Search - consideration

Canada, 2003 DTC 5225, 2003 FCA 128-- summary under Property Summary Under Tax Topics- Income Tax Act- Section 248- Subsection 248(1)- Property "property" entails an exclusive right A portion of the consideration paid by a purchaser of shares of operating companies in which the taxpayer had been a significant shareholder (directly, or through holding companies) was allocated as consideration for his entering into non-compete agreements. ...

Canada, 2019 FCA 62-- summary under Subsection 85(2) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(2) beneficial drop-down of assets to corporation occurred 4 months before the share consideration was issued Webb JA affirmed a finding of D’Arcy J that the beneficial ownership of some applications to the Saskatchewan government for potash exploitation rights that had been acquired by a limited partnership had been immediately on-transferred by it to a wholly-owned corporation for share consideration (presumably on an s. 85(2) rollover basis), so that their fleeting beneficial ownership by the LP did not qualify them as being used in a Canadian active business, as required under the s. 110.6(14)(f)(ii) test. ...

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.” ... 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 (at para. 90): 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. Aeroplan accepts Miles as consideration for airline tickets, merchandise or gift cards with few conditions on their redemption. ...

Charter and a subsidiary of Charter lent $625,000 to Franco, and when Franco subsequently fell into financial difficulty the taxpayer repurchased the shares, and was assigned Charter's loans, in consideration of for the sum of $1.00 and entering into an agreement to jointly and severally guarantee with Charter certain libilities of up to $200,000, once the liabilities of Franco had been reduced to that level. ... Although the taxpayer received the repayments rather than being paid salary, the trial judge had found that "at the time of acquisition [of the loans], assignment of the loans to him was of little interest to him and not a primary consideration," and the taxpayer's gain should be considered to have arisen fortuitously rather than as a result of a carefully realized plan for the realization of speculative profits. ...

In finding that this sum was a tax-free receipt, and in reversing a finding of the Tax Court Judge that it represented the value of consideration from a disposition pursuant to s. 7(1)(b), Malone J.A. stated that "a 'disposition' under paragraph 7(1)(b) refers to a transaction in which the taxpayer voluntarily agrees to exchange property rights that have accrued under an employee stock option agreement for some other consideration", and noted here that instead there had been a unilateral repudiation of the taxpayer's rights under the option agreement by the employer, and that such unilateral conduct constituted a fundamental breach of the contract that terminated it as of that date. ...

The Queen, 84 DTC 6073, [1984] CTC 92 (FCA)-- summary under Paragraph 7(1)(b) Summary Under Tax Topics- Income Tax Act- Section 7- Subsection 7(1)- Paragraph 7(1)(b) Prior to the effective date of an amalgamation squeeze out, the taxpayer agreed to surrender his unvested stock option rights in consideration for a cash payment from his employer equal to the accrued gain. ... In addition, s. 7(1)(b) was not found to be restricted to amounts received from a person other than the optioner/employer, and the words "otherwise disposed of" are "sufficiently broad as to include an amount received as consideration for the surrender of rights that are thereby extinguished. ...

Drayton, which he summarized (at para. 22) as finding that “since the transaction was at arm's length and otherwise unimpeachable, the cost of the sha r es was the consideration agreed between the parties and not the par value, or market value of the shares,” to find that the cost of the assets was the stipulated purchase price. He stated (at para. 32): The cost to the Appellant of issuing shares as part consideration for the assets... is the amount agreed between the parties, as evidenced by the stated capital of the common shares in the Appellant. ...

After noting (at para. 22) that "subsection 160(1) categorizes a transfer to a trust as a transfer of property", Sexton J.A. went on to note (at para. 27) that "it is clear that the transaction between Ms Davies and the respondent left Ms Davies without anything equivalent to the property transferred that could be collected by the CRA, and thus there could not possibly be consideration". Although "forbearance- the act of refraining from enforcing a right, obligation, or debt- can act as consideration for a promise given in return... there is no legal forbearance in this case. ...

In finding that the $233,786 was a deemed dividend received by the taxpayer by operation of s. 84.1(1)(b), Archambault J. noted that the subsequent sale to the outside party clearly established a fair market value of approximately $2.8 million for the shares, and that it would be very strange for the taxpayer to have disposed of the shares for the lowered price if it had not also received the benefit of the fee payments as additional consideration (TCC para. 14). In the Court of Appeal, Noël JA noted the taxpayer's argument that the Minister was statute-barred from applying s. 69(1)(b) to deem the sale of the shares of the numbered company to have been made for the shares' fair market value of $2.8 million, stating (at FCA para. 17): [I]t was neither necessary nor useful to rely on paragraph 69(1)(b), since the value of this consideration tallies with the price at which the shares were sold by [the numbered company] as part of the arm's length transaction that took place the same day and is therefore their fair market value. ...

In finding that the Y% payments were consideration for a taxable supply by Costco, Sharlow JA stated (at paras. 44-45): The value to Amex of exclusivity is readily discernible from the contractual terms. Every Costco sale on a credit card other than an Amex credit card would reduce the value to Amex of the entire co-branding arrangement. … In my view, the interpretation of the contracts that is more consistent with the language of the contracts and the undisputed facts is that [such] payments were consideration paid by Amex to Costco, either for Costco entering into the Co-Branding Agreement, or specifically for the exclusivity provision. ...