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CRA considers that: “[R]evenue” under normal accounting practices generally requires the satisfaction of certain performance obligations, such as the sale of goods or the performance of services that would typically result in a corresponding inflow of cash, accounts receivables or other consideration. CRA applied this test to find that the “revenue reported by the entity under the percentage of completion method would generally be considered ‘qualifying revenue’,” whereas mark-to-market valuation adjustments made by to the carrying value of investments by investment and brokerage firms would not give rise to an “inflow of cash, receivables or other consideration” under the above test, so that such (unrealized) gains or /losses would not affect qualifying revenue. ...

25 April 2021- 11:16pm CRA indicates that payments to a retired partner generally are GST/HST exempt Email this Content CRA confirmed that payments made to a retired partner generally would be considered as consideration for an exempt financial service (assuming no rendering of services), including payments to which ITA s. 96(1.1) applies (which, broadly speaking, are treated for ITA purposes as akin to deferred earnings), stating: When a partner acquires partnership units (i.e. an interest in a partnership), the partner has acquired certain rights which include a right to receive distributions. To the extent that payments made by a partnership to a retired partner are in respect of an interest in the partnership, or any right in respect of such an interest, the payment would be consideration for an exempt supply of a financial service …. ...

Then: The estate transferred all its shares of the corporation to Newco in consideration for four notes maturing 3, 6, 9 and 12 months after the amalgamation below (and in consideration for voting common shares of Newco, with an election filed under s. 85(1),)- and with the resulting capital loss (which was not denied under ss. 40(3.61) and (3.6)) being carried back under s. 164(6). ...

15 September 2022- 11:27pm CRA considers that an agreement of a municipality to provide faster service was HST-taxable Email this Content In another ruling dealing with an Ontario conservation authority, that was a deemed municipality, providing services (here the provision of environmental permits) to a member municipality, CRA ruled that funding provided by the municipality in consideration for getting a dedicated staff at the authority to provide prompter permit service, was consideration for a taxable supply for HST purposes. ...

30 July 2023- 11:39pm CRA declines to discuss whether an intra-government “transfer” can be a non-arm’s length supply Email this Content A provincial government department constructs a school and then transfers it for nominal consideration to another department within the same government which is a school authority that will use the school primarily in exempt activities, although it is also registered because it engages in commercial activities including the supply of parking spaces. CRA noted that ETA s. 155 would apply to deem the supply to be made for FMV consideration if this transfer was a supply between persons not dealing with each other at arm’s length, but did not discuss the issue of whether a transfer of property between two departments within the same government could be such a transaction, nor did it discuss whether a transfer within the provincial government can be a supply. ...

In order to comply with s. 7(1.4), there will be an exchange of pro rata portions (based on the relative FMV of the Newco shares) of each DC employee stock option to Spinco and DC in consideration for the issuance of replacement options. Such issuance by Spinco will be treated as non-share consideration for the butterfly transfer of Newco shares to Spinco (otherwise occurring in consideration only, or mostly, for the issuance of Spinco special shares). ...

The consideration for each InterOil share consists of that number of ExxonMobil shares having a fixed value of U.S.$45.00 per share, plus a cash payment of U.S.$26.87 per share (or U.S.$1.37B in total). ... The Canadian tax disclosure indicates that the full U.S.$26.87 per share CRP consideration (as well as, of course, the share consideration of U.S.$45 per share) will be required to be included in computing a resident InterOil shareholder’s proceeds of disposition for 2016, but (under s. 43) if the repayment obligation is triggered before the filing due-date for the shareholder’s return, the repayment would reduce those proceeds of disposition. ...

The Province then breached terms of the building lease and, in the subsequent settlement agreement, the parties agreed that the Province owed $2.4 million to Armour and that Armour, in consideration for $2.4 million to be paid by way of set-off, would be granted an irrevocable option to acquire the Province’s freehold interest (with the ground lease being terminated). There was no stated exercise price for this “option,” so that effectively this appeared to be an agreement that in consideration for $2.4 million, Armour could acquire the ownership of the freehold at a time of its choosing (and, by the way, when this occurred, the ground lease would terminate.) ... Armour took the position that the $2.24 million paid by it was fully deductible as consideration for the ground lease termination. ...

28 April 2019- 10:53pm Des Groseillers – Court of Quebec decision indicates no s. 7(1)(b) application to option cash-out amount assignments, and no s. 69(1)(b) application to s. 7(1)(b) dispositions Email this Content An individual (Des Groseillers) who donated some of his employee stock options on the shares of his public-company employer (“BMTC”) to arm's length registered charities was assessed by the ARQ on the basis that the Quebec equivalent of s. 69(1)(b) deemed the “value of the consideration for the disposition” received by him to be equal to the options’ fair market value of $3M, thereby resulting in the receipt of deemed employment income in that amount by him pursuant to the Quebec equivalent of s. 7(1)(b). ... He further found, in the alternative, that even if the s. 7(1)(b) equivalent applied, it only applied on the basis of the nil consideration actually received by Des Groseillers rather than being expanded by the s. 69(1)(b) equivalent to deem the consideration to be $3M. ...

. – Tax Court of Canada finds that orthodontic practices make two supplies of services and devices Email this Content A professional corporation’s orthodontics practice claimed input tax credits on the basis of an administrative arrangement of CRA with the Canadian Dental Association under which orthodontists filed their GST returns using 35% of the patient’s total treatment cost as an estimate of the consideration for the supply of the orthodontic appliance (which was zero-rated), with only the balance treated as exempt- and with a requirement, when the annual results became available at year end, to reconcile their 35% ITC estimate with their actual taxable supplies. However, in the view of CRA, the corporation did not comply with the requirement under this policy to “identify the consideration for the zero-rated supply of the appliance separately from the consideration for the exempt supply of services” (the agreement with the patient stated that “[o]ur orthodontic fee includes a portion, up to 35%, relating to the value of orthodontic appliances,” but the invoices contained no allocation between the services and device. ...