Search - consideration

The Department does not require that the consideration received on such transfers be less than the fair market value of the property transferred nor do we require a reduction of the paid-up capital of any shares. Where the consideration includes shares of the Purchaser, we are often unable to rule that the provisions of subsection 55(2) of the Income Tax Act will not apply on the redemption of those shares. ... There may also be situations in which we are unable to give a favourable ruling in respect to the application of subsection 181(5) where fair market value consideration is received on a transfer. ...

An apportionment of a royalty payment agreed to by arm’s length parties under a mixed contract, to the extent that it is reasonable and realistic, in the sense that it is reflective of the actual consideration paid for a copyright described under subparagraph 212(1)(d)(vi), will generally be accepted by the CRA. ... Whether a particular apportionment of the consideration paid is reflective of the actual payments described in the exemption under subparagraph 212(1)(d)(vi) depends on the legal nature of what is being provided under the mixed contract, the relationship between the parties and the facts of the particular situation including the commercial reality of the parties and the consideration paid in these circumstances. In determining if an apportionment provided under a mixed contract is reflective of the obligation of the parties under subsection 212(1), consideration would be given, amongst others, to the terms of the mixed contract and to whether the parties have divergent interests in respect of this apportionment. ...

Smith will hold only share consideration in AB Ltd. after the amalgamation.  ... Smith will hold both share consideration in AB Ltd. and non-share consideration in the form of cash or debt of AB Ltd. after the amalgamation.  ... Smith received consideration other than shares of AB Ltd. upon the amalgamation of A Ltd. and B Ltd.  ...

Smith will hold only share consideration in AB Ltd. after the amalgamation. ... Smith will hold both share consideration in AB Ltd. and non-share consideration in the form of cash or debt of AB Ltd. after the amalgamation. ... Smith received consideration other than shares of AB Ltd. upon the amalgamation of A Ltd. and B Ltd. ...

As consideration, the Transferor receives shares of the Transferee having a fair market value of $800 and transfers liabilities to the Transferee in the amount of $700. The Transferee redeems $500 worth of shares and as consideration surrenders its receivable from Transferor of $500 for cancellation. ... The Transferee then redeems $800 worth of shares and, as consideration, issues to the Transferor an interest-bearing demand note having a principal amount of $800. ...

Position: Yes Reasons: Payments made as consideration for entering into a contract of employment are deemed to be remuneration for services. 2009-035262 XXXXXXXXXX Rita Ferguson 519-645-5261 May 19, 2010 Dear XXXXXXXXXX: Re: Nursing recruitment This is in response to your letter of December 23, 2009 inquiring about the taxation of payments made by the XXXXXXXXXX (the "Employer") to new nursing graduates. ... Subsection 6(3) of the Act states that payments made to a person are deemed to be remuneration for purposes of section 5 if they are received "(a) during a period while the payee was an officer of, or in the employment of, the payer, or (b) on account, or in lieu of payment or in satisfaction of an obligation arising out of an agreement made by the payer with the payee immediately prior to, during or immediately after a period that the payee was an officer of, or in the employment of, the payer, [...] unless it is established that, irrespective of when the agreement, if any, under which the amount was received was made or the form or legal effect thereof, it cannot reasonably be regarded as having been received (c) as consideration or partial consideration for accepting the office or entering into the contract of employment, (d) as remuneration or partial remuneration for services as an officer or under the contract of employment, or (e) in consideration or partial consideration for a covenant with reference to what the officer or employee is, or is not, to do before or after the termination of the employment." (emphasis added) It is our view that the terms of the Contract indicate the payments are made as consideration for entering into the contract of employment. ...

Paragraph 74.5(1)(b) of the Act sets additional requirements necessary to avoid attribution if the consideration includes debt. If a taxpayer gifts property or transfers property to his child for consideration that is less than FMV, the transferor (parent) is deemed to have received proceeds of disposition equal to the FMV of the property transferred. ... If the transfer is for consideration that is not less than the FMV of the property transferred and that consideration meets the requirements of subsection 74.5(1) of the Act, the attribution rule would not be applicable. ...

Pursuant to the terms of the agreement, ResourceCo agreed for cash consideration to incur CEE during the period from August 1 to December 31, 1994 in an amount not less than the cash consideration for which shares of ResourceCo were issued to the Investor. ResourceCo also agreed to renounce with an effective date of December 31, 1994 an amount of CEE incurred by it during that period not exceeding the cash consideration. ... Our Comments In the above-noted hypothetical situation, provided that other requirements in subsection 66(12.6) and in the definition of flow-through share under subsection 66(15) of the Act have been met and that the agreement is enforceable and legally binding, it is our view that the shares of ResourceCo issued to the Investor would not be disqualified as flow-through shares for the purposes of subsections 66(15) and 66(12.6) of the Act solely because: (a) the cash consideration for the shares were paid to ResourceCo by the Investor after the agreement was entered into; (b) the CEE was incurred before the cash consideration for the shares were given to ResourceCo by the Investor; or (c) the direct use of the cash proceeds from issuance of the shares was to repay the loan (the proceeds from such loan were previously used to incur the CEE). ...

Unedited CRA Tags 85(1)(b) 97(2) Principal Issues: Whether the assumption of the excess mortgages by a general partnership represents consideration for the properties transferred under an election pursuant to subsection 97(2). ... Reasons: Consistent with court decisions and with paragraph 17 of Interpretation Bulletin IT-291R3, it is our view that the assumption by the Partnership of the excess mortgages represents consideration for the purposes of paragraph 85(1)(b) and subsection 97(2). ... In our view, the assumption by the Partnership of the Excess Mortgages represents consideration for the Properties for the purposes of paragraph 85(1)(b) and subsection 97(2). ...

Position: Where the consideration received for eligible capital property is dependent upon the use or production from that property and no amount can be quantified at the time of sale, such consideration is not an eligible capital amount but is taxable as income under paragraph 12(1)(g). ... You enquired whether this contingent consideration should be treated as proceeds of disposition pursuant to item E of the definition of "cumulative eligible capital" in subsection 14(5) of the Income Tax Act (the Act). ... In a situation where the consideration received for eligible capital property is dependent upon the use or production from that property and no amount can be quantified at the time of sale, such consideration is not an eligible capital amount but is taxable as income under paragraph 12(1)(g). ...