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To the extent that the transfers result in a Holdco owing fractional interests in the marketable securities, the Holdcos may sell the fractional interests among themselves for fair market value consideration, however any such sales will be made within the parameters of paragraph 55(3.1)(c). As consideration for the transferred properties referred to above, each Holdco will: (a) assume one-third of the current accounts payable of XXXXXXXXXX, and one-third of the shareholder loans of XXXXXXXXXX; and (b) issue to XXXXXXXXXX Class XXXXXXXXXX Preference Shares of its capital stock having an aggregate redemption amount and fair market value equal to the amount by which the fair market value of the transferred properties received by it as a result of the transfers described herein exceeds the fair market value of the liabilities of XXXXXXXXXX assumed by it. ...

In this respect, subsection 206(4) of the Income Tax Act (the "Act") provides that where an RRSP, RRIF or other taxpayer, as noted therein, acquires a property from a person with whom the taxpayer was not dealing at arm's length, for no consideration or for consideration that is less than the fair market value of the property at the time, the taxpayer will be deemed to have acquired the property at its fair market value. ...

In this regard, the Department will take into consideration certain factors which may indicate that, in the absence of an individual's personal services corporation, the individual would be regarded as an employee of a foreign firm rather than a contractor to that firm. ... However, as we believe that what really happens in practice is determinative of whether or not an employer/employee relationship exists, if there is any doubt after taking into consideration the above factors, that the actual practice will not reflect the relationship that is set out in those contracts or other supporting documentation, the issue may have to be resolved retrospectively rather than prospectively and, therefore, preclude the issuance of waivers by the Department to reduce the withholding at source. ...

It would seem that such a decision should not be affected by income tax considerations. ... Any specific concern that you may have with respect to the tax policy behind subparagraph 251(5)(b)(i) and paragraph 256(1.4)(a) of the Act should be submitted to the Department of Finance for consideration. ...

The only consideration received by Mother and Son would be shares of Newco. An election would be filed under section 85 of the Act to defer any capital gain which would otherwise be realized as a consequence of the transfer of the Holdco shares to Newco.- Holdco would transfer all of its Subco shares to Newco with a value equal to the value of the Holdco shares that Mother and Son will transfer to Newco and the only consideration that Holdco will receive on this transfer would be Newco preferred shares of equal value. ...

All of Usco2’s assets are used in the active business. 5) Forco is a corporation resident in the United States that is not related to Canco. 6) Forsub is a wholly-owned subsidiary of Forco resident in the United States. 7) Usco2 sells the beneficial ownership in all of its active business assets to Forsub for fair market value consideration but retains legal title thereto. 8) On the day following the transaction described in paragraph 7 above, Usco1 sells the shares of Usco2 to Forco for fair market value consideration. ...

15 August 2018 Internal T.I. 2018-0749931I7- Subsections 87(1), (1.1) and (4) Unedited CRA Tags Subsections 87(1), (1.1) and (4) Principal Issues: Whether the position described in paragraph 1.74 of the Income Tax Folio S4-F7-C1, Amalgamations of Canadian Corporations (that a shareholder's aggregate ACB of its shares of a predecessor corporation, that are cancelled for no consideration on a horizontal short-form amalgamation, will be added to the cost of the shares of the amalgamated corporation, that are deemed to have been received by the shareholder on the amalgamation pursuant to subsection 87(4)) (the “Folio Position”) is technically correct? ... However, paragraph 1.74 of the Folio states that: Where shares of a predecessor corporation are cancelled for no consideration pursuant to a short-form horizontal amalgamation, the adjusted cost base of such cancelled shares to the shareholder will be added to the cost of the common shares of the new corporation which are deemed to have been received by the shareholder on the amalgamation under subsection 87(1.1). ...

However, we offer the following general comments for your consideration. ... You may wish to seek professional advice with respect to your proposal to ensure that all income tax and other matters are given full consideration. ...

As consideration for the right to use the software program, A Co. has agreed to pay Foreign Co. a royalty based on a percentage of its sales. 4) The royalties described in paragraph 3 above are taxable under Part XIII of the Act pursuant to subparagraph 212(1)(d)(i) of the Act. 5) Foreign Co. has also agreed to provide, in Canada, technical support to A Co. in relation to the operation of the computer program. As consideration for this service A Co. will pay Foreign Co. a fee again calculated by reference to A Co.'s sales. 6) The fees described in paragraph 5 above are taxable under part XIII of the Act pursuant subparagraph 212(1)(d)(iii) of the Act. 7) Foreign Co. has no permanent establishment in Canada. ...

You have asked us to confirm the following: the exchange of shares held by an employee for new shares of the employer as payment of the exercise price of a stock option will not be considered a disposition for income tax purposes, and accordingly, the employee will not be required to recognize any capital gain that had accrued on the exchanged shares up to the date of the exchange by virtue of his tendering the shares; the paid-up capital of the class of shares (assuming the Old Shares are exchanged for New Shares and no cash consideration is paid for the acquisition of the Old Shares) will not change as a result of the exchange; any benefit to be included in the employee's income under section 7 of the Act by virtue of the acquisition of the new shares shall be computed by reference to the exercise price of the option, being the fair market value (not the adjusted cost base) of the Old Shares, on the date of exchange; and no dividend will be deemed to arise by virtue of the exchange of the Old Shares for the New Shares. ... Subject to subsection 51(4) of the Act, section 51 will apply to any situation where a share of the capital stock of a corporation is acquired by a taxpayer in exchange for a capital property that is another share of the particular corporation and no other consideration is received for the old shares. ...