Search - consideration

1 September 2015- 10:49pm OceanaGold is proposing to acquire Romarco under s. 85.1 Email this Content OceanaGold, which is a BC corporation headquartered in Australia, is proposing to acquire all the shares of Romarco (a B.C. corporation with a South Carolina gold property) under a B.C. plan of Arrangement in consideration for OceanaGold shares, so that s. 85.1 should apply (no nominal cash consideration). ...

27 May 2013- 2:55pm CRA finds that a foreign demerger transaction does not give rise to a shareholder benefit Email this Content CRA has concluded that a foreign demerger transaction under which part of the assets of FA1 are transferred to FA2 (in the same jurisdiction) for no consideration, with FA2 issuing shares to the Canadian parent with a foreign paid-up capital equal to the book value of the assets which are transferred to it, and with a corresponding reduction in the foreign paid-up capital of the shares of FA1, qualifies as giving rise to a deemed dividend under draft s. 90(2), so that there is no taxable shareholder benefit to the Canadian parent.  Similar considerations arise if FA1 and FA2 are held through an intermediate foreign holding company. ...

Various provincial taxes can be part of the consideration for a supply either through being deemede to be consideration by s. 154 or on general principles, so that GST or HST effectively is collectible on the amount of the provincial tax. ...

The similarities extend to the CRA treatment of cash consideration. S4-F5-C1 states in the s. 85.1(1) context that cash can also be received – so that the rollover applies only to the exchange of a fraction of each share of the vendor for treasury shares (with the remainder fractions of shares being exchanged for cash on a non-rollover basis) – provided that this is clearly specified in the terms governing the exchange. ... However, the foreign merger parties often will be insensitive to Canadian tax considerations, so that the allocation requirement in the Folio will not be satisfied – as appeared to be the case in the example considered by CRA. ...

15 January 2017- 11:06pm CRA confirms that there is no GST/HST on a fee charged for the cancellation of an exempt supply agreement Email this Content Although there is no general rule that deems a fee charged for the cancellation of an agreement to make an exempt supply to also be consideration for an exempt supply, this is not a problem. CRA acknowledges that compensation or indemnification for damages is not consideration for a supply, so that there is no GST/HST on general principles. ...

19 June 2017- 10:33pm CRA finds that a litigant receiving a court award of costs plus GST/HST is not required to report such tax Email this Content CRA considers that as court awards of costs (including any awards on a solicitor and client scale) “do not constitute consideration for a taxable supply or a service and do not form part of the consideration paid for the lawyer’s services of the winning party,” that party is not required to account for any GST or HST in computing its net tax for the reporting period in question, even where the award of such costs included a GST or HST amount. ...

13 November 2017- 1:03am CRA notes that a fee paid for assignment of a non-builder’s new house purchase contract does not affect the GST/HST new housing rebate Email this Content The computation of the new housing GST or HST rebate takes into account the total taxable consideration for the supply of the new house to the individual purchaser. Where A, who agreed to purchase a new home from the builder, assigns her purchase agreement before closing to B for consideration representing the increased value of the underlying house, the new housing GST rebate to B will be computed on the basis only of the original purchase price – unless A also constituted a builder (e.g., A had entered into the purchase contract for the primary purpose of reselling the house), in which case, the assignment fee would be taxable, and the computation of the rebate would also take into account the amount of the assignment fee. ...

These preferred shares were cancelled for no consideration in connection with the winding-up of the partnership and the transfer of its assets to Opco. CRA confirmed that because the preferred shares were cancelled for no consideration, no s. 84(3) deemed dividend arose. ...

CRA provided s. 107.4 rollover rulings respecting a transfer of a proportionate part of each security holding of each Participating Public Fund (based on the percentage of the NAV of the Participating Public Fund attributable to the units of the Series D or O Unitholders) to the corresponding New Fund (held by the Series D or O Unitholders) for no consideration, with the Series D or O Units in the Participating Public Fund being cancelled for no consideration. ...

12 November 2019- 12:19am CRA is reviewing the Medallion decision Email this Content In Medallion, a corporation that acted as a property manager for the rental properties of 10 non-arm’s length owner-corporations in consideration for a percentage of the rents, was found to qualify as the participant in a joint venture, notwithstanding that it had no ownership interest in the properties, so that it had validly elected to be the JV operator. In response to a question as to whether a participant in a joint venture includes a person who contributes solely property management services to the joint venture pursuant to a written joint venture agreement, CRA responded: We are currently reviewing the extent to which the Medallion decision would affect our position with respect to the issue of who can be considered to be a participant in a joint venture for purposes of section 273 …, and this includes taking into consideration the issue described in the question. ...