Search - consideration

When a business is sold and contingent liabilities of the vendor are assumed by the purchaser as part of the consideration of the sale price, it is the Department's position that there is neither a deduction to the vendor nor a cost of acquisition to the purchaser in respect of the contingent liabilities assumed.... ...

27 June 1995 External T.I. 9505055- AUTOMOBILE BENEFITS-- summary under Subsection 6(2) Summary Under Tax Topics- Income Tax Act- Section 6- Subsection 6(2) Where a corporate employer has entered into a three-year agreement with an automobile dealer whereby the dealer agrees to make an automobile available to the corporation at no cost to the corporation in order that the use by the corporation of the automobile will provide publicity for the automobile dealer, then the value of the consideration paid by the employer for the automobile will be considered to be the fair market for lease of the automobile where the value of the publicity or advertising has not itself been qualified. ...

It is our view that where a taxpayer gives up his right to compete in a business under a contract that right would be a property for the purposes of the Act and any consideration received by the taxpayer for giving up such right would generally be on account of capital. ...

27 June 1995 External T.I. 9510555- LIMITED PARTNER GUARANTEED RETURN-- summary under Paragraph 96(2.2)(d) Summary Under Tax Topics- Income Tax Act- Section 96- Subsection 96(2.2)- Paragraph 96(2.2)(d) Where prior to the acquisition by limited partners of their units, a film production (in respect of which the partnership is to provide services in consideration for a fee based on gross receipts and net receipts) has been licensed for a fee to a broadcaster, there will be considered to be a benefit under s. 96(2.2)(d) based on the amount of revenue that contingently accrues to the limited partnership as a result of the licence fees. ...

2 June 2003 External T.I. 2003-0002485- DEBT FORGIVENESS-GIFT FUND-- summary under Subsection 245(4) Summary Under Tax Topics- Income Tax Act- Section 245- Subsection 245(4) A farmer transfers farm property to an adult child at fair market value taking back a promissory note as consideration, then makes a gift to his child of enough funds to allow for repayment of the note. ...

2 June 2003 External T.I. 2003-0002485- DEBT FORGIVENESS-GIFT FUND-- summary under Subsection 80(13) Summary Under Tax Topics- Income Tax Act- Section 80- Subsection 80(13) A farmer transfers farm property to an adult child at fair market value taking back a promissory note as consideration, then makes a gift to his child of enough funds to allow for repayment of the note. ...

6 October 2003 External T.I. 2003-0040145 F- TRANSFERT D'UNE POLICE D'ASSURANCE-VIE-- summary under Subsection 148(7) Summary Under Tax Topics- Income Tax Act- Section 148- Subsection 148(7) loss on transfer of universal life policy to wholly-owned subsidiary not recognized 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. ...

10 October 2003 Roundtable, 2003-0035665 F- TRANSFER D'UNE POLICE D'ASSURANCE-VIE-- summary under Subsection 148(7) Summary Under Tax Topics- Income Tax Act- Section 148- Subsection 148(7) transfer to shareholder at policy’s FMV is not a “distribution” A corporation transfers a policy on the life of an arm’s length shareholder for consideration equal to the policy’s fair market value, which exceeds its cash surrender value. ...

18 December 2003 Internal T.I. 2003-0044007 F- OPTION D'ACHAT D'ACTIONS RACHETEES-- summary under Capital Property Summary Under Tax Topics- Income Tax Act- Section 54- Capital Property employee stock option surrender proceeds were not from the disposition of capital property The taxpayer surrendered his stock options to his arm’s-length employer for consideration that was payable partly up front and partly in instalments that were never paid. ...

16 December 2003 Internal T.I. 2003-0046167 F- Section 50- Shares of Insolvent Corporation50(1)-- summary under Shares Summary Under Tax Topics- General Concepts- Fair Market Value- Shares shares of corporation that had ceased business and had no assets but had non-capital losses had a significant value The Directorate found that the sale of a subsidiary (Lossco) of the taxpayer with no assets or liabilities but with non-capital losses to another subsidiary (Profitco) for nominal cash consideration gave rise to a gain under s. 69(1)(b) given that “the valuation of those shares should normally take into account accumulated tax losses that may eventually be deductible in calculating a corporation's taxable income, as stated in question 5 of the 1992 APFF Conference Roundtable.” ...