Search - consideration

23 March 2011 Internal T.I. 2010-0389081I7 F- Disposition of a resource property-- summary under Paragraph 12(1)(g) Summary Under Tax Topics- Income Tax Act- Section 12- Subsection 12(1)- Paragraph 12(1)(g) deferred share consideration potentially not recognized until issuance The Vendor sold a percentage interest in mineral claims for consideration including shares to be issued by the public-company purchaser, to be issued over a four-year period. ...

14 April 2009 External T.I. 2007-0238221E5 F- Rights of musician-Transfer-- summary under Subsection 56(2) Summary Under Tax Topics- Income Tax Act- Section 56- Subsection 56(2) s. 56(2) not applicable where copyright or royalty interests transferred at FMV As part of a general response respecting the transfer of rights by a musician to a corporation, CRA stated: As illustrated by … IT-335R2 [para. 8] …the sale of a property for consideration less than its fair market value could result in the application of subsection 56(2). On the other hand, the sale of copyright or royalty interests for consideration equal to their fair market value will generally not trigger subsection 56(2). ...

11 January 2010 External T.I. 2009-0340591E5 F- Specified class- 256(1.1) of the Act-- summary under Subsection 51(1) Summary Under Tax Topics- Income Tax Act- Section 51- Subsection 51(1) s. 51(1) exchange regarded as the new shares having been issued for consideration equalling the FMV of the old shares Where a shareholder exchanged all its Class A shares for Class B shares of the same corporation pursuant to what CRA accepted as being a s. 51 exchange, CRA characterized the Class B shares as having been issued, for purposes of the test in s. 256(1.1)(e), for consideration equalling the FMV of the exchanged Class A shares. ...

27 March 1994 Internal T.I. 9333227- SHAREHOLDER BENEFIT-- summary under Subsection 15(1) Summary Under Tax Topics- Income Tax Act- Section 15- Subsection 15(1) Where a taxpayer has transferred property to a corporation pursuant to s. 85(1) and has received consideration in excess of the fair market value of the property transferred, s. 85(2.1) in its amended form will apply before subsection 84(1). Accordingly, to the extent that the excess consideration exceeds the paid-up capital of the shares received by the taxpayer on the transfer, such amount will no longer be taxed as a deemed dividend but will be taxed as a shareholder benefit under s. 15(1). ...

27 March 1994 Internal T.I. 9333227- SHAREHOLDER BENEFIT-- summary under Subsection 85(2.1) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(2.1) Where a taxpayer has transferred property to a corporation pursuant to s. 85(1) and has received consideration in excess of the fair market value of the property transferred, s. 85(2.1) in its amended form will operate to apply that provision prior to subsection 84(1). Accordingly, to the extent that the excess consideration exceeds the paid-capital of the shares received by the taxpayer on the transfer, such amount will no longer be taxed as a deemed dividend but will be taxed as a shareholder benefit under s. 15(1). ...

3 March 2004 Internal T.I. 2004-0061781I7 F- Engagement de non-concurrence-- summary under Exempt Receipts/Business Summary Under Tax Topics- Income Tax Act- Section 9- Exempt Receipts/Business Manrell inapplicable where recipient of non-compete carried on the related business In finding that consideration received by a corporation for a non-compete covenant given by it on the sale of one of its two businesses gave rise to an eligible capital amount, the Directorate indicated that Manrell and Fortino were inapplicable because there, unlike here, the two shareholders who received consideration for a non-compete covenant respecting the sale of their corporations “were not carrying on any business.” ...

In order to transfer interest expense from Holdco to the Opco business, Holdco transfers its common shares of Opco to a newly incorporated Canadian subsidiary ("Newco2") in consideration for a promissory note of Newco2 and for share consideration, and Newco2 and Opco then amalgamate. ...

2002 Ruling 2002-0177163- Subsection 87(4)- S/H Rights Plan-- summary under Subsection 87(4) Summary Under Tax Topics- Income Tax Act- Section 87- Subsection 87(4) Rights under a shareholder rights plan of Parent received by shareholders of Target on a triangular amalgamation of Target, a subsidiary of Parent and Parent would not constitute "consideration" for purposes of s. 87(4) given that the rights were of little or no value and given that: "The Amalgamation Agreement will provide that the shares of Parent and Amalco... will be the sole consideration for the exchange. ...

" Holdco will redeem the Class B preferred shares held by Sister, Brother 1 and Brother 2, in consideration for a demand non-interest bearing note, with Holdco making eligible dividend designations. Holdco will transfer its GICs to Investmentco in consideration for Class B non-voting retractable preferred shares, with the sale agreement containing a price adjustment clause, and with a s. 85(1) election made. Holdco will redeem the Class B preferred shares which Newco acquired in 2, in consideration for a demand non-interest bearing note ("Note 2"), with Note 2 containing a price adjustment clause. ...

Holdco 1, Holdco 2, Holdco 3, Opco 3 and Holdco 4 incorporate Holdco and (following the incorporation of Realtyco by Holdco) transfer their shares of Opco to Holdco on a rollover basis under s. 85(1) in consideration for Class A common shares of Holdco. ... Holdco transfers its Class B shares of Opco to Realtyco on a s. 85(1) rollover basis in consideration for Class A common shares of Realtyco. ... Realtyco redeems the Class C shares held by Opco in consideration for Note 2. ...