it to purchase the property should be taken into consideration. ...

Secondly, you enquired as to whether the application of subsection 69(11) to the situation described herein is precluded because the fair market value of the shares of X Co issued as consideration for the property was equal to the fair market value of the property at the time of the transfer of the property to X Co. In our view, the application of subsection 69(11) to a transfer is not precluded because the transfer is for fair market value consideration. Subsection 69(11) may apply where the proceeds of disposition of, as opposed to the value of the consideration for, the transferred property is less than the fair market value of such property. ...

In the case now under consideration by you it is essentially a question of fact as to whether the employer carried on one of the specified kinds of businesses in the United States and as to whether the employee performed all or substantially all the duties of his employment in the United States in connection with a contract under which his employer carried on such business. ... In the case under consideration there may also be some question as to whether the individuals are employees of XXX. ... A determination of which company is the employer cannot be based solely on which company pays the salary and indeed in making this determination considerations such as who controls and directs the employee and who the employee reports to are generally more important. ...

., consideration would be given to substance over form). The limited information contained in your correspondence would lead us to conclude that the expense represented membership dues. ... A third consideration is that, to be deductible, the maintenance costs would have to be incurred by the taxpayer in the course of carrying on the business of operating the club or recreational facility for hire or reward, for the purposes of paragraph 18(1)(l)(i). ... Depending on the facts of a particular situation, there may also be other considerations. ...

For the purposes of determining the nature of the payments, we would consider the indicia set out on page 6073 of the Cranswick case [[1982] C.T.C. 69] (82 DTC 6073), set out below, where it was held that: (a) The Respondent had no enforceable claim to the payment; (b) There was no organized effort on the part of the Respondent to receive the payment; (c) The payment was not sought after or solicited by the Respondent in any manner; (d) The payment was not expected by the Respondent, either specifically or customarily; (e) The payment had no foreseeable element of recurrence; (f) The payment was not a customary source of income to the Respondent; (g) The payment was not in consideration for or in recognition of property, services or anything else provided or to be provided by the Respondent; it was not earned by the Respondent, either as a result of any activity or pursuit of gain carried on by the Respondent or otherwise. ... However, we would caution that a more definitive response would have to take into consideration all of the relevant circumstances involved. ... It is our view that the tax treatment of strike pay is not relevant to the issue at hand because strike pay occurs in connection with a union's ongoing activities in the bargaining process on behalf of its employees whereas the issue under consideration involves payments out of a strike fund as a result of a non-recurring single event which eliminated the need for the fund or a part thereof. ...

.- `cumulative eligible capital' of a taxpayer at any time in respect of a business means the amount by which the aggregate of (i) 1/2 of the aggregate of the eligible capital expenditures in respect of the business made or incurred by the taxpayer before that time, and (ii) all amounts included by virtue of subsection (1) in computing the taxpayer's income from the business for a taxation year ending prior to that time, exceeds the aggregate of (iii) all amounts each of which is an amount in respect of any taxation year of the taxpayer ending before that time, equal to the amount deducted under paragraph 20(1)(b) in computing the taxpayer's income for that year from the business, and (iv) the aggregate of all amounts each of which is 1/2 of the amount, if any, by which (A) an amount that, as a result of a transaction occurring after 1971, became payable to the taxpayer before that time in respect of a business carried on or formerly carried on by him where the consideration given by the taxpayer therefor was such that, if any payment had been made by the taxpayer after 1971 for that consideration, the payment would have been an eligible capital expenditure of the taxpayer in respect of the business, exceeds (B) any outlays and expenses to the extent that they were made or incurred by him for the purpose of giving that consideration; and" It is therefore our view that, by virtue of subparagraph 14(5)(a)(iv) of the Act as it read at that time, the inclusion rate would be 1/2 or 50%, in respect of a sale of goodwill by a corporation, during a fiscal year which commenced February 1, 1988 and ended January 31, 1989. ...

At question 33 of the 1987 Revenue Canada Round Table, in Report of Proceedings of the Thirty-Ninth Tax Conference, 1987 Conference Report (Toronto: Canadian Tax Foundation, 1988), the Department's position on what factors would be considered in determining the amount of a benefit when a corporation property is made available to a shareholder was stated as follows: "When a corporate property, for which there is a commercial rental market, is made available to a shareholder, the department usually considers that the benefit is equal to the fair market rental for the property less any consideration paid. ... In such cases, the amount or value of the benefit will usually be determined by the department taking into account a normal rate of return on the greater of the cost or fair market value of the property, plus the related operating costs (the "imputed amount"), less any consideration paid to the corporation by the shareholder. ... However, the Department also stated that in cases where the circumstances are the same as those in the Youngman case, the Department accepts that in determining the amount of the benefit, the shareholder's interest-free loan to a corporation to enable it to purchase the property should be taken into consideration and that the Department was not prepared at that time to extend a benefit offset as determined in Youngman beyond the facts of that case. ...

In particular you describe a situation where, in preparing financial statements of a corporation governed by the Business Corporations Act (Alberta) (the “ABCA”), the corporation has added to the stated capital of a class of shares an amount substantially less than the fair market value of the consideration for which shares of that class were issued. ... As a result, the corporation would have been required to add to its stated capital, pursuant to subsection 26(2) of the ABCA, the fair market value of the consideration received for the shares. It is your understanding that although the corporation was required to add the fair market value of the consideration received for the shares it has been the Departments practice to consider the stated capital to be that amount which was in fact recorded in the stated capital account and reported by the corporation notwithstanding the provisions of subsection 26(2) of the ABCA. ...

You have suggested that, if the potential tax liability of a transferor in the case of a subsection 85(1) transfer is not taken into account in valuing the transferred property, the non-share consideration could include the assumption of the deferred tax liability as an assumption of debt. ... We refer you to our response to Question 32 of the 1986 Revenue Canada Round Table in which, in the context of an intercorporate transfer of depreciable property, we stated that the deferred or potential tax liability does not affect the consideration for the transferred assets. Situations may arise where common shares are issued as consideration for a non-arm's length transfer of property pursuant to subsection 85(1), and the fair market Value of the transferred property is greater than the fair market value of the common shares because of the deferred taxes relating to the transferred property which in the circumstances may be taken into account in valuing the common shares for purposes of the application of paragraph 85(1)(e.2). ...