Search - consideration

18 May 2017- 11:52pm CRA rules that a fee charged on assigning receivables was part of the GST-exempt consideration for the receivables sale Email this Content A car dealer enters into contracts with customers, which could be conditional sales contracts, instalment sales contracts, credit agreements or finance contracts with instalments, and immediately sells each contract to a lender for cash consideration. Consistently with Canada Trustco, CRA found that a separate fee charged by the car dealer on selling the contracts was also part of the consideration for the assignment, so that the fee was also exempted from GST/HST. ...

8 September 2020- 11:10pm Valovic – Tax Court of Canada finds that shareholders’ services were not consideration for dividends received by them for s. 160 purposes Email this Content An electrician and his spouse provided their services as electrician and administrator to their equally-owned corporation, and received dividends and salary. In rejecting their submission that, for s. 160 purposes, the annual dividends were paid for equivalent consideration, being a portion of their services, Monaghan J noted that decisions of the FCA/TCC “accepted and endorsed the view expressed in Neuman that dividends relate to shareholding and rejected the argument that there was consideration for the dividends.” ...

1 January 2019- 11:04pm The consideration for the proposed Pan American acquisition of Tahoe includes future contingent Pan American share deliveries Email this Content Under the proposed acquisition of Tahoe Resources by Pan American Silver pursuant to a B.C. ... Because the right to receive Pan American shares under the CVRs is not absolute, the CVRs are considered to represent “boot” rather than share consideration for s. 85 election purposes. ... The U.S. tax disclosure treats the Arrangement as a “D” reorg, The CVRs are likely just deferred share consideration. ...

30 September 2021- 10:58pm Odette Estate – Tax Court of Canada finds that a promissory note subsequently repaid in cash could not be equated to cash consideration for s. 118.1(13)(c) purposes Email this Content The appellant estate donated shares of a private company (Edmette), which were non-qualifying securities, to a private foundation with which it did not deal at arm’s length. ... The donation of the Edmette shares was deemed by s. 118.1(13)(a) to not be a gift except to the extent “of the fair market value of any consideration (other than a non-qualifying security of any person) received by the donee [i.e., the foundation] for the disposition” by it of the Edmette shares. ... The only consideration received at the time of the disposition was the Promissory Note. … Parliament does not want to grant a tax credit where the donor is not impoverished and the charity is not enriched. ...

19 September 2016- 10:50pm Proposed Vail Resorts acquisition of Whistler includes exchangeable share consideration (likely bearing dividends) and an exchange-rate adjusted cash component Email this Content Vail Resorts is proposing to acquire Whistler Blackcomb under a BC Plan of Arrangement for a combination of shares and cash, paid by a B.C. subsidiary of Vail Resorts (Exchangeco). Resident Whistler shareholders who so elect will receive the share consideration in the form of exchangeable shares of Exchangeco under a largely conventional exchangeable share structure, with those shares being listed on the TSX and having a sunset date seven years out. The cash component of the consideration is nominally in Canadian dollars, except that it is based on an exchange rate of 0.7765 so that, for example, if the exchange rate is less than this six days before the Arrangement implementation date, the Whistler shareholders will receive a correspondingly lower amount. ...

25 January 2017- 7:07am Stock ’94- European Court of Justice finds that interest on a loan funding a taxable supply of goods was part of the consideration for a single supply of the goods Email this Content A Hungarian company was set up to assist Hungarian farmers by lending them money to fund the purchase by them from it of current assets needed in their business. The European Court of Justice (subject to some further findings of facts to be made by the local court) essentially applied the single supply doctrine to find that the loan interest was part of the consideration for the sale of products by the company to the farmers, so that the interest was subject to VAT (even though, of course, interest on loans viewed as being for a separate supply was VAT-exempt). ... However, it is not obvious that the Tax Court could not treat interest on the deferred purchase price for a taxable supply as itself being part of the taxable consideration for a single supply. ...

28 March 2018- 11:37pm Stewardship Ontario – Tax Court of Canada finds that statutorily-mandated waste recycling charges were consideration for a taxable supply Email this Content Stewardship Ontario (“SO”) was a not-for-profit corporation that operated, as part of a regime governed by the Waste Diversion Act, 2002 (Ontario), an Ontario program for recycling various types of waste such as paints, solvents, batteries, empty propane tanks and antifreeze. ... As to the Crown’s argument that the “Steward Fees” were a “regulatory charge” rather than a “user fee,” he stated that they were payable by “operation of law” (i.e., under the Waste Diversion Act) and thus came within the definition of consideration. ... The Queen, 2018 TCC 59 under ETA s. 123(1) – supply, consideration, service, s. 141.01(2). ...

10 July 2019- 12:01am National Car Parks – Court of Appeal of England and Wales finds that car park machines that did not refund coin payments thereby received extra consideration for VAT purposes Email this Content A customer pays for parking in a car park by going to the ticket machine which, on its tariff board, displays a price for one hour of £1.40 – but also states that change is not given. ... In finding that the consideration received by the car park owner (NCP) for VAT purposes was £1.50, and rejecting NCP’s submission that £0.10 was a gratuitous payment, Newey LJ stated: The best analysis would seem to be that the contract was brought into being when the green button was pressed. ... Summary of National Car Parks Ltd v Revenue and Customs [2019] EWCA Civ 854 under ETA s. 123(1) – consideration. ...

19 January 2022- 10:43pm 9056-2059 Québec – Tax Court of Canada finds that ETA s. 153(2) requires a reasonable allocation of consideration between component supplies Email this Content In order to promote the sale of its farm products (mostly honey), the appellant developed a “labyrinth” of trails on its forest lands and, when it sold tickets for access by visitors to the trails, stipulated that the ticket, generally sold for $12, also constituted a coupon of $1.50 to be applied to the purchase of honey or other products. ... Before confirming the resulting reassessments that treated $1.50 of the ticket prices as being zero-rated consideration for the honey or other food products, and the balance as consideration that was subject to tax, Boyle J indicated that s. 153(2) required that the “cost of admission to … the … forest must be reasonably divided between access to the labyrinth and other activities, and the mandatory purchase of a coupon to be exchanged for a honey or maple food product,” and then stated: Appellant was unable to present any valid reason why the value of the initial coupon should be other than $1.50, which is what it charged for the same coupons when purchased individually. ...

9 January 2023- 11:39pm CRA confirms that shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV Email this Content The acquisition of a non-resident target (Target) by a Canadian corporation (Opco) and its Canadian parent (Parent) entailed: Parent forming two new stacked non-resident subsidiaries (Merger Sub1 holding Merger Sub2); Merger Sub2 being merged into Target with Target being the survivor, with the shareholders of Target having their shares converted into shares issued by Parent and cash paid by Merger Sub1 (which it had borrowed from Opco) and with Merger Sub1 becoming the parent of Target; and Merger Sub2 then immediately being merged into Merger Sub1 with Merger Sub1 as the survivor. In order that Parent could get basis for having issued the share consideration, it was stated in a funding agreement to have issued such shares in consideration for the issuance to it by Merger Sub1 of common shares of Merger Sub1 – and CRA ruled that indeed those shares issued to Parent had a cost to it equal to the FMV of the shares issued by it in turn to the Target shareholders plus any related costs incurred by it. ...