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22 November 2018- 4:54am Applewood – Tax Court of Canada finds that a car dealer who promoted and processed credit insurance to its customers was supplying a GST/HST exempt “arranging for” service Email this Content A car dealer entered into a “Dealer Agreement” with a distributor of credit insurance products under which it was agreed that it would “up sell” the insurance products and assist the car customers in applying for the insurance in consideration for a commission of over 50% of the insurance premium. ...

Although not needing to land on this issue, he indicated that there may have been undue delay for purposes of the rule in ETA.s 152(1)(b) (effectively deeming consideration to have become due when its invoicing is unduly delayed) even if the audit firm had “issued” the invoice, given that the invoice date was six months after the completion of the audit work – whereas normally invoices were issued much more promptly. ...

This was the set-up for ACo to then transfer its shares of BSub and CSub to BCo1 and CCo1, respectively, under s. 85(1) in consideration for preferred shares of the transferees, thereby permitting A’s interest in the DC assets to be frozen for the future benefit of her children. ...

Part of the consideration received by affiliates of the Advisor for transferring the hotels into the structure will be Class B redeemable units of the hotel LLC owner. ...

3 January 2019- 1:26am CRA requires that a transfer of an FA with exempt earnings by FA Holdco to Can Subco occur at less than the shares’ FMV Email this Content A foreign affiliate (New FA) of a Canadian corporation (ACo) transferred all the shares of FA1 to a Canadian-resident subsidiary (BCo) of ACo in consideration for a note of BCo whose amount equalled the sum of the relevant cost base of the FA1 shares and the net surplus (being exempt surplus) of FA1 (such sum, the “Transfer Amount”). ...

Like other aspects of the financial services definition, this legislative drafting is conceptually confused and backwards as it focuses on the distribution by the investee being exempt rather than on explicitly exempting this distribution viewed as consideration for the capital provided by the investor. ...

Thereafter, Trust1 will engage in a pipeline transaction in which it will transfer its preferred shares of Opco1 to a new CCPC (Newco) in consideration for Newco preferred shares with full paid-up capital, at the same time as the other shareholders of Opco1 transfer their shares on a s. 85(1) rollover basis to Newco. ...

. … However, in finding that the government could now resile from its undertaking, he stated: Where political issues overtake a promise or undertaking given by government, and where contemporary considerations impel a different course, provided a bona fide decision is taken on genuine policy grounds not to adhere to the original undertaking, it will be difficult for a person who holds a legitimate expectation to enforce compliance with it. ...

20 March 2019- 12:54am CRA rules on hybrid post-mortem 164(6)/pipeline transactions Email this Content CRA has provided the usual rulings for a pipeline transaction in which the estate with a resident beneficiary sells a company (Opco) with apparently some sort of real estate business to a Newco for consideration consisting mostly of a note, followed by an amalgamation of the two companies and the repayment by Amalco to the estate of the note over time. ...

28 March 2019- 7:13pm CRA will only extend Daishowa beyond reforestation and reclamation obligations on a case-by-case basis Email this Content Daishowa found that reforestation obligations were an intrinsic factor that reduced the purchase value of the timber tenures rather than a "distinct existing liability" that was assumed by the purchaser as additional consideration for the purchase. ...