Search - consideration

However, shares of the parent issued as consideration for the shares of the subsidiary are expressly excluded from the rule. ... On the other hand, the provision would not ordinarily apply to conventional common or preferred shares or debt issued by the parent as consideration for the acquisition of the shares of the subsidiary. ... The following transactions are carried out: 1.Y incorporates Buyco and subscribes for $5 million of voting redeemable preferred shares of Buyco. 2.Buyco acquires all of X's shares of Targetco in consideration for $5 million in cash and common shares of Buyco. 3.Buyco winds up Targetco and, but for subparagraph 88(1)(c)(vi), would bump the cost of the shares of Sellco and Keepco to their fair market value. 4.Buyco redeems the preferred shares held by Y and, in satisfaction of the redemption price, transfers to Y its shares of Sellco. ...

Reasons FOR POSITION TAKEN: Subparagraph 80(2)(h)(i) of the proposed amendments to section 80 states that where a new commercial debt obligation is issued by the debtor as consideration for the settlement of a particular commercial debt obligation an amount equal to the principal amount of the new obligation shall be deemed to be paid by the debtor at that time in satisfaction of the principal amount. ... Therefore, if on the issue of the new debt obligation there is no consideration given in satisfaction of that deemed principal amount, it is our view that there would be a forgiven amount in respect of that obligation. ... Department's Position: Subparagraph 80(2)(h)(i) of the proposed amendments to section 80 states that where a new commercial debt obligation is issued by the debtor as consideration for the settlement of a particular commercial debt obligation, an amount equal to the principal amount of the new obligation shall be deemed to be paid by the debtor at that time in satisfaction of the principal amount. ...

Principal Issues: Can an individual transferring property to a partnership under subsection 97(2) claim a reserve under subparagraph 40(1)(a)(iii) where the individual receives as consideration a promissory note payable over 5 years. ... You would like to know whether a reserve under subparagraph 40(1)(a)(iii) of the Act could be claimed by an individual transferring property to a partnership pursuant to subsection 97(2) of the Act where the individual receives as consideration a promissory note payable over five years. ... In respect of your first concern, where an individual transfers property to a partnership under subsection 97(2) of the Act, and receives as consideration a promissory note payable over five years, the agreed amount will include the promissory note and this amount shall be deemed to be the proceeds of disposition for the individual and the cost for the partnership. ...

As indicated in paragraphs 3 and 5 of Interpretation Bulletin IT-268R3 (a copy of which is enclosed), where an interest in farmland is transferred to a child of a taxpayer for actual proceeds of disposition (consideration) of an amount between fair market value and adjusted cost base of the land, that amount is deemed to be the transferor's proceeds of disposition and the cost of acquisition of the land to the transferee. However, as stated in paragraph 5 of IT-268R3, in the case of a gift, there is no consideration paid or payable and, because of paragraph 73(3)(c) of the Act, section 69 does not apply to otherwise determine the proceeds of disposition. Therefore, as provided in subparagraph 73(3)(b)(iii) of the Act, since, in the case of a gift, the consideration would be less than the lesser of the fair market value and the adjusted cost base of the land, the lesser of these two amounts would be deemed to be the transferor's proceeds of disposition and the transferee's cost of acquisition. ...

5 October 2018 APFF Financial Strategies and Instruments Roundtable Q. 1, 2018-0761521C6 F- Life insurance policy as share redempt. proceeds Unedited CRA Tags 148(7), 55(2) Principales Questions: Whether a shareholder receiving an interest in a life insurance policy from a corporation as redemption proceeds for preferred shares the shareholder previously owned in the corporation should be considered as having given consideration for the interest in the life insurance policy? ... Raisons: Based on the meaning of the word "consideration", we are of the view that the shareholder is giving consideration for purposes of clause 148(7)(a)(ii)(B) when its shares are being redeemed. ...

The attribution rules do not apply if fair market consideration is paid by the transferee for the property transferred and an election is made by the transferor to not have the subsection 73(1) rollover apply. Paragraph 74.5(1)(b) of the Act sets out additional requirements necessary to avoid attribution if the consideration includes debt. In the above situation, where you are transferring the rental property to your spouse for no consideration, the attribution rules would therefore apply to attribute both the rental income and any capital gain or loss on the property to you. ...

For no consideration, the Trust guarantees the guarantee described in point 2 and the debt described in point 3. 5. ... In this regard, no person dealing at arm's length with another person would act as guarantor to a loan of that other person unless he received valuable consideration for the risk involved. ... Absent exceptional circumstances, such degree of integration would be expected to exist where for no consideration a mutual fund trust guarantees a debt incurred by a wholly-owned subsidiary to finance its commercial operation, as indicated in technical interpretation 2002-016767. ...

X therefore transfers the shares internally pursuant to subsection 85(1) I.T.A. by selecting $500,000 as the agreed amount and receives in consideration preferred shares with an ACB and FMV of $499,999 and one common share with an ACB and FMV of $1. ... X although the trust acquired the said share for consideration equal to its FMV? ... We therefore feel that subsection 75(2) I.T.A. applies when property is held by a trust under one or more of the conditions provided for in paragraphs 75(2)(a) or (b) I.T.A., notwithstanding the fact that this property was acquired by the trust for consideration equal to its FMV. ...

Mco will incorporate a new wholly owned subsidiary, Oco, by subscribing for common shares for nominal consideration. Mco will transfer its XXXXXXXXXX issued and outstanding common shares of Nco to Nco for consideration equal to XXXXXXXXXX preferred shares of Nco and XXXXXXXXXX common shares of Nco. ... Mco will dispose of its XXXXXXXXXX common shares of Nco to Oco and Oco will issue common shares to Mco as consideration for the common shares of Nco. ...

The Employees would like to transfer their Opco shares to a non-arm's length corporation that is resident in Canada ("Holdco") and take back non-share consideration equal to the adjusted cost base of their Opco shares. ... X had simply gifted the Opco shares to the Employees before he died, each of the Employees could have received an amount of non-share consideration from Holdco equal to their actual adjusted cost base (i.e. essentially the fair market value of the Opco shares at that time the gift was made- see paragraph 69(1)(c)) provided it was otherwise factually determined that each of the Employees and Mr. ... We have sent a copy of this letter to the Department of Finance for their consideration. ...