Search - consideration

X proposes to transfer the immovable to a taxable Canadian corporation in a non-arm’s length transaction, with an s. 85(1) election being made on the following basis: Land Building Total FMV $250,000 $350,000 $600,000 Cost amount $150,000 $50,000 $200,000 Agreed amount $150,000 $50,000 $200,000 Share consideration $400,000 Note consideration $200,000 CCRA indicated that s. 85(5) would deem the capital cost to the corporation of the building, for the purposes of s. 13 and the CCA regulations to be equal to Mr. ...

30 June 2003 External T.I. 2003-0182875 F- TRANSFERT DE POLICE D'ASSURANCE-- summary under Adjusted Cost Basis Summary Under Tax Topics- Income Tax Act- Section 148- Subsection 148(9)- Adjusted Cost Basis ACB bump on policy distribution to shareholder equal to s. 15 benefit excess over CSV A private corporation acquires (and becomes the policyholder of) a permanent life insurance policy on the life of one of its shareholders, pays the premiums on the policy for 12 years, then transfers the policy without consideration to the shareholder who, two years later, after having taken over the premium payments, cancels the policy. CCRA indicated that on the transfer, the corporation was required by s. 148(7) to include an amount pursuant to s. 148(1) if the cash surrender value exceeded the ACB at the time of transfer and that the amount of the benefit to be included in computing the shareholder's income pursuant to s. 15 (1) equaled the excess of the policy’s FMV over any consideration paid. ...

6 October 2003 External T.I. 2003-0040145 F- TRANSFERT D'UNE POLICE D'ASSURANCE-VIE-- summary under Element A Summary Under Tax Topics- Income Tax Act- Section 148- Subsection 148(9)- Adjusted Cost Basis- Element A no taxable benefit when life insurance policy transferred to wholly-owned corporation at less than its FMV A shareholder transferred a universal life insurance policy, that was an exempt policy, on the individual’s life to a wholly-owned corporation for consideration equal to the cash surrender value, which was less than the adjusted cost basis (ACB) of the policy. ... If, in this case, it appears that the fair market value of the policy is greater than the cash surrender value, there will be a benefit conferred by the shareholder to the corporation since the transfer of the policy will be for consideration equal to the cash surrender value. ...

6 October 2003 External T.I. 2003-0040145 F- TRANSFERT D'UNE POLICE D'ASSURANCE-VIE-- summary under Subsection 246(1) Summary Under Tax Topics- Income Tax Act- Section 246- Subsection 246(1) no taxable benefit when life insurance policy transferred to wholly-owned corporation at less than its FMV A shareholder transferred a universal life insurance policy, that was an exempt policy, on the individual’s life to a wholly-owned corporation for consideration equal to the cash surrender value, which was less than the adjusted cost basis (ACB) of the policy. ... If, in this case, it appears that the fair market value of the policy is greater than the cash surrender value, there will be a benefit conferred by the shareholder to the corporation since the transfer of the policy will be for consideration equal to the cash surrender value. ...

In the 10th year, the corporation assigns the insurance policy without consideration to the shareholder, who pays the premium due for the 10th year and then receives a full refund of all premiums paid during the term of the policy. ... However, a shareholder who acquires such a policy from the shareholder’s corporation for less than fair market value will be required by virtue of subsection 15(1) to include in computing income an amount equal to the excess of the fair market value of the critical illness policy over the consideration paid. ...

10 March 2004 External T.I. 2003-0047905- Debt Assumption by Partnership-- summary under Paragraph 85(1)(b) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(1)- Paragraph 85(1)(b) subsequent assumption by partnership of excess mortgage debt treated as boot Three individuals, who are co-owners and actively involved in managing several commercial rental properties and whose tax basis (ACB of land and UCC of buildings) in the properties is less than the mortgages thereon, transfer their respective interests to a new general partnership among them in consideration for the assumption by the partnership of that portion of the mortgages which does not exceed the ACB and UCC of the transferred assets and for general partnership interests, and elect under s. 97(2) with agreed amounts equal to such tax basis. ... In finding that such second stage assumption was included in the boot, CCRA stated: [T]he assumption by the Partnership of the Excess Mortgages represents consideration for the Properties for the purposes of paragraph 85(1)(b) and subsection 97(2). ...

Such a mechanism exists, for example, in the case of relief for shares issued as consideration for other shares or as consideration for the payment of a stock dividend. ...

Such a mechanism exists, for example, in the case of relief for shares issued as consideration for other shares or as consideration for the payment of a stock dividend. ...

A holding corporation for a vendor group accomplishes an indirect sale of a business to the Fund by selling shares and limited partnership units to the subsidiary trust of the Fund (the "Trust") in consideration for Class A and Class B units of the Fund (which previously had been transferred by the Fund to the Trust in consideration for debt) and for cash. ...

Before finding that the debentures were repaid on conversion for the issued shares’ stated capital, so that no premium could be deducted under s. 20(1)(f)(ii), the Directorate stated: [T]he jurisprudence has established that the treatment of the issuer and the holder of the shares may be different, that is, it is the stated capital of the shares issued that generally constitutes the cost of the property received in consideration for their issue and it is the FMV of such shares that is used to determine the tax consequences to the holder of the shares when the holder has transferred property in consideration for the acquisition of such shares. ...