Search - consideration

In some of these arrangements, the facts have led to a conclusion that the trust acquired the shares for fair market value consideration (perhaps by transferring cash to Corp B on the acquisition of the Corp A shares from it). As was noted in our 2013 STEP Conference comments regarding the Federal Court of Appeal decision in Sommerer (endnote 2), CRA agrees with the general proposition that where property is transferred to a trust by a beneficiary for fair market value consideration, subsection 75(2) will not apply to attribute income in respect of that property to the beneficiary. In the alternative, if the facts are such that it may be concluded that the trust did not acquire the shares for fair market value consideration, CRA will typically challenge the arrangement on other grounds. ...

26 May 2016 IFA Roundtable Q. 10, 2016-0642101C6- 93.2 & 95(2)(c) CRA Tags 93.2 Principal Issues: Whether paragraph 95(2)(c) applies in a situation where a taxpayer transfers shares of a foreign affiliate to another foreign affiliate that is a “non-resident corporation without share capital”, within the meaning of subsection 93.2(1), without any “shares” being issued as consideration? ... CRA Response It appears to us that the deeming rule in paragraph 93.2(3)(a) only deems the vendor to have received new shares of the class of the “non-resident corporation without share capital” as consideration in respect of the disposition or exchange so as to meet the conditions of the preamble of paragraph 95(2)(c). ... However, we agree that the context and purpose of paragraph 95(2)(c) and section 93.2 suggest that paragraph 95(2)(c) should be capable of being applied in situations such as the one presented above where no new equity interests are issued as consideration for the acquisition of shares of another foreign affiliate. ...

It is a question of fact as to whether or not an expenditure can be taken into consideration in the calculation of the apprenticeship expenditures of a taxpayer and in the calculation of its qualified scientific research and experimental development expenditures. However, when an expenditure can be taken into consideration as a qualified scientific research and experimental expenditure and also in the calculation of an apprenticeship expenditure, we are of the opinion that the taxpayer may take it into consideration twice for the purposes of computing his investment tax credit at the end of a taxation year. ...

These issues are currently under consideration by our Directorate and we anticipate having discussions with the Department of Finance before we respond to the technical interpretation requests. ... Specifically, we advised that: (1) the interpretation bulletin position was first adopted when a previous version of paragraph 256(7)(a) of the ITA provided a legal basis for the position; (2) a 1994 amendment to paragraph 256(7)(a) of the ITA had removed the legal basis for the position; (3) the bulletin position cannot therefore be extended to inter vivos trusts; and (4) consideration will have to be given to withdrawing the current bulletin position when the bulletin is next revised. ... The ITTN #34 statement that consideration will have to be given to withdrawing the current bulletin position when the bulletin is next revised means that the bulletin position may be relied upon until there is a formal retraction of paragraph 10 of IT-302R3 or a revised bulletin is published. ...

Réponse du ministère du Revenu Dans cette affaire, la Cour suprême a mentionné dans son «Sommaire des principes et conclusion quant au contrôle», que dans la détermination du «contrôle effectif» d’une société, il faut prendre en considération la loi sur les sociétés par laquelle est régie la société, le registre des actionnaires, et toute limitation spécifique imposée soit au pouvoir de l’actionnaire majoritaire de contrôler l’élection des membres du conseil d’administration, ou soit au pouvoir du conseil d’administration de gérer les affaires tant commerciales qu’internes de la société. ... La Cour suprême a aussi mentionné que les documents autres que le registre des actionnaires, les actes constitutifs et les conventions unanimes des actionnaires, ne doivent généralement pas être pris en considération pour les fins de la détermination du «contrôle effectif» sur les affaires et les destinées de la société. ... Entre autres, le Ministère continuera de prendre en considération l’incidence des conventions unanimes des actionnaires dans la détermination du contrôle de droit. ...

