Search - consideration

Presumption of consistency In a close case, there is a presumption that where a taxpayer has reported gains in previous years on share sales as being on capital account, losses in the year under consideration also should be treated as having been realized on capital account (Kriplani, Rajchgot, see also Le Bel). ... S. 54.2 deems shares issued to a taxpayer in consideration for the transfer of substantially all the assets of an active business to be capital property. Where shares have been issued by a corporation as consideration for real property transferred to it and s. 54.2 does not apply, CRA nonetheless generally will consider those shares to be capital property (25 October 1991 T.I.). ...

S. 212.3(18)(d) provides that s. 212.3(2) (including, by implication, the paid-up capital grind rule in s. 212.3(7)) does not apply to a direct acquisition by a CRIC of shares of a subject corporation (described in s. 212.3(10)(a)) or an indirect acquisition of shares of a subject corporation by the CRIC resulting from the direct acquisition of shares of another corporation resident in Canada (as described in s. s. 212.3(10)(f)), where such acquisition of shares was received by the CRIC as the sole consideration for an exchange of a debt obligation owing to the CRIC, other than an exchange to which s. 51(1) applies. ...

S. 28(3) stipulates that the tax generally is payable on the day that the consideration for the purchase becomes due (or is paid, if earlier). ...

REIT transfers the $950 note to Bidco (so that such note is extinguished by operation of law), with $890 of such amount being treated as a distribution of the $890 capital gain (consistently with a timely designation being made under ITA s. 104(21) in the REIT return for that year), and the balance of $60 being treated as the consideration for the redemption by it of 95% of its units. ...

As noted in the Department of Finance Explanatory Notes: the exceptions will only apply to foreign affiliate shares that are received – subsection 212.3(2) is intended to apply to the extent that debt or other forms of non-share consideration are also received as a result of the share-for-share or distribution transaction. ... As consideration for a disposition of shares to which s. 85.1(3) applies (or would apply but for the exclusion in s. 85.1(4)) (s. 212.3(18)(b)(ii)), i.e., a transfer of shares of a foreign affiliate of the CRIC to the subject corporation for shares of the subject corporation. ...

A further consideration arises under s. 133, which deems a supply (including of IPP) to be made at the time the agreement for its supply was entered into. S. 136.1(1), which constitutes an exception to s. 133, provides that a supply by way of licence of IPP for consideration that is attributable to monthly intervals (e.g., a licence under which monthly royalty payments are payable) will be deemed to be made on a monthly basis. ...

"The consideration for the purchase or acquisition of the tangible personal property by the corporation [the purchaser] is the issue or transfer of shares in that corporation to the previous owner of the tangible personal property" (s. 152(5)(a)). ...

Furthermore, even if the rights are disposed of in consideration for the payment of annual royalties (i.e., payments based on the extent of use) plus a lump sum, that lump sum may qualify as a capital receipt (Imperial Chemical, Porta Test, see also Tyresoles, British Salmson). ...

The retention of the amount of the consideration received from the sale of shares is, on the face of it, an additional protection for creditors. ... " The stated capital of shares without par value (subject to subsequent adjustment) is the amount of the consideration for the issuance of the shares determined by the board to be their capital. ... Accordingly, similar considerations as for U.S. C-Corps in stated capital states may apply. ...

Similar principles apply where the taxpayer lends money to speculative start-up companies with a view to profiting from the resale of shares of the companies which are issued to the taxpayer for nominal consideration, so that the loans (in addition to the shares) may be acquired by the taxpayer on income account (Freud, Greenberg, see also Hayter). ...