Search - consideration

Estate B will transfer its shares of Opco to a newly incorporated corporation (Newco B) in consideration for common and preferred shares of Newco B, with a joint election under subsection 85(1) being filed. Newco B will purchase for cancellation up to 25% of the preferred shares in its capital held by Estate B in consideration for a promissory note (the Newco B Note). Estate B will assign the Newco B Note to Opco as consideration for the partial repayment for the tax-funding loan described above. ...

24 May 2011 External T.I. 2007-0246981E5- Subsection 212(1)-- summary under Paragraph 212(1)(d) Summary Under Tax Topics- Income Tax Act- Section 212- Subsection 212(1)- Paragraph 212(1)(d) In consideration for the "Non-Resident's" grant of the right to manufacture and sell a trademarked product to the "Resident," who manufactures the product in Canada and sells the product wholesale to customers throughout the world, the Resident agrees to pay the Non-Resident the greater of a percentage of amounts invoiced to customers from sales of the product and a pre-determined fixed minimum amount. In concuding that this consideration was a royalty on general principles, so that it ws not necessary to refernce s. 212(1)(d)(i), CRA stated: The payments in question are clearly in consideration for obtaining the rights to manufacture and sell the product and are based on a share of the profits that the Resident will realize from using such rights. ...

In finding that s. 232(2) did not apply to the supply of crude made by Company A to Company B, CRA stated: The reduction in consideration must relate to the original supply and may be made for any reason but must not depend on any action undertaken by the recipient or any supply made by the recipient. Furthermore, a reduction in consideration is not considered to have occurred if the goods are sold back to the original supplier. To be considered a reduction of consideration, it must be evident that the goods are being returned to the supplier rather than being sold to the supplier. ...

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. ...

14 March 2016 External T.I. 2016-0626781E5- Neuman Type Situation-- summary under Subsection 15(1) Summary Under Tax Topics- Income Tax Act- Section 15- Subsection 15(1) s. 15(1) might apply where spouse subscribes nominal consideration for Opco shares and receives a large discretionary dividend The only issued and outstanding share of Opco (which has retained earnings of $500,000) is 1 Class A common share, with a fair market value of $1,000,000 owned by Mr. ... A, for nominal consideration, 1 non-voting Class B preferred share, which is redeemable and retractable “for the fair market value for which it is issued” and entitled to discretionary dividends as and when declared. ... A as consideration for the share does not represent the fair market value of such share at the time of subscription. ...

Must the retained amount be included in the value of the consideration for the disposition of the stock options pursuant to s. 7(1)(b)? ... CRA responded (TI translation): [T]he term "value of the consideration for the disposition" under paragraph 7(1)(b) includes a receivable from the employer. Therefore…if the agreed price for the options includes the amount retained at the moment of the disposition of the stock options subject to a possible future reduction, the retained amount would be a part of the value of the consideration for the disposition under paragraph 7(1)(b). ...

23 March 2011 Internal T.I. 2010-0389081I7 F- Disposition of a resource property-- summary under Paragraph (a) Summary Under Tax Topics- Income Tax Act- Section 54- Proceeds of Disposition- Paragraph (a) proceeds included full (undiscounted) deferred cash proceeds, but might exclude share consideration (with volatile market price) until issued The Vendor sold a percentage interest in mineral claims (the “Mining Properties”) for consideration including deferred cash payments and shares to be issued by the public-company Purchaser, in each case, to be paid or issued over a four-year period. ... Turning to the deferred share issuance consideration, the Directorate noted that the shares’ market price could “fluctuate greatly,” and indicated that the TSO accordingly might: conclude that such portion of the proceeds of disposition for the Mining Properties by the Vendor is not determinable prior to the date of issuance of the shares by the Purchaser and that such portion of the proceeds of disposition would be recognized for tax purposes at the times of their issuance …. ...

23 March 2011 Internal T.I. 2010-0389081I7 F- Disposition of a resource property-- summary under Paragraph 12(1)(b) Summary Under Tax Topics- Income Tax Act- Section 12- Subsection 12(1)- Paragraph 12(1)(b) full undiscounted amount of future cash consideration to be included as an amount receivable The Vendor sold a percentage interest in mineral claims for consideration including deferred cash payments to be paid over a four-year period. ... Thus, for the purposes of paragraph 12(1)(b), we are of the view that to be able to say that the proceeds of disposition have become receivable, the vendor must have an absolute right, though not necessarily immediate, to the consideration and, secondly, that the proceeds of disposition are determined or determinable. ...

24 January 2011 Internal T.I. 2010-0389251I7 F- Farm-out agreement and warrants-- summary under Paragraph (f) Summary Under Tax Topics- Income Tax Act- Section 66.1- Subsection 66.1(6)- Canadian exploration expense- Paragraph (f) application of farmout policy to situation where free warrants issued along with incurring of CEE A mining exploration corporation (the "Purchaser") agreed with another mining exploration corporation (the "Vendor") to acquire an interest in the Vendor's unproven resource properties (the "Properties") in consideration for incurring specified exploration expenses. As part of this agreement, the Vendor also agreed to issue, for no significant consideration, warrants to the Purchaser to acquire treasury common shares. After noting that a portion of the consideration otherwise payable as Canadian exploration expense should be allocated to the warrants based on their value, the Directorate stated: [T]he CRA's current position with respect to simple farm-out transactions is that there would be no cost to the farmee to acquire a property and that the farmee may consider the expenses incurred by the farmee to be Canadian exploration expenses if the expenses meet the definition of Canadian exploration expense in subsection 66.1(6). ...

30 April 2009 External T.I. 2008-0296721E5 F- Late filed election 85(7)- Amending transactions-- summary under Rectification & Rescission Summary Under Tax Topics- General Concepts- Rectification & Rescission CRA will not anticipate a judicial rectification An individual transferred an immovable to his corporation for non-share consideration, and after being reassessed by CRA for the resulting gain, filed a late s. 85(7) election showing preferred share consideration and proposed to validate such late election by entering into a "deed of correction" with the corporation providing for the shares’ issuance. ... Consequently, CRA would not be able to accept a late election filed by the taxpayer and the Corporation under subsection 85(7) since, based on the Contract initially entered into … one of the conditions set out in subsection 85(1) (i.e., the issuance by the Corporation of share consideration) would not have been satisfied. ...