Principal Issues: Whether an in-kind capital distribution of FA shares on shares of another FA to a Canco may give rise to a PUC reinstatement under subsection 212.3(9), while the shares so received by the Canco are subsequently contributed back to a third FA of the group in consideration for shares of that third FA such that subsection 212.3(2) does not apply to that investment in application of subparagraph 212.3(18)(b)(ii)? ... Using the proceeds of the Daylight Loan, New FA2 subscribes for 100 common shares of New FA3 for $100, such that New FA3 is at that time a wholly-owned subsidiary of New FA2. iv) FA1 acquires the common shares of New FA3 from New FA2 in consideration for a promissory note in the amount of $100. v) FA1 makes an in-kind return of capital on its common shares held by Canco by transferring to Canco the common shares of New FA3. This acquisition of the New FA3 shares is an investment by Canco described in paragraph 212.3(10)(a) that is not subject to subsection 212.3(2) in application of subparagraph 212.3(18)(b)(vii). vi) Canco contributes the common shares of New FA3 to New FA2 in consideration for additional common shares of New FA2, such that subsection 85.1(3) applies to this transfer of shares. ...

3 December 2024 CTF Roundtable Q. 1, 2024-1038181C6- Safe Income and Preferred Shares Principal Issues: Does the position set out in the Safe Income Paper regarding the allocation of safe income to preferred shares acquired as consideration for the transfer of property on a tax-deferred basis to the corporation apply where the preferred shares are acquired in exchange for common shares? ... Reasons: The position set out in the Safe Income Paper is only applicable to, specifically, the transfer of property other than shares. 2024 CTF Annual Tax Conference CRA Round Table Question 1: Safe Income and Preferred Shares The Canada Revenue Agency (CRA) has considered the allocation of safe income to preferred shares where a shareholder acquires preferred shares in a corporation as consideration for the transfer of a property (other than shares) on a tax-deferred basis to the corporation. ... CRA Response As part of the Safe Income Paper, the CRA did state that where a shareholder acquires preferred shares of a corporation as consideration for a transfer of a property on a tax-deferred basis to the corporation, the accrued gain on the property at the time of the transfer and that would subsequently be realized by the corporation would indeed be viewed as contributing to the gain on the preferred shares and would be included in the safe income of the preferred shares. ...

The Oxford English Dictionary defines a sale as an "exchange of a commodity for money or other consideration."" Similarly, Black's Law Dictionary refers to a "transfer of property … for consideration." ... " Accordingly, it is our view that the FCA decision in Sommerer does stand for the general proposition that where property is transferred to a trust by a beneficiary of the trust in return for consideration that constitutes a fair market value, subsection 75(2) will not apply to attribute income in respect of that property to that beneficiary. ...

We understand that the deceased taxpayer sold her entire farming operation to her daughter and as part of the sale, cattle and feed inventory was transferred to the daughter in consideration of a promissory note in the amount of $XXXXXXXXXX. ... On the contrary both the Bill of Sale and the Purchase and Sale Agreement refer to the promissory note as the consideration given for the transfer of the inventory. ... As the promissory note was received as consideration for the inventory transferred and accepted as absolute payment, there is no amount owing on the sale of the cattle and feed inventory. ...

The general rule, under subsection 148(8) of the Act, provides that where a policyholder transfers an interest in the policy to the policyholder’s child for no consideration and a child of the policyholder or a child of the transferee is the person who is insured under the contract, the policyholder shall be deemed to have disposed of his or her interest in the policy for proceeds of the disposition equal to the adjusted cost basis (ACB) of the policy immediately before the transfer. ... Child B dies and the policy remains in force, with B’s Spouse being the sole life insured. (1) Subsequent to Child B’s death, Parent A transfers the Policy to B’s Spouse for no consideration. ... The first condition is found in paragraph 148(8)(a) of the Act, which requires that the interest of a policyholder in a policy be transferred to a “child” (as defined in subsections 70(10) and 252(1) of the Act) of the policyholder for no consideration. ...