Search - consideration

7 October 2021 APFF Roundtable Q. 14, 2021-0901041C6 F- Meaning of Any consideration received by Donee Unedited CRA Tags 118.1(13) Principales Questions: Est-ce que la « JVM de toute contrepartie reçue par le donataire reconnu pour la disposition du TNA » au paragraphe 118.1(13) se limite à la notion de « produit de disposition » prévue à l’article 54? / Is the "FMV of any consideration received by the donee for the disposition" in subsection 118.1(13) limited to the notion of "proceeds of disposition" in section 54? ... Raisons: La notion de "contrepartie" est plus large. / The notion of "consideration" is broader. ...

Robert Gagnon 957-2108 Le 11 octobre 2002 2002-015686 ROUND TABLE ON FEDERAL TAXATION APFF- 2002 CONVENTION Question 16 Subsections 85.1(1) and 85.1(5) (Consideration other than Shares Paragraphs 85.1(2)(d) and 85.1(6)(c) provide that, for the purposes of applying subsections 85.1(1) and 85.1(5) respectively, the said subsections cannot apply if the vendor of shares of a corporation receives property other than shares of the purchaser corporation as consideration for the exchanged shares. ... Is it the CCRA's opinion that, for the purposes of subsections 85.1(1) and 85.1(5), the vendor receives consideration other than shares of the capital stock of the purchaser corporation in the situation described above? CCRA's Reply It seems to us that in general, in such a situation, the vendor receives upon the exchange a right to receive some shares of the purchaser corporation, and this right constitutes consideration other than a share of the capital stock of the purchaser corporation. ...

What considerations go into the determination of whether or not there has been a misrepresentation? ...

Marc LeBlond (613) 946-3261 Le 6 octobre 2006 2006-019601 ROUND TABLE ON FEDERAL TAXATION APFF- 2006 CONFERENCE Question 11 PUC Reduction Without Consideration to Avoid a Capital Gain on a Winding-Up Corporation A acquires all the shares issued and outstanding of Corporation B for $1 million paid cash and, thus, has an ACB equal to this amount. ... In order to avoid any capital gain on the winding-up of Corporation B, the PUC of Corporation B is reduced to $1 million without consideration immediately before the winding-up of Corporation B. ...

Some key considerations from the decision: When contemplating the establishment of a trust which will acquire securities of an employer to be held for the benefit of employees, consideration of the EBP rules is advised. ...

Thus, the only question under consideration is whether the interest is beneficially owned by a resident of the U.S. ... Other considerations It should be noted that contemplated legislative proposals that would implement the recommendations in the Action 2 Report of the Organization for Economic Cooperation and Development /G20 Base Erosion and Profit Shifting project, on “Neutralizing the Effects of Hybrid Mismatch Arrangements” may have an impact on the structures described in this response. ...

Paragraph 74.4(3)(a) provides as follows: (a) in the case of a transfer of property to a corporation, the amount, if any, by which the fair market value of the property at the time of the transfer exceeds the total of (i) the fair market value, at the time of the transfer, of the consideration (other than consideration that is excluded consideration at the particular time) received by the transferor for the property, and (ii) the fair market value, at the time of receipt, of any consideration (other than consideration that is excluded consideration at the particular time) received by the transferor at or before the particular time from the corporation or from a person with whom the transferor deals at arm’s length, in exchange for excluded consideration previously received by the transferor as consideration for the property or for excluded consideration substituted for such consideration; Subparagraph 74.4(3)(a)(i) takes into account consideration received on the initial transfer and, therefore, would not apply to an exchange of shares under a subsequent refreeze. Subparagraph 74.4(3)(a)(ii) would also not apply as the shares received on the refreeze constitute “excluded consideration”, as that term is defined in subsection 74.4(1). ... Subparagraph 74.4(3)(a)(ii) will reduce the outstanding amount by the fair market value, at the time of receipt, of consideration from the corporation in exchange for excluded consideration previously received by the transferor as consideration for the property or for excluded consideration substituted for such consideration. ...

Restrictive Covenants In very general terms, the rules concerning restrictive covenants are divided into two categories, the first being where there is no consideration for the restrictive covenant, and the second being where there is consideration. The rules applicable to situations where there is no consideration are generally more widely applicable. ... Accordingly, it would be common in drafting a restrictive covenant to state that the consideration is the sum of $1 and other valuable consideration etc. ...

Three-Stage Approach In situations involving the application of paragraphs 247(2)(b) and (d), the TPRC uses a three-stage approach: (1) initial consideration, (2) consideration of a formal referral, and (3) final consideration. (1) Initial consideration (1st stage) As soon as it becomes apparent that paragraphs 247(2)(b) and (d) may be recommended as an assessing position, an initial referral is made to the TPRC. ... The taxpayer's representations and the additional information will be taken into consideration when completing the formal referral to the TPRC. ... In cases in which the TPRC decides that the auditor should proceed with recharacterization, the auditor will issue the proposal letter. (3) Final consideration (3rd stage) If additional representations are made by the taxpayer in response to the proposal letter, the auditor will forward the additional representations along with the auditor's comments for the TPRC's final consideration. ...

Restrictive Covenants Question: Would the CRA reconsider the position set out in 2014-0522961C6 to the effect that the allocation in an agreement of $1 of consideration to a restrictive covenant, merely to ensure that the agreement constitutes a legally binding contract, does not constitute proceeds for the purpose of paragraphs 56.4(6)(d) and (7)(e)? ... The CRA is now prepared to accept that where a contract relating to granting a restrictive covenant uses words such as "$1 and other good and valuable consideration" simply to ensure that the contract is legally binding, and means in effect that "no more than a $1 worth of consideration" is conveyed by a purchaser for the restrictive covenant, such consideration will not, in and of itself, constitute proceeds received or receivable by the particular party for granting the RC for purposes of paragraph 56.4(6)(e) and paragraph 56.4(7)(d). ... If more than nominal consideration of $1 is paid for a restrictive covenant under the wording "$1 and other good and valuable consideration", the exceptions set out in subsections 56.4(6) and (7) would not apply because the respective conditions in paragraph 56.4(6)(e) and paragraph 56.4(7)(d) would not be met. ...