Search - consideration

15 January 1993 Income Tax Severed Letter 9236060- Prepayment of Debt Unedited CRA Tags 18(9.1) Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department. 1993 Manitoba Institute/Bar Revenue Canada Round Table- Question 13 Author: Steve Tevlin Date: January 15, 1993 Document Type: Code 7 T236 #: 923606 Section of Act: 18(9.1) Question (a) Where a financial institution lender receives payments from different borrowers, in each case as consideration for a reduction in the rate of interest payable on a debt obligation or as a penalty or bonus payable by reason of the repayment of all of or part of the principal amount of a debt obligation, will the lender in calculating its income for subsequent years consider such payments on an individual loan basis or an aggregate basis? ...

The purpose of paragraph 84.1(1)(a) of the Act is to prevent an individual taxpayer from receiving, in certain circumstances, consideration (other than debt or shares of the purchaser corporation) in respect of a corporation's pre-1972 surplus. ...

11 June 1992 Income Tax Severed Letter 2M01320- Term Preferred Shares Unedited CRA Tags 112(2.1) 1992 Corporate Management Tax Conference TERM PREFERRED SHARES Question 12 Will the Department, following the 1991 Tax Court of Canada decision in the Société d'Investissement Desjardins case [[1991] 1 C.T.C. 2214] (91 D.T.C. 393), take into consideration as one of the relevant factors in establishing whether particular term preferred shares were or were not acquired in the ordinary course of the business carried on by a corporation the fact that the corporation is a specified financial institution only by reason of being related to a financial institution and is not itself engaged in a financing business? ...

The concerns which you discussed with Jim Wilson of this office were taken into consideration while reviewing the 1989 General Tax Guide. ...

23 February 1986 Income Tax Severed Letter RCT 5-0266 F Unedited CRA Tags 40(1)(a)(iii) Dear XXX: RE:     Capital Dividend Account This is in reply to your letter of December 11, 1985 concerning whether or not a capital gain reserve that is to be brought into income at the end of the taxation year should be taken into consideration in the calculation of the Capital Dividend account that may be calculated at any particular time in the year. ...

Assessing and Enquiries Directorate initially reviewed the taxpayer's request and has now referred it to us for consideration. ...

For that reason, the Department will concur with the transferor receiving in the interim (in addition to a qualifying share) a right to receive preference shares and will view such a right as being an acceptable form of consideration for the purposes of paragraph 85(1)(e.2) of the Act provided that the preference shares (with the appropriate fair market value) that the right represents are authorized, issued, and in place within the time specified in subsection 85(6) of the Act. ...

You have asked if the Department is prepared to rule on the application of 84.1 if the taxpayer transfers those shares to his holding company under subsection 85(1) for 'boot' consideration equal to his cost and shares of the holding company. ...

You stated that the purchase price of the assets to be transferred as outlined in the agreement will be fair market value and the consideration will be (a) a promissory note equal to the adjusted cost base of the assets being transferred, and (b) a subsequent issue of special shares having a paid-up capital of $1 and a redemption and retraction amount equal to the difference between the fair market value of the assets being transferred and the fair market value of the note. ...

. • an estate freeze is proposed whereby the taxpayer, an individual, will transfer all his shares, being common shares, in Opco to Holdco (both of which are small business corporations) pursuant to subsection 85(1) for consideration consisting of preferred shares of Holdco having an aggregate fair market value equal to that of the Opco common share transferred. • an irrevocable discretionary trust, having an arm's length trustee, will hold all the common shares of Holdco; the settlors of this trust will be the taxpayer and his spouse while the beneficiaries thereof will be the settlors and their children, one of whom is a minor. • should we rule on this type of "estate freeze" since the freezer is a beneficiary of the trust who may at the discretion of the trustee receive any or all of the income of the trust? ...