Search - consideration

The income derived by FA2 from payments received from FA1 in consideration for reinsuring the contracts of FA1 are stated in the question to be deemed to be income from an active business income under s. 95(2)(a)(ii), as is the income derived by FA3 from payments received from FA2 in consideration for reinsuring the risks assumed by FA2. ...

In those circumstances, we are of the view that the determination of the existence of particular consideration for a property and the FMV of that consideration should be made in light of the particular facts of the situation under analysis. ...

X 100 Class A shares for nominal consideration and also issues 100 discretionary dividend shares to Holdco. ... X of the new Class A shares of the capital stock of Opco was part of a series of transactions or events under which Holdco acquired discretionary dividend shares of capital stock of OPCO for consideration well below their FMV at the time of acquisition. ...

Madame sells some of her shares of her corporation, having a fair market value equaling 50% of the mortgage, to Monsieur in consideration for Monsieur assuming the 50% of the mortgage to which Madame had been subject. ... CRA responded: In order to answer the question, it must be established whether Monsieur, in assuming a portion of Madame's mortgage loan as consideration for the acquisition of the shares, incurred a new debt for which he was not previously liable and whether he had a legal obligation to pay interest that he was not previously legally required to pay. ...

In the 10th year, the corporation assigns the insurance policy without consideration to the shareholder, who pays the premium due for the 10th year and then receives a full refund of all premiums paid during the term of the policy. ... However, a shareholder who acquires such a policy from the shareholder’s corporation for less than fair market value will be required by virtue of subsection 15(1) to include in computing income an amount equal to the excess of the fair market value of the critical illness policy over the consideration paid. ...

" In ITTN-44, the CRA commented that, in the context of estate freezes of private corporations: “Provided that the owners of all the shares of the corporation act in a manner consistent with the assumption that no value attaches to the voting rights, and the rights are eventually extinguished for no consideration, the CRA will generally not attribute value to the rights. If the holder of the rights uses them to run the corporation in conflict with the common shareholders or seeks or is offered consideration for them, it would be difficult for the CRA to ignore this evidence of value.” ...

S. 87(4) requires that such shares be the only consideration received by the Target shareholders “on the amalgamation.” ... The payment made quite some time after the amalgamation, regarding bona fide representations and warranties, would not normally be thought of as consideration received for the disposition of shares of a predecessor corporation. ...

CRA responded: 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. … 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. ...

Without referring to s. 68, CRA stated: 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. … 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. ...

However…the taxpayer should be prepared to establish that the brief delay could not practically have been avoided and was not attributable to financial considerations like a desire to earn a return from a non-qualifying investment, to avoid temporary cash flow issues or because of exchange rate considerations. ...