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24 January 2011 Internal T.I. 2010-0389251I7 F- Farm-out agreement and warrants-- summary under Paragraph (f) Summary Under Tax Topics- Income Tax Act- Section 66.1- Subsection 66.1(6)- Canadian exploration expense- Paragraph (f) application of farmout policy to situation where free warrants issued along with incurring of CEE A mining exploration corporation (the "Purchaser") agreed with another mining exploration corporation (the "Vendor") to acquire an interest in the Vendor's unproven resource properties (the "Properties") in consideration for incurring specified exploration expenses. As part of this agreement, the Vendor also agreed to issue, for no significant consideration, warrants to the Purchaser to acquire treasury common shares. After noting that a portion of the consideration otherwise payable as Canadian exploration expense should be allocated to the warrants based on their value, the Directorate stated: [T]he CRA's current position with respect to simple farm-out transactions is that there would be no cost to the farmee to acquire a property and that the farmee may consider the expenses incurred by the farmee to be Canadian exploration expenses if the expenses meet the definition of Canadian exploration expense in subsection 66.1(6). ...

16 August 2017 Internal T.I. 2017-0701291I7- Exclusive Distributorship Rights-- summary under Article 12 Summary Under Tax Topics- Treaties- Income Tax Conventions- Article 12 lump sum paid for distributorship rights was not a royalty In consideration for a lump sum, a non-resident in a Treaty country (NRco) granted an arm’s length Canadian company (Canco) the exclusive right to distribute its product in Canada, with Canco agreeing not to acquire or sell competitive products. ... Paragraph 10.1 of the OECD commentary (the “OECD Commentary”) on Article 12 of the Model Tax Convention states that payments made in consideration for obtaining the exclusive distribution rights of a product in a given territory do not constitute royalties within the meaning of the Model Tax Convention as they are not made in consideration for the use of, or the right to use, an element of property included in the definition. ...

Canco provided services for no consideration to LLC1. In concluding that because NRTrust thereby will have a resident contributor (Canco), so that NRTrust will be resident under s. 94(3), the Directorate stated: If Canco provided services to LLC1, other than exempt services defined in section 94(1), paragraph 94(2)(f) would apply to deem Canco to have transferred property to LLC1. ... It would seem reasonable to be of the view that services provided to LLC1 for no consideration would result in an increase in fair market value of the shares of LLC1. …[P]aragraph 94(2)(a) applies at the time the services are rendered for no consideration resulting in an increase in the fair market value of the shares of LLC1 at that time. ...

Regarding the allocation under the licence agreement of X% of the payments to copyright and the balance to trademarks, the Directorate stated: 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 namely on the legal nature of what is being provided under the mixed contract, the legal relationships 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 the apportionment provided under the License Agreement is prima facie reflective of the obligation of the parties under subsection 212(1), consideration could be given, namely, to whether the parties had divergent interests in respect of the apportionment. ...

NR4 acquired all the NR6 shares from NR1 at FMV in consideration for an interest-bearing note (Note1). ... " S. 95(2)(a)(ii)(D)(II) also was not available as "NR2 acquired Note1 in consideration for the issuance of Note2…[so that] the property acquired was not shares of another foreign affiliate" and, furthermore "NR2 did not acquire any property upon the contribution of Note1 to the capital of NR3. ... Upon further consideration, we are of the view that subclause 95(2)(a)(ii)(D)(II)...applies in the circumstances.... ...

18 December 2003 Internal T.I. 2003-0044007 F- OPTION D'ACHAT D'ACTIONS RACHETEES-- summary under Subparagraph 40(2)(g)(ii) Summary Under Tax Topics- Income Tax Act- Section 40- Subsection 40(2)- Paragraph 40(2)(g)- Subparagraph 40(2)(g)(ii) unpaid and defaulted balance of stock option surrender consideration was not property used in a property or business source The taxpayer surrendered his stock options to his arm’s-length employer for consideration that was payable partly up front and partly in instalments that were conditional on the employee’s continued employment for a specified period (a condition which he satisfied) and came due in years subsequent to that of the surrender. In finding that the taxpayer’s loss on the unpaid instalments could not be recognized as a capital loss, the Directorate stated: Although an election under section 50 could be made because it can be shown that the debt is uncollectible at the end of the particular year, the loss on such a debt is deemed to be nil pursuant to subparagraph 40(2)(g)(ii) unless the taxpayer acquired the debt for the purpose of gaining or producing income from a business or property, or as consideration for the disposition of capital property to a person with whom the taxpayer was dealing at arm's length. ...

14 January 2005 Internal T.I. 2004-009814-- summary under Paragraph 20(1)(c) Summary Under Tax Topics- Income Tax Act- Section 20- Subsection 20(1)- Paragraph 20(1)(c) assumption in consideration for debt forgiveness The interest on debt previously owing by the taxpayer's shareholder that the taxpayer assumed in consideration for the forgiveness of a non-interesting bearing loan that had been owing by it to the shareholder and which had resulted from the transfer, in a prior year, of public shares from the shareholder to the taxpayer was non-deductible given that such assumed debt would not represent borrowed money and the forgiveness of the debt would not result in the acquisition of property. ...

16 December 2003 Internal T.I. 2003-04616-- summary under Shares Summary Under Tax Topics- General Concepts- Fair Market Value- Shares With respect to the situation where a parent corporation ("Parentco") would elect to have s. 50(1) apply in respect of the shares of one of its wholly-owned subsidiaries ("Lossco") and then, in a subsequent taxation year, Parentco disposes of its Lossco shares in favour of another wholly-owned subsidiary ("Profitco") for a nominal cash consideration, the Agency commented that it would be difficult for Parentco to satisfy the requirements of ss.50(1)(b)(iii)(A) and (C) stating that "the benefits that can be derived from the utilization of non-capital losses should generally be taken into consideration in assigning a value to the shares of a corporation". ...

16 December 2003 Internal T.I. 2003-04616-- summary under Subsection 50(1) Summary Under Tax Topics- Income Tax Act- Section 50- Subsection 50(1) With respect to the situation where a parent corporation ("Parentco") would elect to have s. 50(1) apply in respect of the shares of one of its wholly-owned subsidiaries ("Lossco") and then, in a subsequent taxation year, Parentco disposes of its Lossco shares in favour of another wholly-owned subsidiary ("Profitco") for a nominal cash consideration, the Agency commented that it would be difficult for Parentco to satisfy the requirements of ss.50(1)(b)(iii)(A) and (C) stating that "the benefits that can be derived from the utilization of non-capital losses should generally be taken into consideration in assigning a value to the shares of a corporation". ...

23 December 2013 Internal T.I. 2013-0514701I7- Bitcoins-- summary under Subsection 153(1) Summary Under Tax Topics- Excise Tax Act- Section 153- Subsection 153(1) sale for Bitcoins When asked to address the HST/GST consequences of buying and selling goods in exchange for Bitcoins, CRA stated: [W]here a taxable supply… is made and the consideration for that supply is Bitcoins, the consideration for the supply is deemed to be equal to the fair market value of the Bitcoins at the time the supply is made….For example, if a GST/HST registrant sells a good for 10 Bitcoins and the sale is subject to GST/HST, the registrant will be required to collect the GST/HST calculated on the fair market value of the 10 Bitcoins at the time of the sale. ...