Search - consideration

15 September 2022- 11:27pm CRA considers that an agreement of a municipality to provide faster service was HST-taxable Email this Content In another ruling dealing with an Ontario conservation authority, that was a deemed municipality, providing services (here the provision of environmental permits) to a member municipality, CRA ruled that funding provided by the municipality in consideration for getting a dedicated staff at the authority to provide prompter permit service, was consideration for a taxable supply for HST purposes. ...

30 July 2023- 11:39pm CRA declines to discuss whether an intra-government “transfer” can be a non-arm’s length supply Email this Content A provincial government department constructs a school and then transfers it for nominal consideration to another department within the same government which is a school authority that will use the school primarily in exempt activities, although it is also registered because it engages in commercial activities including the supply of parking spaces. CRA noted that ETA s. 155 would apply to deem the supply to be made for FMV consideration if this transfer was a supply between persons not dealing with each other at arm’s length, but did not discuss the issue of whether a transfer of property between two departments within the same government could be such a transaction, nor did it discuss whether a transfer within the provincial government can be a supply. ...

The Province then breached terms of the building lease and, in the subsequent settlement agreement, the parties agreed that the Province owed $2.4 million to Armour and that Armour, in consideration for $2.4 million to be paid by way of set-off, would be granted an irrevocable option to acquire the Province’s freehold interest (with the ground lease being terminated). There was no stated exercise price for this “option,” so that effectively this appeared to be an agreement that in consideration for $2.4 million, Armour could acquire the ownership of the freehold at a time of its choosing (and, by the way, when this occurred, the ground lease would terminate.) ... Armour took the position that the $2.24 million paid by it was fully deductible as consideration for the ground lease termination. ...

28 April 2019- 10:53pm Des Groseillers – Court of Quebec decision indicates no s. 7(1)(b) application to option cash-out amount assignments, and no s. 69(1)(b) application to s. 7(1)(b) dispositions Email this Content An individual (Des Groseillers) who donated some of his employee stock options on the shares of his public-company employer (“BMTC”) to arm's length registered charities was assessed by the ARQ on the basis that the Quebec equivalent of s. 69(1)(b) deemed the “value of the consideration for the disposition” received by him to be equal to the options’ fair market value of $3M, thereby resulting in the receipt of deemed employment income in that amount by him pursuant to the Quebec equivalent of s. 7(1)(b). ... He further found, in the alternative, that even if the s. 7(1)(b) equivalent applied, it only applied on the basis of the nil consideration actually received by Des Groseillers rather than being expanded by the s. 69(1)(b) equivalent to deem the consideration to be $3M. ...

. – Tax Court of Canada finds that orthodontic practices make two supplies of services and devices Email this Content A professional corporation’s orthodontics practice claimed input tax credits on the basis of an administrative arrangement of CRA with the Canadian Dental Association under which orthodontists filed their GST returns using 35% of the patient’s total treatment cost as an estimate of the consideration for the supply of the orthodontic appliance (which was zero-rated), with only the balance treated as exempt- and with a requirement, when the annual results became available at year end, to reconcile their 35% ITC estimate with their actual taxable supplies. However, in the view of CRA, the corporation did not comply with the requirement under this policy to “identify the consideration for the zero-rated supply of the appliance separately from the consideration for the exempt supply of services” (the agreement with the patient stated that “[o]ur orthodontic fee includes a portion, up to 35%, relating to the value of orthodontic appliances,” but the invoices contained no allocation between the services and device. ...

CIBC argued that these fees were (1) consideration for intangible personal property (the Miles) that were supplied by Aeroplan, and (2) that such property was exempted from GST as being a supply of “gift certificates.” ... He stated: The issuance of Aeroplan Miles to CIBC’s customers cannot be elevated to be the predominant supply when such issuance of Aeroplan Miles is not even mentioned in the referral activities for which the consideration was payable. … The legal relationship between CIBC and Aeroplan is defined by the agreement between these two parties. ... Stratas JA went on to indicate that the Miles acquired by CIBC were deemed under the gift certificate rule (ETA s. 181.2) not to be a supply, so that the fees were not subject to GST, stating: In the commercial world, Miles function as gift certificates. … They are an exchange device because they may be used as consideration for property or services in the same way as money or a gift certificate. ...

Furthermore, however, they will jointly purchase all the Filo shares for consideration consisting of BHP and Lundin Mining cash of around $1.908 billion and $0.859 billion, respectively, and the issuance by Lundin Mining of around 92.1 million shares. ... The plumbing to accomplish the final structure of JVCo holding all of Filo and Josemaria in general involves: BHP lending both the Filo acquisition cash and JV cash to Lundin Mining and receiving the "BHP notes"; Lundin Mining then acquiring all the Filo shares (not already held by BHP and it) for the agreed cash and share consideration; Lundin Mining then contributing Filo (through intermediate Canadian holding companies) to JVCo in consideration for shares and the assumption of the BHP notes; and BHP converting the BHP notes into JVCo shares (as well as transferring its existing 5% interest in Filo to JVCo for JVCo shares); so that, after the dust settles, JVCo is held on the agreed 50-50 basis. ...

Two days after the ARQ had issued a statement of account to Construction LMA showing that it had failed to remit over $527,000 in sales taxes and employee source deductions, Larocque transferred his residence, which was mortgaged to a bank to secure debt owing to the bank by Construction LMA, to a newly formed trust (of which he was the beneficiary and one of the two trustees) in consideration for the assumption of the bank debt. ... Tremblay JCQ, noted that, in fact, Larocque had continued to service the bank debt, so that the consideration received by him from the trust for the transfer by him was “purely fictitious” and that the purported assumption of the bank debt was a “sham”. However, the ARQ could not now reverse its assessing position, as “the determination of the value of the consideration must be made at the time of the transfer”. ...

In its new Folio on the prohibited investment rules, CRA states that this test is not restricted to consideration of the voting rights of the shares: [T]he phrase governance of the investment entity should be given a wide meaning. ... CRA provides an example of a situation where it would give “favourable consideration” to waiving under s. 207.6(2) the 100% advantage tax. ...

8 March 2017- 12:18am InterOil – Yukon Supreme Court indicates that all plans of arrangement must be accompanied by a fairness opinion prepared on a fixed fee basis Email this Content A decision of the Yukon Court of Appeal reversed approval of the plan of arrangement for the acquisition of InterOil by ExxonMobil on the basis inter alia that the Circular did not contain information permitting InterOil shareholders to properly assess the adequacy of contingent cash consideration to be paid to them based on the subsequently-measured size of InterOil’s natural gas resource. ExxonMobil then returned with an offer that was essentially the same, except that the contingent cash consideration was capped only once the resource size reached a quite unlikely level. ...