Search - consideration

23 March 2011 Internal T.I. 2010-0389081I7 F- Disposition of a resource property-- summary under Paragraph 12(1)(g) Summary Under Tax Topics- Income Tax Act- Section 12- Subsection 12(1)- Paragraph 12(1)(g) deferred share consideration potentially not recognized until issuance The Vendor sold a percentage interest in mineral claims for consideration including shares to be issued by the public-company purchaser, to be issued over a four-year period. ...

27 March 1994 Internal T.I. 9333227- SHAREHOLDER BENEFIT-- summary under Subsection 15(1) Summary Under Tax Topics- Income Tax Act- Section 15- Subsection 15(1) Where a taxpayer has transferred property to a corporation pursuant to s. 85(1) and has received consideration in excess of the fair market value of the property transferred, s. 85(2.1) in its amended form will apply before subsection 84(1). Accordingly, to the extent that the excess consideration exceeds the paid-up capital of the shares received by the taxpayer on the transfer, such amount will no longer be taxed as a deemed dividend but will be taxed as a shareholder benefit under s. 15(1). ...

27 March 1994 Internal T.I. 9333227- SHAREHOLDER BENEFIT-- summary under Subsection 85(2.1) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(2.1) Where a taxpayer has transferred property to a corporation pursuant to s. 85(1) and has received consideration in excess of the fair market value of the property transferred, s. 85(2.1) in its amended form will operate to apply that provision prior to subsection 84(1). Accordingly, to the extent that the excess consideration exceeds the paid-capital of the shares received by the taxpayer on the transfer, such amount will no longer be taxed as a deemed dividend but will be taxed as a shareholder benefit under s. 15(1). ...

3 March 2004 Internal T.I. 2004-0061781I7 F- Engagement de non-concurrence-- summary under Exempt Receipts/Business Summary Under Tax Topics- Income Tax Act- Section 9- Exempt Receipts/Business Manrell inapplicable where recipient of non-compete carried on the related business In finding that consideration received by a corporation for a non-compete covenant given by it on the sale of one of its two businesses gave rise to an eligible capital amount, the Directorate indicated that Manrell and Fortino were inapplicable because there, unlike here, the two shareholders who received consideration for a non-compete covenant respecting the sale of their corporations “were not carrying on any business.” ...

Consideration to USCo includes a fixed monthly fee, a percentage of gross receipts, and a "Procurement License Fee" ("PLF"). ... Regarding s. 212(1)(d)(v), CRA stated: If [as CRA contends] the PLF is characterized as consideration for the Franchise Rights, it would be difficult to conclude that any portion of the PLF would fit within the wording of this subparagraph because the PLF is dependent upon the volume or the price of the products and equipment purchased by Canco, not the degree to which Canco uses or has production (i.e., sales or profits) from the Franchise Rights. ...

4 January 2012 Internal T.I. 2011-0408081I7 F- Transactions entre une société et ses actionnaires-- summary under Subparagraph 13(7)(e)(i) Summary Under Tax Topics- Income Tax Act- Section 13- Subsection 13(7)- Paragraph 13(7)(e)- Subparagraph 13(7)(e)(i) s. 13(7)(e)(i) capital cost equals consideration paid even where in excess of FMV A shareholder sells depreciable property to the corporation for a sum exceedingits fair market value ("FMV"). ... However, CRA noted that the excess of the consideration received by the shareholder over the property’s FMV would be a taxable s. 15(1) benefit. ...

8 November 2004 Internal T.I. 2004-0076271I7 F- Émission d'options d'achat d'actions-- summary under Computation of Profit Summary Under Tax Topics- Income Tax Act- Section 9- Computation of Profit unclear whether the FMV of options issued in consideration for purchases of property or services is the cost thereof CRA noted that it was subject to debate whether the FMV of stock options issued by a corporation as consideration for the purchase of assets or as an incentive payment to future clients should be treated as the cost of such assets or services, or whether “the issuance of stock options does not constitute a bona fide disbursement to the corporation and, at the very least, should not be taken into account by the corporation in computing the cost of acquiring property or in computing the expense incurred for a service.” ...

16 December 2003 Internal T.I. 2003-0046167 F- Section 50- Shares of Insolvent Corporation50(1)-- summary under Paragraph 69(1)(b) Summary Under Tax Topics- Income Tax Act- Section 69- Subsection 69(1)- Paragraph 69(1)(b) sale of Lossco with no assets but non-capital losses for nil consideration to another subsidiary generated a gain under s. 69(1)(b) Parentco elected under s. 50(1) respecting its shares of one of a wholly-owned subsidiary ("Lossco") with non-capital loses but no assets or liabilities. It subsequently sold its Lossco shares to a profitable wholly-owned subsidiary ("Profitco") for nominal cash consideration, with Lossco then being wound-up into Profitco under s. 88(1) so that Profitco could then access Lossco's non-capital losses pursuant to s. 88(1.1). ...

CRA stated: To the extent that the individual has transferred a licence to use the software to the charity for no consideration, and the charity is not required to return the licence to the individual, it is our view that the non-exclusive licence to use software developed by the individual to a registered charity without a right of return for no consideration is a transfer giving rise to a gift for purposes of the Act. ...

24 April 2001 Internal T.I. 2000-0037677 F- DEBENTURES CONVERTIBLES-- summary under Subparagraph 143.3(3)(a)(ii) Summary Under Tax Topics- Income Tax Act- Section 143.3- Subsection 143.3(3)- Paragraph 143.3(3)(a)- Subparagraph 143.3(3)(a)(ii) under pre-s. 143.3 Act, where shares issued for property, the shares’ stated capital determines the property’s cost, whereas the cost of the shares to the shareholder is their FMV Before finding that, on a (pre-s. 143.3) conversion of convertible debentures through the issuance of shares with a lower stated capital than their FMV, no premium could be deducted under s. 20(1)(f)(ii), the Directorate stated: [T]he jurisprudence has established that the treatment of the issuer and the holder of the shares may be different, that is, it is the stated capital of the shares issued that generally constitutes the cost of the property received in consideration for their issue and it is the FMV of such shares that is used to determine the tax consequences to the holder of the shares when the holder has transferred property in consideration for the acquisition of such shares. ...