Search - consideration

25 March 2019- 12:46am Ipsen SA acquisition of Clementia Pharmaceuticals includes a significant contingent cash payment (CVR) Email this Content The cash consideration for the proposed acquisition of Clementia Pharmaceuticals (a Canadian-incorporated NASDAQ-listed clinical-stage biopharmaceutical company) by a Canadian Buyco subsidiary of Ipsen S.A. includes not only an up-front cash payment of US$25.00 per share (for an aggregate of US$1.04 billion) but also a deferred payment, on the achievement by the end of 2024 of FDA approval of a new drug application made by Clementia, in the form of a contingent value right ("CVR") of US$6.00 per Share. ...

2 July 2019- 11:59pm CRA finds that ss. 6(1)(a) and 148(7) applied simultaneously to the transfer of a life insurance policy by an employer to an arm’s length employee Email this Content As a result of an arm’s length employee no longer being considered to be a key employee, her employer transfers its “key person” permanent life insurance policy on her life to her for nominal consideration. ...

In addition, the usual Pt IV tax considerations should be addressed including that shares held by a trust will not qualify for the votes and value test in s. 186(4)(b). ...

17 March 2020- 11:37pm CRA indicates that adding a closely related party to ETA s. 156 elections does not require revocation of previous elections Email this Content CRA indicated that when the parties to a nil consideration (ETA s. 156) election (say, Company A and B) wish to add another member of the closely related group (Company C) as an electing party, it is not necessary to revoke the existing election, and it is sufficient for “Company C [to] simply file a new election naming Company A and B as closely related members.” ...

CRA ruled on the implementation by the estate of conventional pipeline transactions for Opco 2 (whereby it sells Opco 2 to a Newco formed by it in consideration for a note and, at a subsequent juncture, Opco 2 and Newco amalgamate to form Amalco, and Amalco starts progressively paying off the note). ...

23 August 2020- 11:44pm CRA confirms that it generally will not attach value to private company voting rights Email this Content CRA confirmed a previous position that “provided that the owners of all the shares of the corporation act in a manner consistent with the assumption that no value attaches to the voting rights, and the rights are eventually extinguished for no consideration, the CRA will generally not attribute value to the rights,” so that, for example, “in the context of an estate freeze of a Canadian-controlled private corporation, where the freezor, as part of an estate freeze, keeps controlling non-participating preference shares in order to protect his economic interest in the corporation, the CRA generally accepts not to take into account any premium that could be attributable to such shares for the purposes of subsection 70(5).” ...

8 November 2021- 10:43pm CRA indicates that a pipeline transaction can use an existing corporation rather than a Newco Email this Content In order to implement pipeline planning, the estate of an individual generally incorporates a new corporation ("Newco") to which it sells shares of a private corporation ("Target"), with or without a tax rollover, in consideration for shares of Newco or a note issued by Newco. ...

CRA went on to find that the dividends received by him “as the only form of consideration for the work he performs for the Company” were exempted, i.e., CRA did not recharacterize the dividends as compensation for his services. ...

30 August 2022- 11:06pm CRA rules on pipeline transactions of an alter ego trust implemented over an extended period Email this Content CRA provided the usual pipeline rulings respecting transactions, which contemplated that: shares of an investments company (ACo), whose ACB had been stepped up in the hands of an alter ego trust on the death of the settlor (“Father”) are transferred by the trust to a “Newco” in consideration mostly for notes of Newco the Newco common and preferred shares and the Newco notes are distributed pro rata to Father’s children on a s. 107(2) rollover basis at least one year after step 1, Newco and ACo amalgamate (under a long-form amalgamation, given that the children until then had been minority shareholders of ACo) Amalco repays no more than 10% of the initial aggregate principal amount of the notes during the first year following the amalgamation and, absent extraordinary events, repays no more than that sum in each of the subsequent years. ...

CRA indicated that, under ETA s. 182, Aco is deemed to have collected the GST/HST as part of the liquidated damages amount, which is deemed to be consideration for a taxable supply by it, and Bco would be deemed to have paid that GST/HST (notwithstanding that Cco is the actual payer) – so that Bco (not, Cco) would be able to claim an ITC for the deemed GST/HST payment if the usual conditions in s. 169 were satisfied. ...