Search - consideration

27 February 2007 External T.I. 2006-0216481E5 F- Montant payable à des retraités (annul ass. malad)-- summary under Subsection 6(3) Summary Under Tax Topics- Income Tax Act- Section 6- Subsection 6(3) compensation for termination of retirees’ benefit plan not includible under s. 6(3) Before finding that the allowance was non-taxable to the recipients as not being income from a source, CRA indicated that they were not taxable under s. 5(1) and also were not taxable under s. 6(3), stating: [T]he payments do not meet the criteria of subsection 6(3), which deals with amounts paid on account of or in full or partial consideration or partial consideration of an obligation between an employer and employee. ...

A of his common shares of Opco by way of purchase for cancellation for Class A preferred shares with a redemption value of $1 million, followed by a common share subscription by his two adult children for nominal consideration. ... A as consideration, Mr. A and Opco would agree to exchange the those Class A preferred shares for an equal number of Class B preferred shares. ...

1 February 2006 External T.I. 2005-0142411E5 F- Don entre vifs- bien agricole admissible-- summary under Paragraph 69(1)(c) Summary Under Tax Topics- Income Tax Act- Section 69- Subsection 69(1)- Paragraph 69(1)(c) words of transfer not determinative as to whether there is a gift or sale for nominal consideration CRA indicated that an individual who donated land to an unrelated couple could be regarded as not dealing with them at arm’s length (stating that “the CRA generally assumes that two parties are not dealing at arm's length in a gift situation”), in which case, the transaction might be viewed as an inter vivos gift (so that the donees had full cost under s. 69)(1)(c)) or as a sale for $1 consideration (in which event, there would be no such cost to the donees). ...

-- summary under Paragraph 28(1)(a) Summary Under Tax Topics- Income Tax Act- Section 28- Subsection 28(1)- Paragraph 28(1)(a) promissory note accepted as absolute payment for the transfer of inventory given that no remedy provided for non-payment Respecting the transfer of inventory by a cattle farmer for a promissory note, CRA stated: [B]oth the Bill of Sale and the Purchase and Sale Agreement refer to the promissory note as the consideration given for the transfer of the inventory. Since the promissory note was accepted as consideration for the transfer of the inventory, and given that none of the documents provide any remedy for non-payment, it appears that payment could only be enforced under the terms of the promissory note. ...

10 April 2003 External T.I. 2002-0170485- Assumption of Debt-- summary under Paragraph 85(1)(b) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(1)- Paragraph 85(1)(b) mortgage otherwise to be assumed on drop-down can instead be assumed in consideration for corporate debt to shareholder Where a corporation owes $100 to the taxpayer, and the taxpayer transfers a property with an FMV of $300, cost to the taxpayer of $200, and encumbered by a debt of $275, then (provided the $100 debt is genuine) the corporation may assume a portion of the $275 debt (e.g., $75) as repayment of that portion of the $100 debt, so that the property may be transferred for an elected amount of $200 (i.e., the consideration described in s. 85(1)(b) will be considered to have been reduced to the elected amount of $200). ...

30 April 2003 External T.I. 2002-0172485 F- LIQUIDATION SOCIETE DE PERSONNES-- summary under Subsection 85(3) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(3) taking back note for receivables transferred under s. 22 rather than s. 85(2) precludes s. 85(3) application to wind-up A partnership disposed of all of its capital property to the corporation pursuant to s. 85(1) in consideration for the assumption of debt and for shares, except that it transferred its accounts receivable in consideration for a demand note and elected to s. 22. ...

16 December 2003 Internal T.I. 2003-0046167 F- Section 50- Shares of Insolvent Corporation50(1)-- summary under Paragraph 69(1)(b) Summary Under Tax Topics- Income Tax Act- Section 69- Subsection 69(1)- Paragraph 69(1)(b) sale of Lossco with no assets but non-capital losses for nil consideration to another subsidiary generated a gain under s. 69(1)(b) Parentco elected under s. 50(1) respecting its shares of one of a wholly-owned subsidiary ("Lossco") with non-capital loses but no assets or liabilities. It subsequently sold its Lossco shares to a profitable wholly-owned subsidiary ("Profitco") for nominal cash consideration, with Lossco then being wound-up into Profitco under s. 88(1) so that Profitco could then access Lossco's non-capital losses pursuant to s. 88(1.1). ...

CRA stated: To the extent that the individual has transferred a licence to use the software to the charity for no consideration, and the charity is not required to return the licence to the individual, it is our view that the non-exclusive licence to use software developed by the individual to a registered charity without a right of return for no consideration is a transfer giving rise to a gift for purposes of the Act. ...

Accordingly, where, under a plan of arrangement pursuant to s. 192(1) of the CBCA all the Canco common shares (other than those shares held by dissenting shareholders) are disposed of to another CBCA corporation ("Holdco") for consideration that consists solely of Holdco common shares, such transactions will not necessarily be disqualified under s. 256(7)(e) by reason only that dissenting shareholders dispose of their Canco common shares to Canco and receive consideration other than shares of Holdco by virtue of exercising their dissent rights. ...

24 April 2001 Internal T.I. 2000-0037677 F- DEBENTURES CONVERTIBLES-- summary under Subparagraph 143.3(3)(a)(ii) Summary Under Tax Topics- Income Tax Act- Section 143.3- Subsection 143.3(3)- Paragraph 143.3(3)(a)- Subparagraph 143.3(3)(a)(ii) under pre-s. 143.3 Act, where shares issued for property, the shares’ stated capital determines the property’s cost, whereas the cost of the shares to the shareholder is their FMV Before finding that, on a (pre-s. 143.3) conversion of convertible debentures through the issuance of shares with a lower stated capital than their FMV, no premium could be deducted under s. 20(1)(f)(ii), the Directorate stated: [T]he jurisprudence has established that the treatment of the issuer and the holder of the shares may be different, that is, it is the stated capital of the shares issued that generally constitutes the cost of the property received in consideration for their issue and it is the FMV of such shares that is used to determine the tax consequences to the holder of the shares when the holder has transferred property in consideration for the acquisition of such shares. ...