Search - consideration

7 August 2022- 10:59pm CRA finds that MFT trailer fees paid to a dealer, and by it to its representatives, generally are GST/HST exempt Email this Content CRA indicated that where a dealer, who was a distributor of mutual fund units, received both up-front commissions and trailing commissions from the mutual fund manager, the trailing commissions were generally part of the consideration for the single supply made by the dealer to the manager, namely, arranging for the sale of the units, so that the trailing commissions also were exempt- even though there was an element of on-going servicing of the investors as well. Regarding front end load funds, where the investor is ordinarily charged an upfront fee or commission directly by the dealer upon the initial purchase, but the dealer also receive an ongoing trailing commission from the manager, CRA indicated that if the agreement between the manager and dealer “is for the distribution of units or shares of the fund, the supply made under that agreement by the dealer to the manager would [generally] be one of arranging for a financial service” even though the trailers are the only consideration received. ... CRA indicated that such amounts also were generally exempt consideration for an arranging-for financial service. 217144 is similar, but narrower in scope. ...

The consideration paid by the shareholders would be a proportionate fraction of the property’s nominal appraised value. CRA gave a ruling (albeit, apodictic) that there would be no s. 15(1) (or 246(1)) benefit to the extent that the FMV of the share of the real property so transferred to each shareholder was equal to or less than the FMV of the consideration paid therefor and, on a similar assumption that the aggregate consideration and the property’s FMV did not exceed its ACB, the corporation would not realize a gain. ...

(b) of the definition, because the equity holders of the covered entity (Acquisitionco as the holder of Targetco shares) do not receive equity of Amalco, as such equity is instead cancelled for no consideration. ... (a) of that definition and a portion of the consideration received by a holder for the Targetco shares is not equity consideration described in para. ...

In finding that this commission was consideration for the taxable supply of “the provision of the club's facilities to the dancers to enable them to obtain income from non-cash customers” (rather than merely consideration for a VAT-exempt financial service of encashing the vouchers), Richards LJ stated that “a commission of 20% for the encashment of a voucher…is on the face of it very high, particularly as the appellants ran, as they knew, a very low credit risk.” ... One distinction might be that it would have been less consonant with the “economic realities” (to use a phrase of Richards LJ) to characterize these amount as being paid by Global for access to the casino – and another, that the amounts were high, but not outrageous, when viewed as consideration only for encashing. ...

6 February 2017- 11:05pm ExxonMobil renews proposal to acquire InterOil on the same basis as before, but with an increased contingent cap Email this Content The proposal for the Exxon acquisition of InterOil contemplated that a newly-incorporated B.C. subsidiary of ExxonMobil would acquire InterOil under a Yukon Plan of Arrangement, with the consideration for each InterOil share comprising that number of ExxonMobil shares having a fixed value of U.S.$45.00 per share, plus a cash payment of U.S.$26.87 per share (or U.S.$1.37B in total). ... The Canadian tax disclosure is essentially the same as before, and indicates that the full per share CRP consideration (now of U.S.$ $33.94 rather than U.S.$26.87 per share)- as well as, of course, the share consideration of U.S.$45 per share- will be required to be included in computing a resident InterOil shareholder’s proceeds of disposition, but (under s. 42) if the repayment obligation is triggered before the filing due-date for the shareholder’s return, the repayment would reduce those proceeds of disposition. ...

13 March 2017- 12:30am OPTrust – Ontario Superior Court finds that Ontario LTT applied to contingent deferred purchase price which, in fact, never became payable Email this Content The Ontario Land Transfer Tax Act definition of “value of the consideration” includes not only the “the amount expressed in money of any consideration given or to be given for the conveyance” but also “the value expressed in money of any liability assumed or undertaken by the transferee” and of “any benefit of whatsoever kind conferred by the transferee on any person as part of the arrangement relating to the conveyance.” ... Ontario, 2016 ONSC 3648 under LTTA, s. 1- value of the consideration. ...

The acquisition occurred for cash consideration, subject to two exceptions. ... The Holdco shareholders then sold their Holdco shares as part of the Quebec Plan of Arrangement for cash consideration (corresponding to the transaction value of the underlying Canam shares) except as described below. ... Second, members of the same 27% group could timely elect to transfer their Canam or Holdco shares to the Purchaser for Purchaser shares with a value agreed to correspond to the cash consideration. ...

13 March 2018- 1:30am CRA finds a lump sum paid to a non-resident for granting an exclusive right to distribute its product in Canada was subject to s. 212(1)(i) (“restrictive covenant”) withholding Email this Content In consideration for a lump sum, a non-resident in a Treaty country (NRco) granted an arm’s length Canadian company (Canco) the exclusive right to distribute its product in Canada, with Canco agreeing not to acquire or sell competitive products. ... But there was the Treaty, whose Royalty Article was similar to the OECD Model, the Commentary on which stated that that payments made in consideration for obtaining the exclusive distribution rights of a product in a given territory do not constitute royalties within the meaning of the Model Tax Convention as they are not made in consideration for the use of, or the right to use, an element of property included in the Royalty definition. ...

14 August 2019- 1:00am SLFI Group – Federal Court of Appeal finds that the Invesco group successfully reduced their HST-taxable management fees by having a third party take over the funding of broker commissions Email this Content A non-resident bank (Citibank) agreed to fund the payment of the upfront brokerage commissions that were payable on the issuance of units in the Invesco/Trimark funds (the “Funds”) in consideration for receiving an assignment of a portion of the amounts that otherwise would have been earned by the Invesco manager as management fees. More precisely, the manager agreed to reduce its management fees (i.e., reduce its percentage charge of NAV), and the Funds agreed to pay the same percentage amounts to a special purpose non-resident Citibank-formed vehicle (“Funding Corp”) essentially in consideration for Funding Corp paying the brokerage commissions. ... Therefore, the consideration paid by the Funds to Funding Corp was tainted as Funding Corp was providing a management service. ...

., standby charges) payable by a borrower as consideration for the lender agreeing to lend money or make money available (arguably, under the definition of “restrictive covenant” such an agreement “affects … the … provision of property … by the taxpayer” (i.e., of funds by the lender) or “affects … the acquisition of property … by the taxpayer” (i.e., the lender’s acquisition of the debt obligation)) consent payments to creditors, e.g., to permit a particular transaction or loosen a financial covenant (such “agreement could be viewed as affecting the (ongoing) provision of property by the taxpayer, being the loaned funds, especially if the consent relates to an amendment of a covenant that could otherwise have been breached and allowed … acceleration …”) in the context of a distress restructuring, an additional payment made to a debt holder who agrees to exchange for the securities of the restructured debtor by a specified date, e.g., the receipt of additional shares on a debt for shares restructuring (the additional shares “may properly be viewed as consideration for the debenture holder having agreed to consent to the restructuring plan by the specified date, rather than as consideration for the exchange itself, having regard to paragraph 68(c).”) ...