Search - consideration

The CRA is of the view that the word "consideration" in the phrase "fair market value of any consideration … received by the donee for the disposition … of the security" in paragraph 118.1(13)(c) must be given the broad meaning generally accepted in the jurisprudence. ... Consequently, the CRA is of the view that for the purposes of paragraph 118.1(13)(c), the consideration received by the qualified donee for the disposition of a NQS may include the portion of such consideration that is a deemed dividend received by the qualified donee pursuant to subsection 84(3) on a redemption of shares. Words and Phrases consideration ...

S. 87(4) requires that such shares be the only consideration received by the Target shareholders “on the amalgamation.” ...

2 December 2014 CTF Roundtable Q. 3, 2014-0547251C6- Q.3- Restrictive Covenants-- summary under Paragraph 56.4(6)(e) Summary Under Tax Topics- Income Tax Act- Section 56.4- Subsection 56.4(6)- Paragraph 56.4(6)(e) recital of nominal consideration Would CRA reconsider 2014-0522961C6, so that the allocation in an agreement of $1 of consideration to a restrictive covenant does not constitute proceeds for the purpose of paragraphs 56.4(6)(e) and (7)(d)? CRA responded that it: 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…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…the amount of proceeds (or any additional amount deemed to be proceeds by paragraph 68(c)) received or receivable by the taxpayer for the RC would be taxable as ordinary income under subsection 56.4(2) unless one of the three exceptions in subsection 56.4(3) otherwise applies. ...

Regarding s. 148(7), CRA indicated that, although it considered that a dividend-in-kind of a life insurance policy by a corporation to its shareholder is made for no consideration for purposes of s. 148(7)(a)(ii)(B), where a trust transfers the policy to its beneficiary, the beneficiary is regarded as giving consideration for the transfer that is all or any part of the beneficiary's income or capital interest, as applicable. Here, it would be reasonable to consider that such consideration had an FMV of $250. ... Instead, s. 148(7) would deem the proceeds of disposition of the policy to the trust to be the FMV of the consideration received by the trust for the disposition, namely, the $250 note repayment. ...

16 June 2014 STEP Roundtable, 2014-0522961C6- STEP CRA Roundtable- June 2014-- summary under Paragraph 56.4(6)(e) Summary Under Tax Topics- Income Tax Act- Section 56.4- Subsection 56.4(6)- Paragraph 56.4(6)(e) nominal consideration tainting of non-compete- partly reversed immediately above Does the fact that a contract of a restrictive covenant stipulates the amount of $1 as consideration mean that there is consideration, such that the elections, provided under subsection 56.4(7) are inapplicable? CRA stated: While we understand that a nominal amount of consideration may be given by the parties in a contract relating to a restrictive covenant to ensure that the contract is legally binding, it is the CRA's view that this would still constitute an amount of proceeds received or receivable by the particular party for granting the RC. ...

16 June 2014 STEP Roundtable, 2014-0522961C6- STEP CRA Roundtable- June 2014-- summary under Paragraph 56.4(7)(d) Summary Under Tax Topics- Income Tax Act- Section 56.4- Subsection 56.4(7)- Paragraph 56.4(7)(d) nominal consideration tainting of non-compete Does the fact that a contract of a restrictive covenant stipulates the amount of $1 as consideration mean that there is consideration, such that the elections, provided under subsection 56.4(7) are inapplicable? CRA stated: While we understand that a nominal amount of consideration may be given by the parties in a contract relating to a restrictive covenant to ensure that the contract is legally binding, it is the CRA's view that this would still constitute an amount of proceeds received or receivable by the particular party for granting the RC. ...

., the distribution restriction in s. 74.4(4) was not complied with), the preferred shares received on the refreeze will be excluded consideration that do not reduce the “outstanding amount” (as determined under s. 74.4(3)) on which the deemed interest benefit is computed under s. 74.4(2). If the refrozen preferred shares are redeemed for cash consideration, that consideration will reduce the outstanding amount, but only to the extent of the fair market value of those shares. ...

5 October 2012 APFF Roundtable Q. 13, 2012-0454181C6 F- Discretionary Dividend Shares-- summary under Subsection 15(1) Summary Under Tax Topics- Income Tax Act- Section 15- Subsection 15(1) discretionary dividend shares issued for nominal consideration Mr. ... X 100 Class A shares for nominal consideration and also issues 100 discretionary dividend shares to Holdco. ... CRA stated (TaxInterpretations translation): We are of the view that subsection 15(1) could apply to the extent that Holdco acquired the discretionary dividend shares of Opco for consideration less than their FMV. ...

5 October 2018 APFF Financial Strategies and Instruments Roundtable Q. 1, 2018-0761521C6 F- Life insurance policy as share redempt. proceeds-- summary under Subsection 148(7) Summary Under Tax Topics- Income Tax Act- Section 148- Subsection 148(7) more gain will be realized if an appreciated life insurance policy is distributed as redemption proceeds rather than a dividend-in-kind 2017-0690331C6 found that a dividend-in-kind by a subsidiary to its parent of a life insurance policy would result in proceeds of disposition to it equal to the greater of the policy’s cash surrender value (CSV) and its adjusted cost basis (ACB), rather than equaling the policy’s higher fair market value (FMV), given that the dividend would not result in consideration being given for the policy. ... In effectively answering “$100,000,” CRA stated: [T]he word "consideration" must, for the purposes of subsection 148(7), receive the broad meaning generally accorded to it in the jurisprudence … [so that where] on a share redemption, the redemption price paid by a corporation is an interest in a life insurance policy that the corporation transfers to the shareholder, the CRA is of the view that the shareholder gave consideration (the redeemed shares) to the corporation for the interest thus transferred. ...

If the Trust has a non-resident beneficiary, such non-resident beneficiary would be deemed to receive a certain proportion of any non-share consideration (the Note) received by the Trust on the disposition of the Canco low paid-up capital shares, resulting in a dividend deemed to be received by the non-resident beneficiary. ... Under s. 212.1(6)(b)(ii), each non-resident beneficiary will be deemed to have received consideration other than the shares of the purchaser corporation, and that consideration received will, again, be equal to the proportion of their interest in the trust. ...