Search - consideration

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). ...

Reasons: In this situation, the exception in clause 18(9)(a)(iii)(B) does not apply since the employer's pre-funding of its required contributions to the Trust cannot be deemed consideration for life insurance in respect of a period that ends more than 13 months after the consideration is paid. ... In general terms, this exception applies where an employer has incurred an expense or made an outlay as consideration for group term life insurance in respect of a period that ends more than 13 months after the consideration is made. ... In this situation, the exception in clause 18(9)(a)(iii)(B) does not apply since the employer's pre-funding of its required contributions to the Trust cannot reasonably be regarded as consideration for life insurance in respect of a period that ends more than 13 months after the consideration is paid. ...

Reasons: The payment fits into the description of an amount under 6(3)(e) as an amount paid as consideration for a covenant with reference to what the employee is not to do after termination of employment, making the payment deemed to be salary, wages or other remuneration under section 5. ... Subsection 6(3) of the Income Tax Act (the "Act") states: An amount received by one person from another (a) during a period while the payee was an officer of, or in the employment of, the payer, or (b) on account, 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, shall be deemed, for the purposes of section 5, to be remuneration for the payee's services rendered as an officer or during the period of employment, 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. In the absence of any evidence to the contrary, it appears that the $XXXXXXXXXX paid for the confidentiality provision fits squarely within the scope of paragraph 6(3)(e) of the Act, as an amount that can reasonably be regarded as being in 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. ...

Principal Issues: whether a standby charge can be computed when there is no apparent consideration, no cost to the employer in acquiring the automobiles. ... Reasons FOR POSITION TAKEN: In an arm's length transaction there is likely to be consideration given in exchange for the use of the automobiles and that consideration becomes the cost of the automobile for the purposes of the calculation under subsection 6(2) of the Act. 942100 J. ... The consideration need not necessarily be in cash. It is not uncommon for the use of automobiles or other goods to be provided in exchange for non-cash consideration such as goods, services or certain rights and privileges. ...

Under the scenario that you provided in your correspondence, a prohibited investment held in a registered retirement savings plans (RRSP) or registered retirement income fund (RRIF) is sold to the annuitant of the RRSP or RRIF for fair market value consideration. ... In our view, if a prohibited investment held by an RRSP or RRIF is sold by the RRSP or RRIF to the annuitant of the RRSP or RRIF for cash consideration equal to the fair market value of the prohibited investment, the sale transaction will not be treated as an RRSP strip. However, it is our position that, if such consideration were less than the fair market value of the prohibited investment, the transaction would be viewed as an RRSP strip. ...

Under the scenario that you provided in your correspondence, a prohibited investment held in a registered retirement savings plans (RRSP) or registered retirement income fund (RRIF) is sold to the annuitant of the RRSP or RRIF for fair market value consideration. ... In our view, if a prohibited investment held by an RRSP or RRIF is sold by the RRSP or RRIF to the annuitant of the RRSP or RRIF for cash consideration equal to the fair market value of the prohibited investment, the sale transaction will not be treated as an RRSP strip. However, it is our position that, if such consideration were less than the fair market value of the prohibited investment, the transaction would be viewed as an RRSP strip. ...

Under the scenario that you provided in your correspondence, a prohibited investment held in a registered retirement savings plans (RRSP) or registered retirement income fund (RRIF) is sold to the annuitant of the RRSP or RRIF for fair market value consideration. ... In our view, if a prohibited investment held by an RRSP or RRIF is sold by the RRSP or RRIF to the annuitant of the RRSP or RRIF for cash consideration equal to the fair market value of the prohibited investment, the sale transaction will not be treated as an RRSP strip. However, it is our position that, if such consideration were less than the fair market value of the prohibited investment, the transaction would be viewed as an RRSP strip. ...

Subsection 146(9) of the Income Tax Act states that if an asset is transferred from an RRSP for consideration which 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. ...

You are enquiring whether or not a general partnership can transfer goodwill pursuant to subsection 85(2) to a taxable Canadian corporation without any tax consequences where the non-share consideration is in excess of the agreed upon amount. ... The assumption of the partnership debt by Corp would be considered non-share consideration received by the partnership. As noted in paragraph 10 of IT-291R3, pursuant to paragraph 85(1)(b), the agreed amount generally cannot be less than the fair market value of the non-share consideration received. ...

GST should be collected and remitted based on the fair market value of the consideration at the time the supply was made. ... We note that GST will be imposed under subsection 165(1) of the ETA, which states that "every recipient of a taxable supply made in Canada shall pay to Her Majesty in right of Canada tax in respect of the supply calculated at the rate of 5% on the value of the consideration for the supply". The value of consideration upon which tax is imposed under section 165 of the ETA is outlined in subsection 153(1) which states that the value of the consideration, or any part thereof, for a supply shall be deemed to be equal to: (a) where the consideration or that part is expressed in money, the amount of the money; and (b) where the consideration or that part is other than money, the fair market value of the consideration or that part at the time the supply was made. ...