Search - consideration

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(l)(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. ...

You have requested our comments whether losses arising from loan guarantees given by the above corporations on behalf of a U.S. corporation which they together control, for no (or inadequate) consideration, would be deemed to be nil by subparagraph 40(2)(g)(ii) of the Income Tax Act (the "Act") on the basis that the guarantees were not given for the purpose of gaining or producing income. ... Accordingly, in our view the losses of 24(1) would be deemed nil under the provisions of subparagraph 40(2)(g)(ii) of the Act because they arose from guarantees given for no (or inadequate) consideration and would not be permitted by virtue of the administrative exception set out in paragraph 6 of IT-239R2 because the guarantees were given on loans to a U.S. company. ...

We would consider the right to receive payments over a seven year period as consideration received on the disposition of the shares. ... When an annual payment is subsequently received by the vendor there would be a disposition of the right to receive a payment in the particular year for consideration equal to the amount received. ...

A") of the capital stock of a corporation ("Opco") transfers the particular shares to Opco for consideration that includes shares of Opco and that, even though all of the shares of a particular class were so transferred, the provisions of subsection 86(1) of the Act would not apply by virtue of the limitation provided in subsection 86(3) of the Act. Assumptions In formulating our reply we have made the following assumptions. i) Opco is a taxable Canadian corporation within the meaning of subsection 89(1)(i) of the Act. ii) All the issued shares of the particular class of Opco shares are transferred. iii) The share attributes of the particular shares of Opco received as consideration for the particular shares of Opco transferred are not identical. iv) The amount by which the paid-up capital in respect of the class of shares issued by Opco has increased by virtue of the issuance of the shares on the transfer, is equal to the paid-up capital of the shares being transferred to Opco by Mr. ...

In general terms, where an individual disposes of shares of a subject corporation, within the meaning of subsection 84.1(1), to another corporation with which the individual does not deal at arm's length for consideration comprised only of cash and debt of the other corporation and, immediately after the disposition, the subject corporation would be connected with the other corporation, paragraph 84.1(1)(b) applies to deem the individual to have received a divided equal to the amount by which the value of the non-share consideration received from the other corporation exceeds the paid-up capital of the transferred shares of the subject corporation. ...

Consequently, while CPP contributions that are required to be paid during the leave period are to be deducted and remitted by the trustee as by any other employer, those CPP contributions paid in the year prior to the leave period must be taken into consideration by the trustee. ... However, since CPP contributions made during the year prior to the leave period are to be taken into consideration by the trustee, the amount ofcontributory earnings reported by the trustee may not coincide with the amount of contributions reported in box "D". ...

Coincident with completion of the Take-Over Bid, there is a transfer of assets by Target to a wholly-owned subsidiary, with an election under subsection 85(1) to defer the gain on the assets transferred, and share consideration is taken back. ... (b) Disposition of Property Question A Parent transfers assets to its wholly-owned subsidiary in exchange for share consideration, electing under subsection 85(1). ...

Our Comments Section 69 of the Act is sub-titled "Inadequate Considerations" and is quite specific on the subject of non-arm's length transactions and includes ordinary business transactions between persons not dealing with each other at arm's length. ... There it states that in the event the vendor and the purchaser are not dealing at arm's length and the fair market value of the inventory sold is significantly more or less than the consideration paid, paragraph 69(1)(a) or the Act or 69(1)(b) of the Act will apply, requiring the portion of the total proceeds allocated to inventory to be based on fair market value. ...

Assuming subsections 86(2) and (3) do not apply, the taxpayer would be deemed by subsection 86(1) to have disposed of the old shares for the adjusted cost base to him of the old shares, since the sole consideration for the old shares is new shares. It is our opinion that, to the extent that there are no dividends which have been declared and are unpaid, no part of the consideration would be required to be included in Mr. ...

In our view, where paragraph (d) of the QSBCS definition applies, that paragraph will require that the reference to "more than 50%" in clause (c)(ii)(B) of the QSBCS definition be read as a reference to "all or substantially all" in respect of other corporations connected (within the meaning of subsection 186(4) of the Act) with the corporation whose shares are under consideration, for the period of time specified in that paragraph. ... Whether or not this factor, as well as, all other requirements of the small business corporation or QSBCS definitions are satisfied involve questions of fact which can only be decided after consideration of all the relevant facts of a particular situation. ...