Search - consideration

8 October 2010 Roundtable, 2010-0373221C6 F- Paid-up capital-- summary under Subsection 245(4) Summary Under Tax Topics- Income Tax Act- Section 245- Subsection 245(4) CRA has concluded in some cases that using PUC averaging to shift PUC to individual shareholders engages GAAR Opco, a Canadian-controlled private corporation owning and operating a seniors' residence, and whose shares (which are qualified small business corporation shares) are held equally by X, Y and Z (the "Taxpayers") carries out the following transactions in order to shield assets from commercial risks relating to its business, the Taxpayers cause the following transactions: they transfer their shares of Opco to a newly-incorporated corporation (Propertyco) in consideration for Class F Shares; Opco redeems its shares held by Propertyco; Opco transfers its real estate and other investments to Propertyco in consideration for Class F shares; the repurchase of the shares of the capital stock of Propertyco held by Opco. ...

In the year immediately preceding that sale on January 1 of all the shares of Aco, Aco paid a dividend in kind of the policy to Trust X, so that the policy was deemed to be disposed of for the greatest of its ACB, CSV and the (nil) consideration received, or $150. ... 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. ...

For example, Father transfers shares of Opco (a small business corporation whose shares are eligible for the CGE) to his children in consideration for a note that is payable over 10 years, claims the capital gains reserve, but does not claim the CGE. The children transfer the Opco shares to a new Holdco in consideration for a note of Holdco, with a view to Opco dividends funding note repayments. ...

Ss. 87(9)(a.4) and (c) apply so that the cost of the shares of Amalco held by Parentco are not derived from the value of the consideration given. ... CRA indicated that in Scenario 1, the shares received by Parentco from Amalco are subject to the application of ss. 87(9)(a.4) and (c), so that the cost of the shares of Amalco held by Parentco will not be derived from the value of the consideration given (that is the shares issued by Parentco to acquire the shares of Amalco) to the former shareholders of Targetco. ...

Situation 1 Subsequent to Child B’s death, Parent A transfers the policy to B’s Spouse for no consideration. ... Provided that B’s Spouse acquired this interest without consideration, it is our view that subsection 148(8) of the Act would apply to the transfer of the interest in the Policy from Parent A to B’s Spouse, such that Parent A would be deemed to have disposed of the interest in the Policy for proceeds of the disposition equal to Parent A’s ACB of the interest immediately before the transfer, and B’s Spouse will be deemed to have acquired the interest in the Policy at a cost equal to those proceeds. ...

They transfer equal portions of their current equal shareholdings of Opco to Realtyco under s. 85(1) in consideration for preferred shares of equivalent fair market value. Opco transfers realty to Realtyco under s. 85(1) in consideration for preferred shares of equivalent FMV. ... CRA then stated: Furthermore, as regards the dividend deemed to be received by Opco, an increase in interest of Third Party described in subparagraph 55(3)(a)(v) would result from the transfer of the shares of Opco by Third Party to Realtyco in consideration for preferred shares in the capital of Realtyco, as well as on the redemption of the preferred shares in the capital of Realtyco held by Opco. ...

They transfer equal portions of their current equal shareholdings of Opco to Realtyco under s. 85(1) in consideration for preferred shares of equivalent fair market value. Opco transfers realty to Realtyco under s. 85(1) in consideration for preferred shares of equivalent FMV. ... CRA then stated: Furthermore, as regards the dividend deemed to be received by Opco, an increase in interest of Third Party described in subparagraph 55(3)(a)(v) would result from the transfer of the shares of Opco by Third Party to Realtyco in consideration for preferred shares in the capital of Realtyco, as well as on the redemption of the preferred shares in the capital of Realtyco held by Opco. ...

11 September 2006 STEP Roundtable Q. 4, 2006-0185571C6- 2006 STEP Conference-Question 4-- summary under Subsection 75(2) Summary Under Tax Topics- Income Tax Act- Section 75- Subsection 75(2) Although CRA does not apply s. 75(2) to a genuine loan of cash to the trust, this position does not extend to a loan of income-producing property to the trust or to the situation where a capital beneficiary of a trust transfers property to that trust, regardless of whether or not the capital beneficiary receives fair market value consideration. ...

2 June 2011 STEPs Roundtable Q. 5, 2011-0401861C6- 2011 STEP- Q.5- Post-Mortem Planning and 84(2)-- summary under Subsection 84(2) Summary Under Tax Topics- Income Tax Act- Section 84- Subsection 84(2) triggers: quick distribution; mostly cash assets An estate engages in a "pipeline" strategy in which it disposes of its shares of ACo (having a stepped-up adjusted cost base under s. 70(5)) to a newly-incorporated holdco ("AHoldco") in consideration for a promissory note, and AHoldco applies an intercorporate dividend from ACo to repay the promissory note. ...

16 June 2014 STEP Roundtable, 2014-0523061C6- Trust audit issues-- summary under Subsection 75(2) Summary Under Tax Topics- Income Tax Act- Section 75- Subsection 75(2) settlor taking back undervalued freeze shares 2010-036630117 concerned the sole trustee and capital beneficiary of a trust (the taxpayer) who, had transferred property to the trust by accepting undervalued freeze shares as consideration when growth shares were issued to the trust. ...