Search - consideration

The taxpayer subsequently received full FMV consideration. Was there an RRSP contribution or other adverse tax result? ... On XXXXXXXXXX, the taxpayer’s financial advisors recommended that “Securabond” strip bonds be transferred into the taxpayer’s RRSP account and that other consideration be removed from the account as consideration for the strip bonds. ... As far as we are concerned, the only issue here is the transfer itself and the consideration provided in return. ...

The amount of non-share consideration received by the taxpayer is a matter of fact and not an elected amount. The matters agreed to under a roll-over election are the proceeds and cost of eligible properties transferred and not the amount of non-share consideration received or paid in exchange. We note that the taxpayer is not required to file an amended election to revise the stated amount of non-share consideration received as this adjustment is automatic. ...

You have asked us whether the Consideration would be assistance as defined in subsection 125.4(1) of the Income Tax Act (the "Act"). ... The financing of the Production is comprised of several components, including the $XXXXXXXXXX Consideration from the GoC. The Producer has received the first $XXXXXXXXXX instalment in respect of the Consideration. ...

Bryson 957-2110   File No. 7-4757 SUBJECT:   Subsection  15(1) of the Act Transfer of property to a wholly-owned Canadian subsidiary We are writing in response to your letter of February 22, 1990 in which you requested our interpretation of the application of subsection 15(1) of the Income Tax Act (the "Act") to the following situation. (1)     A Corporation transfers property to its wholly-owned Canadian subsidiary. (2)     The Corporation and its wholly-owned subsidiary jointly elect under subsection 85(1) of the Act. (3)     The consideration for the transfer is to be a common share of the wholly-owned subsidiary and non-share consideration equal to the adjusted cost base of the property transferred. (4)     The value of the share is issued to the parent on the exchange exceeds the difference between the fair market value of the transferred property and the boot received on the exchange. (5)     There is only one class of shares issued by the wholly-owned subsidiary, there are no V-day value considerations and the transaction is not tax motivated. As stated in IT-432R and IT-291R it is the Department's position that where a shareholder transfers property to a corporation, the consideration and the fair market value of the share issued.  If the fair market value of the total consideration received exceeds the fair market value of the property transferred, the excess is included in the income of the shareholder pursuant to subsection 15(1) of the Act.  ...

A gift is a voluntary transfer of property without valuable consideration. ... If the consideration had been stated as a nominal amount of $1.00, one could conclude that the value of the property was more than the stated consideration and that, in fact, there was a gift or possibly other unspecified consideration. ... While the $1,000 paid may have been much less than the FMV at the time, it is, nevertheless, consideration which defeats the contention that the disposition was a gift. ...

Subsection 25(1) of the CBCA provides that shares may be issued at such times and to such persons and for such consideration as the directors may determine. ... There is no provision in the CBCA that would require a corporation to reduce the full amount of any consideration it receives. Section 41 of the CBCA allows the directors to authorize the corporation to pay a reasonable commission as consideration on the issuance of its shares. ...

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's benefit pursuant to subsection 15(1) of the Act. In our view, the proposed amendments to subsection 85(2.1) of the Act are correctly founded on the assumption that property will be transferred to a corporation by its shareholders for consideration that does not exceed the fair market value of the transferred property. In the case where the consideration received exceeds the fair market value of the property, we do not believe that it is inappropriate that such excess consideration be included in the shareholders income under subsection 15(1) of the Act as an appropriation of corporate property. ...

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère. 1994 Canadian Tax Conference Section 85 (Dale case) One of the requirements that must be met for the provisions of section 85 to apply to a transfer of property is that the transferor receive consideration consisting of shares in the capital stock of the transferee corporation. ... In that case, counsel for the Minister argued that a rollover would be allowed as long as the consideration shares were validly issued before the end of the taxation year in which the transfer occurred. In allowing the rollover, Judge Bowman ruled that the words "consideration that includes shares" appearing in section 85 do not require that the shares be issued simultaneously with the transfer of the property or even within the same taxation year. ...

In most purchase and sale transactions, the consideration exchanged accurately reflects the sale price. ... Canadian courts have, on several occasions, considered the determination of POD where differences existed between the reported sales price and the value of consideration exchanged. ... MNR, [63 DTC 347] (TAB), aff'd. [66 DTC 5100] (SCC), the appellant sold a hotel to a corporation for consideration consisting of shares and a mortgage. ...

Principal Issues: Computation of cost and ACB of certain shares acquired in a non-arm's length transaction where a promissory note issued as full consideration had a fair market value less than its principal amount. ... A accepted a promissory note from each of S and D as sole consideration for the respective Opco shares sold to S and D. ... Based on the CCRA's valuation report, the fair market value of the promissory notes is substantially less than the fair market value of the number of Opco shares for which each note was issued as consideration. ...