Search - consideration

As noted in the definition in subsection 125.7(1) of the Act, qualifying revenue requires, among other things, an inflow of cash, receivables or other consideration. Where an entity re-evaluates or translates certain balance sheet accounts to reflect their value in Canadian currency at a certain time, no inflow of cash, receivables or other consideration has occurred. ... Whether a realized gain or loss results in an inflow of cash, receivables and other consideration is a question of fact. ...

An apportionment of a royalty payment agreed to by arm’s length parties under a mixed contract, to the extent that it is reasonable and realistic, in the sense that it is reflective of the actual consideration paid for a copyright described under subparagraph 212(1)(d)(vi), will generally be accepted by the CRA. ... 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 on the legal nature of what is being provided under the mixed contract, the relationship 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 an apportionment provided under a mixed contract is reflective of the obligation of the parties under subsection 212(1), consideration would be given, amongst others, to the terms of the mixed contract and to whether the parties have divergent interests in respect of this apportionment. ...

If the Trust has a non-resident beneficiary and receives non-share consideration from a non-arm’s length Canadian resident corporation (“Holdco”), such non-resident beneficiary would be deemed to receive a certain proportion of any non-share consideration received by the Trust on the disposition of the Canco low paid-up capital shares. To the extent that the conditions of subsection 212.1(1) are met, this would result in a dividend deemed to be paid to the non-resident beneficiary, subject to Canadian withholding tax, notwithstanding the fact that the non-share consideration does not exceed the ACB of the Canco shares. In this scenario, where section 84.1 would not apply because the Trust has full ACB in the Canco shares, would the CRA seek to apply section 212.1 based on a technical application of the look-through rules, even though the non-share consideration received by the Trust does not exceed the ACB of the shares that are disposed? ...

There is no basis, in my view, for confining the word "consideration" to executed consideration. ... There is no basis, in my view, for confining the word "consideration" to executed consideration. Consideration is of two kinds-executed and executory-and it would be an unwarranted restriction on that term to limit it to only one of the two types. ...

27 October 2020 CTF Roundtable Q. 4, 2020-0862451C6- Sale of TCP by a partnership Unedited CRA Tags 116 Principal Issues: Whether a purchaser who purchases TCP from a partnership may be liable under subsections 116(5) or (5.3) of the Act in respect of the portion of the consideration paid to the partnership that, after reasonable inquiry, the purchaser believes is attributable to direct or indirect partners (through one or more other partnerships) of the partnership that are resident in Canada? ... Would the CRA confirm that a purchaser who purchases TCP or property described in subsection 116(5.2) of the Act from a partnership has no liability under subsections 116(5) or (5.3) of the Act in respect of the portion of the consideration paid to the partnership that, after reasonable inquiry, the purchaser believes is attributable to direct or indirect (through one or more other partnerships) partners of the partnership that are resident in Canada? ... For the purposes of (inter alia) paragraph 2(3)(c) and section 116 of the Act, each partner of the partnership is considered to have disposed of their respective interest in the property of the partnership for proceeds of disposition equal to the portion of the consideration that is proportionate to the partner’s interest in the property. ...

Position: Either of subsections 6(1) or 15(1) of the Act may apply to include in the income of the individual, as the case may be, the amount by which the fair market value of the policy exceeds any actual consideration paid by the individual for the policy. ... Upon its renewal, the policy is transferred to the employee for no consideration under subsection 148(7) of the Act. ... Can the CRA confirm that, since the key employee has effectively been paying the premium under the policy in the form of a taxable benefit, that no employee benefit will arise on the transfer of the policy to the key employee for no consideration? ...

If Parent provides indemnities to the Target shareholders for any representations, warranties, etc. in the form of cash payment to Target shareholders, would this be consideration other than shares of Parent for purposes of subsection 87(4)? ... It looks like the share consideration to be received by a shareholder of a predecessor corporation may be reduced by a repurchase by Parent of shares issued as consideration for shares of a predecessor corporation for $1 and the value of the shares repurchase would correspond to the indemnity claim made by the Parent. ... In this situation, the reduction in value of the shares held by the Target shareholders is made as consideration for the settlement of the indemnity claim. ...

In consideration for the issuance of Parentco shares to the Former Targetco Shareholders, Targetco issues its shares to Parentco having a FMV equal to the FMV of the Parentco shares issued to Former Targetco Shareholders. ... As such, the cost of the shares of Amalco held by Parentco will not be derived from the value of the consideration given, i.e., shares issued by Parentco, to acquire the shares of Amalco. ... In consideration for Midco issuing shares to Parentco, Amalco issues compensatory shares to Midco having a FMV equal to the FMV of the shares of Midco issued to Parentco. ...

In such circumstances, does section 160 apply, or is there an exemption because fair market value consideration was paid in the form of shares which were tendered back to the corporation for redemption? ... Subparagraph 160(1)(e)(i) will limit the transferee's liability to the excess of the fair market value of the property transferred over the fair market value of consideration given for the property. ... Subsection 160(1) would not apply to any transfers of property where fair market value consideration is received in return. ...

Position: The proceeds of the disposition to the transferor and the ACB to the transferee would be the greatest of the cash surrender value, the consideration given for the interest and the ACB of the interest in the policy. ... For this purpose, paragraph 148(7)(a) would apply to deem the proceeds of the disposition to Opco to equal $50,000 (the greatest of CSV ($500), consideration (nil) and ACB ($50,000)), resulting in a policy gain of nil. ... We have brought this situation to the attention of the Department of Finance for their consideration. ...