Search - consideration

You have suggested that in this scenario, the additional contributions of capital by the beneficiaries should not disqualify Trust as a personal trust on the basis that the contribution would not constitute consideration payable for a beneficial interest in the trust, and have asked that the Canada Revenue Agency ("CRA") confirm your view. ... In technical interpretation 9432135, which addressed beneficial interests in an employee profit sharing plan ("EPSP"), CRA stated its position that "the sole fact that an employee is a beneficiary under an EPSP due to his employment does not constitute consideration payable to the employer to acquire a beneficial interest in the said EPSP". ... Our response also further noted that "whether a beneficial interest was acquired for consideration payable to the trust or to any person who has made a contribution to the trust is a question of fact". ...

Principal Issues: Where FAPI arises as a result of a disposition by a foreign affiliate but foreign tax in respect of that disposition is deferred a result of a roll-over under foreign law, may foreign tax arising as a result of a gain on the disposition of the consideration received by the foreign affiliate on the original transaction qualify as foreign accrual tax? ... Such FAPI is included in the income of Canco under subsection 91(1) of the Act. 5) In the immediately following taxation year, the Partnership disposes of the Consideration Property for proceeds of disposition equal to its fair market value and this value is equal to its adjusted cost base for the purposes of the Act. ... However, it would be necessary to review all the relevant details that would be available in an actual case in order to make a definitive determination whether the gain on the Consideration Property could be entirely attributed to the income deferred on the original disposition. ...

Position: The proceeds of the disposition to the transferor and the ACB to the transferee would be the greatest of the cash surrender value, the consideration given for the interest and the ACB of the interest in the policy. ... For this purpose, paragraph 148(7)(a) would apply to deem the proceeds of the disposition to Opco to equal $50,000 (the greatest of CSV ($500), consideration (nil) and ACB ($50,000)), resulting in a policy gain of nil. ... We have brought this situation to the attention of the Department of Finance for their consideration. ...

23 March 2007 External T.I. 2007-0227981E5- Canadian Resource Property Unedited CRA Tags 66(15) 66.4(5) 66.2(5) 59(3.2)(c) Principal Issues: tax treatment for consideration received on entering into a petroleum and natural gas lease Position: consideration represents proceeds to be credited to the CCOGPE pool Reasons: review of the legislation 2007-022798 XXXXXXXXXX T. Harris (613) 957-2114 March 23, 2007 Dear XXXXXXXXXX: Re: Petroleum and Natural Gas Lease We are writing in response to your recent request for our interpretation of the tax treatment for certain payments received as consideration for entering into a petroleum and natural gas lease (the "PNG Lease"). ... In 2006, XXXXXXXXXX leased these rights to an arm's length party for a term of XXXXXXXXXX years for consideration consisting of a lump sum rental payment, a bonus payment and a signing payment (the "Payments"). ...

DC-Sub-1 and DC-Sub-2 will each receive only cash consideration for the share dispositions contemplated by this Paragraph. ... If such investments are made, each of DC-Sub-1 and DC-Sub-2 will ensure they acquire and hold exactly the same type of property, in proportion to the cash consideration received by each such corporation on the share dispositions, until the implementation of all of the Proposed Transactions is complete. ... Such capital dividend shall be declared and paid at the same time as the capital dividend is declared and paid by DC-Sub-2, as described in Paragraph 19, and for greater certainty, will be in proportion to the cash consideration received by each such corporation on the share dispositions as described in Paragraph 17. 19. ...

A personal trust is defined in subsection 248(1) of the Act and includes an inter vivos trust in which no beneficial interest was acquired for consideration. ... Paragraph 69(1)(a) of the Act deems property acquired from a non-arm’s length person for consideration in excess of fair market value to be acquired at fair market value, and paragraph 69(1)(b) of the Act deems property disposed of to a non-arm’s length person for proceeds less than fair market value to be disposed of at fair market value. In addition, where an RRSP trust disposes of property for a consideration less than fair market value of the property or acquires property for a consideration greater than the fair market value, the difference between the fair market value and the consideration is income of the annuitant in the year pursuant to subsection 146(9) of the Act. ...

A personal trust is defined in subsection 248(1) of the Act and includes an inter vivos trust in which no beneficial interest was acquired for consideration. ... Paragraph 69(1)(a) of the Act deems property acquired from a non-arm’s length person for consideration in excess of fair market value to be acquired at fair market value, and paragraph 69(1)(b) of the Act deems property disposed of to a non-arm’s length person for proceeds less than fair market value to be disposed of at fair market value. In addition, where an RRSP trust disposes of property for a consideration less than fair market value of the property or acquires property for a consideration greater than the fair market value, the difference between the fair market value and the consideration is income of the annuitant in the year pursuant to subsection 146(9) of the Act. ...

For example, by the end of the series of transactions, it would appear that XXXXXXXXXX received strictly shares in XXXXXXXXXX as its consideration for the sale of its shares in XXXXXXXXXX. ... Other Issues It seems peculiar that the preferred shares issued by XXXXXXXXXX in transaction #3 reflect a FMV significantly less than the FMV of the consideration received two days later upon the surrender of those shares by XXXXXXXXXX. ... For example, we would be concerned if a capital gain (i.e. the capital gain that would have arisen had the consideration described in transaction #4 been received in transaction #3) has been converted into a deemed dividend. ...

It is also our view that the facts of the other cases are significantly different from the situation under consideration. 940101 XXXXXXXXXX M. ... Pursuant to this concept, a payment of in-kind consideration will only be regarded as a benefit to the extent that it can be converted to cash. ... While these cases involved decisions on whether economic benefits were received, it is our view that the facts are significantly different from those under consideration here. ...

The exception referred to in your letter is stated in the Act as follows: "at the time of the transfer the fair market value of the transferred property did not exceed the fair market value of the property received by the transferor as consideration for the transferred property;" Therefore, in order to qualify for this exception, "at the time of the transfer" fair market value consideration must be received from the transferee. Receipt of fair market value consideration at a date subsequent to the transfer date will not cease attribution unless as stated above, the original property, or property substituted is returned to the transferor. If the transferor takes back a debt as consideration (ie. sale of an asset for a promissory note) then interest (equal to the lesser of a Revenue Canada prescribed rate or an arm's length rate) must be charged and paid within thirty days of the end of each year the debt is outstanding or attribution will occur. ...