Search - consideration

Our Comments Provided that the individual acquired the interest in the deferred annuity contract before December 2, 1982, and could not, after December 1, 1982, and before the end of the taxation year under consideration, require the repayment, acquisition, cancellation or conversion of that interest (i.e. the taxpayer is locked in) and the maturity date of the contract has not, during that time period, been extended and the terms and conditions relating to payments in respect of that interest have also not been changed, subsection 12.2(7) of the Income Tax Act will apply to exempt taxpayers from the accrual rules for the entire term. ... An exemption is also provided for annuity contracts on which the cash surrender value does not exceed the premiums paid for the period after December 1, 1982, and before the end of the taxation year under consideration. ...

Our Comments Paragraph 5 of IT-268R3 states, in part, that “... proceeds of disposition otherwise determined' means the amount of consideration paid or payable by a child on a transfer of farm property. In the case of a gift, there is no consideration paid or payable and, because of paragraph 73(3)(c) section 69 does not apply to otherwise determine the proceeds o.f disposition on such a transfer. ...

Paragraph 3 of IT-110R2 and Special Release thereto defines "gift" for purposes of sections 110.1 and 118.1 as voluntary transfer of property without valuable consideration and no consideration or benefit of any kind accrues to the donor as a result of the transfer. ...

The word gift is not defined in the Income Tax Act and therefore it takes on its legal meaning which is "a voluntary transfer of property without valuable consideration and without expectation of return or compensation. ... In the situation you have described, it is our opinion that consideration does flow back to the individual in the form of reimbursed expenditures. ...

The child pays fair market value consideration which exceeds the paid-up capital of the shares, and the child pays some of all of the purchase price with funds provided by salary or bonus payments received from the company whose shares the child purchased. ... Proposed paragraph 183.1(2)(b) deems a distribution of corporate surplus to have occurred where the consideration for the acquisition of a share exceeds its paid-up capital, as is the case in your example. ...

As long as the value of the shares which are received by each spouse as consideration for their interest in the farm land is equal to the value of the interest in the farm land transferred by each spouse to the corporation paragraph 85(1)(e.2) will not apply. The fact that the interest in the farm land owned by the taxpayer's spouse may have been acquired by her from the taxpayer for no consideration does not affect the applicability of paragraph 85(1)(e.2). ...

26 May 1981 Income Tax Severed Letter RCT 5-1846 Unedited CRA Tags 84(3), 86(1), 89(1)(a), ITAR 26(27) Dear: XXX This is in reply to your letter of September 23, 1980 in which you requested our opinion as to whether subsection 86(1) of the Income Tax Act (the Act) would apply to a situation in which more than one class of common shares would be received as consideration from a corporation in exchange for all the shares of one class that were owned by a taxpayer in that corporation immediately before the exchange. ... For the provisions of subsection 26(27) of the ITAR to apply, we are of the view that shares of one class only must be received as the sole consideration in exchange for shares of another class of the capital stock of the corporation In addition, we would point out that either subsection 84(1) or subsection 84(3) of the Act would be applicable where the paid-up capital, as defined in paragraph 89(1)(c) of the Act, of the new shares exceeds the paid-up capital (as so defined) of the old shares. ...

After a short period of time A Co decides to transfer to B Co, a newly incorporated sister corporation, the Canadian resource property it purchased using a section 85 rollover. elected amount: $1 total consideration: $5M preferred shares 3. ... Because of our position on 85(1)(e.2) (that taxpayers must take back consideration in shares or otherwise in an amount equal to the fair market value of the property without taking into account any tax liability associated with the ownership of the asset) we cannot apply 245(2) in this situation. ...

The consideration for this right is a payment due on the date of granting the right. ... The second part of the agreement provides that the claim owner having received all the yearly payments is obliged to grant to the corporation a right to purchase the claims in consideration for a lump sum payment. ...

The parties will elect pursuant to subsection 85(1) of the Income Tax Act to transfer the shares for a consideration equal to $500,000. 2. ... Section 55 may apply to the transaction if A acquired the shares of B in such a manner that the transfer of the shares of C to D for an amount of consideration less than fair market value results in A incurring a capital loss or a reduction in capital gain on the sale of the shares of B to a third party, caused by a stripping of the value of B's assets due to the subsection 85(1) transfer. ...