Search - consideration

This right technically makes the transfer ineligible for section 85.1 treatment since it is additional consideration within the meaning of paragraph 85.1(2)(d). We are asked to rule that this additional consideration does not disqualify the arrangement. ... On due consideration, I see no reason to adopt an incorrect interpretation designed to facilitate the takeover of Canadian companies by foreign interests. ...

Savage (613) 993-6201 November 1, 1985 Dear Sirs: Re: Transfer of Property to a Sister Corporation-------------------------------------------- This is in response to your letter of September 6, 1985 wherein you requested clarification of our position with respect to the application of paragraph 85(1)(e.2) of the Act where a property is transferred between corporations owned by the same shareholder for consideration less than the fair market value of the property transferred. Transfers for consideration less than fair value can, inadvertently or intentionally, create opportunities for the inappropriate reduction of capital gains in the event of a future disposition of shares of the corporations involved. Despite the fact that the provisions of paragraph 85(l)(e.2) of the Act are applicable in such situations we have adopted an administrative position not to apply them to transfers between sister corporations where, in our view, the consideration taken back ensures that the accrued gain in the shares of the transferor is not reduced, as a result of the transfer, by more than the accrued gain in the property transferred. ...

Employment income received by an employee is a valuable consideration for the services he renders under a written or verbal employment contract. Dividend income received by a shareholder is in consideration for the capital he has invested by buying shares of the corporation. ... Accordingly, where all the facts of a particular situation point to the conclusion that the dividend an employee-shareholder receives is in consideration for the services he renders as an employee, this income, in our opinion, would be taxable as employment income pursuant to subsection 6(3) of the Income Tax Act. ...

Cudjoe Telephone: 983-3959 RE: Section 85 Query Relevant provisions involved: 85(l)(a)- Where the agreed amount = deemed proceeds of disposition. 85(l)(b)- Agreed amount cannot be less than the non share consideration. 40(1)(a)(iii)- Rules for calculating the capital gain reserves. ... F.M.V. of property transferred $500,000 Agreed amount indicated 250,000 Consideration received Promissory note (payable on demand) = 250,000 Share consideration 250,000 $500,000 An audit review determined that a non-clerical error was made by the taxpayer and that the A.C.B. of the property transferred was $150,000. ...

"Newco Redemption Amount" means the FMV of the property that DC will assign to Newco in consideration for XXXXXXXXXX class A preferred shares in Newco less the consideration other than shares, if any, to be issued to DC as further described in Paragraph 25 divided by the number of class A preferred shares issued as consideration for the transferred property. ... Immediately thereafter, DC will proceed with the XXXXXXXXXX Sale in consideration for cash. 13. ... On XXXXXXXXXX, Newco will redeem the XXXXXXXXXX class A preferred shares that DC will hold in Newco in consideration for Promissory Note 2. ...

TargetSub XXXXXXXXXX transferred its net assets to CarveOut XXXXXXXXXX, on a taxable basis, in consideration for cash. ... CarveOut XXXXXXXXXX acquired inter-company debt owing by CarveOut XXXXXXXXXX in consideration for the issuance by CarveOut XXXXXXXXXX of four demand promissory notes as follows: 65.1 CarveOut XXXXXXXXXX Note 2 issued to TargetSub XXXXXXXXXX as consideration for debt owing to TargetSub XXXXXXXXXX; 65.2 CarveOut XXXXXXXXXX Note 3 issued to TargetSub USA as consideration for debt owing to TargetSub USA; 65.3 CarveOut XXXXXXXXXX Note 4 issued to TargetSub USA as consideration for debt owing to TargetSub USA; 65.4 CarveOut XXXXXXXXXX Note 5 issued to TargetSub XXXXXXXXXX as consideration for debt owing to TargetSub XXXXXXXXXX. 66. ... Buyerco subscribed for XXXXXXXXXX common shares of the capital stock of Bidco in consideration for $XXXXXXXXXX. 130. ...

As consideration, A receives an interest-bearing demand promissory note (the “Note”). 4. ... The consideration for the transfer is the assumption of the Note by Holdco. ... Also, no consideration has been given to provisions of the Act other than those referred to above. ...

The consideration need not necessarily be in cash. It is not uncommon for the use of automobiles to be provided in exchange for non-cash consideration such as goods, services or certain rights and privileges; in short, what is commonly known as a barter transaction. ... While the precise value of the consideration may be difficult to determine, in an arm's length arrangement it should equal the value provided by the other party. ... Once the reasonable standby charge is established then the provisions of paragraph 6(1)(k) of the Act is a consideration. ...

CRA takes the view that an agreement to sell or issue shares as contemplated under section 7 of the Act, includes an agreement to sell or issue securities where there is no cash consideration payable by the employee in respect to the acquisition of the securities. Accordingly, in our view, the provisions of section 7 apply to an agreement under which an employer agrees, subject to any vesting requirements, to provide a share to an employee for no cash consideration. ... In this respect, paragraph 7(1.4)(b) of the Act provides that the employee cannot receive any consideration other than rights to acquire securities and paragraph 7(1.4)(c) ensures that no economic advantage or net benefit can be acquired through an improvement in the rights received in the new agreement as consideration. ...

Principal Issues: Computation of cost and ACB of certain shares acquired in a non-arm's length transaction where a promissory note issued as full consideration had a fair market value less than its principal amount. ... A accepted a promissory note from each of S and D as sole consideration for the respective Opco shares sold to S and D. ... Based on the CCRA's valuation report, the fair market value of the promissory notes is substantially less than the fair market value of the number of Opco shares for which each note was issued as consideration. ...