Search - consideration

(ii)At all times "the consideration for which the share is to be issued", within the meaning of subparagraph 66(15)(d.1)(i) of the Act and "the consideration received by the corporation for the share", within the meaning of subparagraph 66(15)(d.1)(ii) of the Act, will be the Subscription Price paid by the subscriber to acquire each Special Warrant. ... Generally, the amounts of any such renunciations cannot exceed the consideration paid for the Right. However, in the above hypothetical situation, provided that the agreement for the issuance of the Special Warrants constituted an "agreement in writing" for the purposes of the FTS definition referred to above under which the PBC is obligated to incur (and renounce to the subscriber) the expenses specified in such FTS definition and to issue its common shares to the subscriber, in our opinion the "period" referred to in subparagraphs 66(15)(d.1)(i) and (ii) of the Act would commence with the entering into of such agreement and the amount of the "consideration" for the purposes of such provisions would be equal to the Subscription Price. ...

Subsection 110.6(7) of the Act Subsection 110.6(7) of the Act may apply, depending on the facts of a particular situation, to deny a capital gains deduction claimed by an individual in respect of the capital gain realized as a result of the application of paragraph 69(1)(b) of the Act in a situation where a corporation acquires a property for consideration that is significantly less than the fair market value of the property at the time of acquisition. ... Subsection 110.6(7) quite clearly denies a capital gains deduction to an individual where that individual has a capital gain from the disposition of property as part of a series of transactions in which any property is acquired by a corporation for consideration that is significantly less than the fair market value of the property at the time of acquisition. Even though paragraph 69(1)(b) of the Act deems a taxpayer to have received proceeds of disposition equal to fair market value where the taxpayer disposes of property for no proceeds in a non-arm's length situation, property that was factually acquired for no consideration, that is, consideration significantly less than the fair market value of the property at the time of the transaction, will trigger the consequences of subsection 110.6(7) of the Act under which the capital gains deduction will be denied. ...

However, the preamble to subsection 6203(1) of the ITR excludes from prescribed shares a share acquired by a taxpayer under circumstances referred to in section 66.3 of the Act, a share acquired as consideration for a disposition of property in respect of which an election was made under subsection 85(1) or (2) of the Act, and a share that can be considered to have been issued, directly or indirectly, for consideration that includes other shares of the capital stock of the corporation. ... This subsection excludes, among others, a share in a taxable Canadian corporation acquired in consideration of the disposition of a property subject to the election provided for at subsection 85(1) or (2) of the ITA, and a share that may be considered as having been issued, directly or indirectly, in consideration of other shares of the capital stock of the corporation. ...

Can the CRA clarify its position on stock options agreement given to consultants in consideration for services to be rendered? Under what circumstances will the CRA consider the difference between the fair market value of the shares and the exercise price to be consideration paid for services rendered? When will the consultant be deemed to have received this consideration? ...

In your letter you outline three hypothetical situations for our consideration. ... Therefore, if the Opco shares are exchanged after April 26, 1995 for Holdco shares as described in situation 1 above, the share exchange rule in paragraph 131(12) of the CIF will apply to grandfather any Holdco shares issued by each individual's Holdco as consideration for that individual's Opco shares. ... With respect to your second situation, if the Opco shares are grandfathered under paragraph 131(11)(b) of the CIF we agree that the shares of Holdco received by the shareholders as consideration for their Opco shares in a transaction where section 85 of the Act applies would continue to be grandfathered. ...

Under the Plan, a transfer of the Options is permitted to the Employee's family members "or other persons or entities" according to such terms as determined by the committee (the "Committee") appointed by the board of Corporation B under the terms of the Plan, provided the Employee receives no consideration for the transfer. 10. ... The Employee will transfer all of the Options to the Corporation for no consideration. ... During the Employee's lifetime, and on or before the expiry date of one or more of the Options (the "Particular Options"), the Corporation will either: (a) exercise the Particular Options and acquire the underlying shares of Corporation B; or (b) transfer the Particular Options to the Employee for no consideration, in which case the Employee will exercise the Particular Options and directly acquire the underlying shares of Corporation B. 16. ...

The question that has been presented to you is as follows: Where a Canadian corporation grants stock options to individual consultants, who are not employees, such as in consideration for consulting services, what are the corporation's tax withholding and reporting requirements? ... Options Granted for Services Previously Rendered Where options are issued to a consultant as consideration for services rendered as an independent contractor immediately before the options were granted, section 9 of the Income Tax Act (the "Act") will apply to include in the income of the consultant the fair market value of the option at the time of the grant. ... Options Granted for Services to be Rendered In circumstances where it can be determined (i.e. on examination of all the facts and circumstances, including contracts, etc.) that the options are granted in consideration for services that are to be rendered by a self-employed consultant over a period of time after the time of grant, we may, depending on the facts, take the view that the difference between the fair market value of the shares and the exercise price at the time of exercise, or a portion thereof, is consideration received for the services rendered. ...

The 110(1)(d) deduction is available where no consideration is paid and shares are acquired with the in-the-money option increase in value since grant. ... Given this explanation. you asked us to confirm that the surrender of shares already owned by an employee to pay the exercise price of an option would not constitute a disposition for the purposes of the Act if no consideration other than new shares were received in return. ... In this respect, please be advised that this issue has recently been under review and as a consequence we are prepared to state that a deduction will be available where a SAR is exercised and shares are issued for no consideration. ...

Furthermore, the agreement clearly provides that the trust has the right to sell the mortgage receivables for consideration. The fact that the trust has agreed to give the bank the first right to purchase mortgage receivables that the trust wishes to sell, does not alter the fact that the trust has the right to realize fair market value consideration on the sale of the mortgage receivables. ... The agreement also requires that the trust is to pay the bank a guarantee fee in consideration for the bank agreeing to repurchase the Sold Mortgages in the circumstances described in the Agreement. ...

As consideration for the property it acquired, B Ltd. assumes a mortgage of $200 000 and issues preferred shares of its capital stock with a redemption value of $800 000 to A Ltd. At the time of the sale, B Ltd. also agrees to assume an additional mortgage of $500 000 as consideration for the $500 000 demand note issued to it by A Ltd. ... In this situation, among others, our view is now that A Ltd. actually received consideration (other than any shares) of $700 000 when the property was transferred to B Ltd. ...