Search - consideration

The excess of the non-share consideration over the fair market value of a transferred property in such a situation should be considered to be non-share consideration of another property. ... However, if the consideration for all properties transferred is taken into account, no benefit may be considered to have been conferred. ... The consideration received is a note for $20,000 and shares. Section 85 envisages a property by property transfer. ...

22 February 1985 Income Tax Severed Letter RCT 85-029 F Unedited CRA Tags 85.1 RE:     85.1 and IT-450 In the course of a share for share exchange pursuant to section 85.1 when the vendor receives shares for some of the exchanged shares and cash or other consideration for other exchanged shares, paragraph 5 of IT-450 indicates that 85.1(1) may be used in respect of the exchanged shares for which shares were received, provided the vendor can clearly identify which shares were exchanged for cash or other consideration and which were exchanged for shares. Recently, the purchaser corporation in these situations has frequently been offering a combination of share and non-share consideration for each share of the target corporation. In advance rulings, provided the takeover offer clearly indicates that the share consideration will be exchanged for a specified fraction of each share tendered and that the non-share consideration will be given for the remaining specified fraction of each such share, we have ruled that 85.1(1) will apply to the exchange of the specified fraction of each share that is exchanged for share consideration. ...

Moreover, the identical phrase in subparagraph 74.4(3)(a)(ii) refers to the time the individual actually receives consideration from the corporation or an arm's length person, other than excluded consideration, that is received in exchange for excluded consideration previously received by the individual for the transferred property (or excluded consideration substituted for such excluded consideration). ... A for the property, being $Nil and (ii) the FMV, at the time of receipt, of any consideration (other than excluded consideration at the time of receipt) received by Mr. A from Aco in exchange for excluded consideration previously received by Mr. ...

A promise is enforceable if it is made for consideration. Since a donor cannot receive consideration for a gift, it is not possible for a person to make a gift by issuing a gift certificate directly to a charity. ... In order for a promise to be enforceable, there must be consideration. ... If the charity should transfer the gift certificate to a third person for consideration, the issuer of the gift certificate may, at that point, become "estopped" from refusing to honor the gift certificate for lack of consideration. ...

Three-Stage Approach In situations involving the application of paragraphs 247(2)(b) and (d), the TPRC uses a three-stage approach: (1) initial consideration, (2) consideration of a formal referral, and (3) final consideration. (1) Initial consideration (1st stage) As soon as it becomes apparent that paragraphs 247(2)(b) and (d) may be recommended as an assessing position, an initial referral is made to the TPRC. ... The taxpayer's representations and the additional information will be taken into consideration when completing the formal referral to the TPRC. ... In cases in which the TPRC decides that the auditor should proceed with recharacterization, the auditor will issue the proposal letter. (3) Final consideration (3rd stage) If additional representations are made by the taxpayer in response to the proposal letter, the auditor will forward the additional representations along with the auditor's comments for the TPRC's final consideration. ...

In such cases, in lieu of such fractional shares, a vendor will be entitled to receive cash or other non-share consideration from the purchaser corporation. ... Pursuant to paragraph 85.1(6)(c), subsection 85.1(5) does not apply where the vendor receives consideration that is other than shares in the foreign purchaser for the exchanged shares. ... Where the amount of cash or the value of any non-share consideration received by the vendor exceeds $200, the vendor must report any gain or loss, as the case may be, from the disposition of the fractional shares. ...

The taxpayer subsequently received full FMV consideration. Was there an RRSP contribution or other adverse tax result? ... On XXXXXXXXXX, the taxpayer’s financial advisors recommended that “Securabond” strip bonds be transferred into the taxpayer’s RRSP account and that other consideration be removed from the account as consideration for the strip bonds. ... As far as we are concerned, the only issue here is the transfer itself and the consideration provided in return. ...

Principal Issues: Does a transfer pursuant to 97(1) allow for a reserve for a note taken back as part consideration. Position: In our opinion 97(1) contemplates an exchange pf property for property ie: partnership interest only received as consideration. Reasons: 97(2) allows for reserve if true conditional payment received as part consideration. ...

If the last significant purchase was before January 1, 1972, then the consideration should equal the V-Day value of the transfer property. ... When the transferor is a corporation whose shares are widely held and traded, the consideration should equal the fair market value of the transfer property. ... In some cases there will be a dividend paid to the parent by the transferor equal to the consideration received from the transferee or a subsection 84(3) deemed dividend on a redemption or cancellation of shares of the transferee taken as consideration by the transferor. ...

Restrictive Covenants Question: Would the CRA reconsider the position set out in 2014-0522961C6 to the effect that the allocation in an agreement of $1 of consideration to a restrictive covenant, merely to ensure that the agreement constitutes a legally binding contract, does not constitute proceeds for the purpose of paragraphs 56.4(6)(d) and (7)(e)? ... The CRA is now prepared to accept that where a contract relating to granting a restrictive covenant uses words such as "$1 and other good and valuable consideration" simply to ensure that the contract is legally binding, and means in effect that "no more than a $1 worth of consideration" is conveyed by a purchaser for the restrictive covenant, such consideration will not, in and of itself, constitute proceeds received or receivable by the particular party for granting the RC for purposes of paragraph 56.4(6)(e) and paragraph 56.4(7)(d). ... If more than nominal consideration of $1 is paid for a restrictive covenant under the wording "$1 and other good and valuable consideration", the exceptions set out in subsections 56.4(6) and (7) would not apply because the respective conditions in paragraph 56.4(6)(e) and paragraph 56.4(7)(d) would not be met. ...