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Canada, 2019 FCA 306-- summary under Shares Summary Under Tax Topics- General Concepts- Fair Market Value- Shares FMV of shares reduced by accrued, but not yet payable, corporate income tax on gains An individual rolled his apartment building into a Newco in consideration for a mortgage assumption and shares with nominal paid-up capital, and then rolled those shares into a new Holdco. ...

After rejecting the taxpayers’ submission that they should not be required to comply because it was unclear whether the RFIs were directed to them individually or to their related entities, Pamel J went on to reject a submission that the RFIs contravened s. 13 of the Charter, stating (at para. 76): The ITA’s legitimate purpose in allowing the CRA to audit taxpayers—to ensure compliance with our taxation system—must thus be balanced against the section 7 rights invoked by the Friedmans, with the consideration that the sole object of section 7 is to offer protection in “extraordinary or exceptional circumstances” when the impugned legislation is unjust. ...

These considerations apply here. ...

In the context of negotiations that led to the sale of the shares of Public Mobile to Telus, Pangaea and a resident shareholder (“Thomvest”) entered into a letter agreement that provided that Thomvest would pay $3,000,000 as consideration for Pangaea’s agreement to execute a share purchase agreement. ...

In rejecting the ARQ’s submission that it was contrary to judicial comity and an abuse of process for the same transactions to be appealed respecting QST to the Court of Quebec (and before going on to grant the appellants’ appeals in part), Choquette JCQ stated (at paras. 22, 24 and 25, TaxInterpetations translation): With respect, the judgment of the TCC is a transcript of the recording of the oral judgment and does not reveal the facts submitted or the Court's considerations …. ...

In particular, although the OSAs provided that JDI was to operate the PCE, JDI delegated to IPPL, in consideration for fees, the performance of all such operating services, so that nothing changed “on the ground.” ...

Before granting the compliance order, Pentney J cited (at para. 19) Cameco for the proposition that “the fact that the requests may involve substantial documentation which the taxpayer may view as not proportional to the matter is not a relevant consideration,” and further stated (at para. 29): [T]here is no evidence to suggest that the CRA audit has been launched for any purpose other than to ensure compliance with the ETA, or that the request for information was so wide, extraordinary, or unusual as to give rise to questions about its legitimacy in the context of the audit (assuming that such a claim could be brought, in the face of the wide authority granted to the Minister to set the timing, scope, and nature of the audit …). ...

. … The Tax Court Judge was not bound by any admission that CIBC was paying for Aeroplan Miles in light of the agreement, which was properly tendered as evidence at the Tax Court hearing, and which clearly states that the payments made by CIBC were in consideration of Aeroplan “referring or arranging for Aeroplan Members and other members of the public to make Card Applications”. ...

. … The Tax Court Judge was not bound by any admission that CIBC was paying for Aeroplan Miles in light of the agreement, which was properly tendered as evidence at the Tax Court hearing, and which clearly states that the payments made by CIBC were in consideration of Aeroplan “referring or arranging for Aeroplan Members and other members of the public to make Card Applications”. ...

This reporting was confirmed in the Court of Quebec on the basis inter alia that the equivalent of ITA s. 7(3)(a) established that the stock option rules constituted a “complete code” so that the equivalent to ITA s. 69(1)(b) did not apply to deem the “value of the consideration for the disposition” received by him to be equal to the options’ fair market value of $3M, rather than the nil proceeds in fact received. ...