Search - consideration

Trade-ins 1.47 In some cases a person may acquire depreciable property for consideration that includes a transfer of other property (for example, a trade-in). ... Combined consideration Allocation of amounts in consideration for property, services or restrictive covenants 1.80 Section 68 applies to the allocation of an amount received or receivable where the amount is partly consideration for property, services or restrictive covenants, and partly consideration for something else. ... Combined consideration for real estate 1.82 Section 68 applies to the allocation of lump sum proceeds of disposition between land and building. ...

Table of contents Discussion and interpretation Factual residence Deemed residence Other considerations Application Reference Discussion and interpretation Factual residence 1.1 The residence of a trust in Canada, or in a particular province or territory within Canada, is a question of fact to be determined according to the circumstances in each case. 1.2 The Supreme Court of Canada (Fundy Settlement v. ... Other considerations 1.11 Subsection 75(2) is an attribution rule applicable in respect of trusts factually resident in Canada and created after 1934. ...

If future considerations are only speculative, they would not be material in an assessment of whether a past due debt is collectible." Non-arm’s-length relationship between creditor and debtor 1.38 In assessing the likelihood of collecting a debt, the main consideration will generally be the ability of the debtor to repay the debt. ... In other cases, a taxpayer may have guaranteed the debts of such a corporation for inadequate consideration. ...

Acquired to replace the former property Acquired for the same or a similar use Acquired to gain or produce income from the same or a similar business Other considerations relevant to the replacement property rules Class 14.1 Limited period franchises, concessions or licences Subsection 85(1) election Amalgamations and wind-ups Partnerships Non-residents and deceased taxpayers Application Reference History Discussion and interpretation General overview of the replacement property rules 1.1 Where a capital property, other than a share of the capital stock of a corporation, is disposed of, whether voluntarily or involuntarily, and a replacement property is acquired within specified time limits, subsection 44(1) may provide for the deferral of all or part of the capital gain on the disposition. 1.2 Similarly, all or part of the recapture of CCA on the disposition of a property described in ¶1.3 that is depreciable property of a prescribed class may be deferred by virtue of subsection 13(4) where a replacement property is acquired within the specified time limits. 1.3 Unless otherwise specified, a reference in this Chapter to a former property applies to any property disposed of in either of the situations described below: when subject of an involuntary disposition: a property where the proceeds of disposition (POD) received by the taxpayer consist of compensation for property unlawfully taken (for example, stolen), compensation for property destroyed including any amount of insurance proceeds payable in respect of that loss or destruction, compensation for property taken under statutory authority (for example, expropriated) or the sale price of property sold to a person by whom notice of an intention to take it under statutory authority was given. ... Other considerations relevant to the replacement property rules Class 14.1 1.45 Effective January 1, 2017, the eligible capital property rules were repealed and were replaced by Class 14.1 of depreciable property under the CCA regulations. ...

For the purposes of the definition of a personal trust, love and affection are not regarded as consideration. ... Release or surrender For consideration or deemed consideration 1.13 A release or surrender is either an extinguishment or discharge of a legal right or claim, or a transfer of a legal right or claim to another person. ... On a later date, and for no consideration, Mr. A releases or surrenders his income interest in the trust in favour of his two adult children to be shared equally. ...

This will not preclude another vendor who has exchanged shares as part of the same arrangement from benefitting from subsection 85.1(1) if that vendor qualifies; subject to ¶1.7, the consideration received by the vendor for the exchanged shares includes shares of more than one class of the capital stock of the purchaser (paragraph 85.1(2)(d)); or subject to ¶1.7, the consideration received by the vendor for the exchanged shares includes consideration other than shares of the purchaser (non-share consideration) (paragraph 85.1(2)(d)). ... The vendor must be able to clearly identify which exchanged shares were exchanged in consideration for the newly issued shares of that class of the purchaser and which were exchanged in consideration for shares of another class of the purchaser or for non-share consideration. ... The purchaser’s offer must clearly indicate which fraction of each exchanged share is exchanged in consideration for the newly issued shares of the purchaser and which fraction of each exchanged share is exchanged for non-share consideration. ...

However, a price adjustment clause providing for the issuance of additional shares or cancellation of issued shares without payment in order to adjust the value of the consideration received carries with it a number of legal and technical difficulties that are best avoided from the perspective of both taxpayers involved and the CRA. For instance, events like the winding-up, reorganization or amalgamation of the issuer of the share might make the future exercise of the price adjustment clause difficult or impossible. 1.7 Where the price adjustment clause relates to the issuance of a note or property other than shares in consideration for the transfer of a property, the adjustment to the price may be implemented in a number of ways, including through a change to the principal amount of the note, the issuance of additional non-share consideration, the cancellation of the note or the return of all or part of the non-share consideration. ... If the FMV of the consideration received by the corporation for the issuance of those shares differs from the FMV of the shares, the exercise of the price adjustment clause might have an impact on the determination of the FMV of the shares immediately before the person’s death for purposes of applying subsection 70(5). ...

The rules allow for the recognition of a gift for income tax purposes in certain circumstances where there is a transfer of property for partial consideration. ... It is generally accepted that a transfer is made by gratuitous title when: the transfer impoverishes the donor to the benefit of the donee and is made without any corresponding consideration; and it is the donor's intention to enrich the donee without receiving any corresponding consideration. ... Therefore, a transfer of property for partial consideration may result in a gift under the civil law. ...

Where a former shareholder of a predecessor corporation receives any non-share consideration, in lieu of a fraction of a share of the new corporation, and the total amount or value of that non-share consideration does not exceed $200, the shareholder may choose to either: (a) include the amount of any gain or loss from the disposition of the shareholder’s fractional share in the computation of income; or (b) ignore the computation of that gain or loss and reduce the adjusted cost base of the new corporation shares received on the amalgamation by that total amount or value. However, this choice is not available if the total amount or value of any non-share consideration received exceeds $200. ... Where the streaming of paid-up capital to a specific class of shares of the new corporation has been done in order to accomplish a form of surplus strip, consideration will be given to the application of the general anti-avoidance rule in section 245. ...

If a corporation were to make repeated or deliberate use of this relief mechanism, consideration would be given to the application of the general anti-avoidance rule in section 245. 2.17 Subsection 4900(15) does not apply to small business investments acquired before March 23, 2011, for RRSPs and RRIFs, and before March 23, 2017, for RESPs. ... Example 4 The following example illustrates a situation in which the CRA may give favourable consideration to a request that the 100% advantage tax be waived. ... Upon learning of the share redemption later that year, Martin immediately swaps the shares out of the TFSA for fair market value consideration. ...