Search - consideration

CRA Tags ITR 5907(2.01) Principal Issues: Does the assumption by an acquiring foreign affiliate of liabilities of a disposing foreign affiliate constitute "consideration received" by the disposing affiliate for purposes of paragraph 5907(2.01) of the Regulations? ... Although there is no definition of "consideration received" in the Income Tax Act (the "Act"), it is commonly understood that "consideration received" by a taxpayer in respect of a particular disposition of assets includes the amount of any liabilities of the taxpayer that are assumed by a purchaser as part of the purchase of the disposed assets. ... " In summary, it is our view that the assumption by the Receiving FA of liabilities of the Disposing FA on a transfer of property to it, is "consideration received" by the Disposing FA for the property transferred for purposes of paragraph 5907(2.01)(a) of the Regulations. ...

The term “consideration” as used in paragraph 110.6(7)(b) of the Act does not mean the agreed amount referred to in subsection 85(1). ... No other consideration was received by the individual in respect of the transfer, and the individual is the sole shareholder of the new corporation. ... In our view, the term “consideration” as used in paragraph 110.6(7)(b) of the Act does not mean the agreed amount referred to in subsection 85(1) of the Act. ...

An investment that you wish to take out of your RRSP (including a mortgage) because it has little or no value, can be sold from the RRSP to anyone (including yourself) for fair market consideration. However, subsection 146(9) of the Income Tax Act states that if an asset is transferred (sold) from an RRSP for consideration that is less than the fair market value of the property at the time of the transfer, or for no consideration, the difference between the fair market value of the property and the consideration, if any, shall be included in computing the income of the annuitant of the RRSP. Therefore, if a property is transferred from your RRSP into your name personally for no consideration, there will be no income tax consequence as long as the fair market value of the property was nil at the time of the transfer. ...

Principal Issues: 1.A shareholder will transfer a life insurance policy to a corporation it controls for consideration equal to the fair market value of the policy. ... The policyholder is a shareholder who controls a corporation and the shareholder wants to transfer the policy to the corporation for consideration equal to the fair market value of the policy. ... Where the shareholder is receiving consideration equal to the fair market value of the policy there would not be a shareholder benefit pursuant to subsection 15(1). ...

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). ...