Search - consideration

Completed transactions A Bidco of the Taxpayer, which was indirectly funded by Pubco (in consideration for being issued JV Co shares in 4 below) and directly by the Taxpayer (through subscriptions through intermediate Canadian holding companies), acquired all the shares of Target pursuant to a court-approved Scheme under the laws of Country 1. ... Country 1 Subco sold all the shares of Canco 1 to the Taxpayer in consideration for the “Demand Note” having a principal amount equal to such shares’ FMV. ...

DC1 will transfer its shares of Newco 1 to SpinCo Sub on a s. 85(1) rollover basis in consideration for SpinCo Sub special shares. ... DC2 will transfer its shares of SpinCo Sub to SpinCo on a s. 85(1) rollover basis in consideration for SpinCo Sub common shares. ...

16 November 2011 External T.I. 2011-0423861E5 F- paragraph 53(1)b)-- summary under Paragraph 53(1)(b) Summary Under Tax Topics- Income Tax Act- Section 53- Subsection 53(1)- Paragraph 53(1)(b) example of application of s. 53(1)(b) on dirty s. 85 exchange of common shares with partial SIOH for high PUC/ACB prefs and low PUC/ACB common shares Holdco, whose common shares of Opco have a nominal adjusted cost base ("ACB") and paid-up capital ("PUC"), a fair market value ("FMV") of $2 million and safe income on hand ("SIOH") attributable to those shares of $900,000, increases the PUC of those shares by $1 million, and transfers those common shares (or to be more precise, new common shares issued in replacement therefor on the PUC increase) to Opco for cancellation in consideration for the issuance by Opco of (i) preference shares of Opco having an FMV, PUC and ACB (determined under s. 85(1)(g)) of $1 million; and (ii) common shares having a FMV of $1 million and nominal PUC and ACB. ...

A testamentary trust created by Mr X will transfers the estate shares to a Canadian corporation (Newco) which is jointly owned by the trust and Mrs X and controlled by the trust in consideration for two promissory notes equal to the fair market value of such common and preferred shares at the death of Mr X, and for preferred shares having a redemption amount equal to any appreciation in the fair market value of the common shares subsequent to such death (and having a nominal paid-up capital so as not to engage s. 84.1). ...

After noting that s. 97(2) permits a taxpayer to dispose of property on a tax-free basis to a partnership if, among other things, the taxpayer is a member of the partnership immediately following the disposition, CRA stated: [T]here would be a disposition of the initial interest if the interests in income and in capital received in consideration had rights and characteristics sufficiently different to be distinguishable from those of the initial interest. … It should be noted that the totality of the interests of a partner held in a partnership constitute a single property of the partner and represent its interest in the partnership for purposes of the Act. ...

The deductibility of the discount to the Canadian Taxpayer, would be subject to the considerations listed in IT Bulletin 188R and must meet the provisions of section 67 and section 69 of the Act. ...

However, given CRA's interpretation of the fees as being consideration for services, they would not constitute royalties under Article XII of the Canada-US Income Tax Convention, and they would not be taxable under Art. ...

Therefore, Canco would compute its...qualifying income and qualifying losses, and its foreign non-business tax credit, without taking into consideration the...net mark-to-market loss on the Investments. ...

Therefore, Canco would compute its...qualifying income and qualifying losses, and its foreign non-business tax credit, without taking into consideration the...net mark-to-market loss on the Investments. ...

After noting that in some instances and based on Sommerer "subsection 75(2) will not apply to attribute income in respect of that property to the beneficiary," CRA stated: In the alternative, if the facts are such that it may be concluded that the trust did not acquire the shares for fair market value consideration, CRA will typically challenge the arrangement on other grounds. ...