Search - consideration

16 December 2012- 1:13pm CRA treats construction services provided in exchange for a development permit as being made for nil consideration for GST/HST purposes Email this Content A subdivision developer who pays a development levy of a municipality will be considered to have made an exempt supply for HST/GST purposes of cash in consideration for an exempt municipal service.  However, its provision of municipal improvements such as roads generally will be treated as the making of a taxable supply for nil consideration rather than in consideration for the (presumably valuable) permit, so that no GST or HST is payable by the municipality. ...

29 December 2014- 3:58pm BCE proposed acquisition of GLENTEL does not include a de minimis cash consideration component Email this Content In the proposed BCE acquisition of GLENTEL for ½ of a BCE share or cash of $26.50, per GLENTEL share at the GLENTEL shareholder’s option (but with the overall consideration being fixed on essentially a 50-50 basis), a GLENTEL shareholder potentially could receive only share consideration, so that the s. 85.1 rollover would be available. This contrasts with other offerings (e.g., First Quantum/Lumina and Loblaw/Shoppers Drug Mart) where a minimum (and somewhat nominal) cash consideration was specified, so that all target shareholders wishing rollover treatment would be required to make a s. 85 election. ...

25 October 2021- 1:50am CRA indicates that “consideration … received” in s. 118.1(13)(c) includes a s. 84(3) deemed dividend Email this Content Under s. 118.1(13)(c), where a qualified donee that disposes of non-qualifying securities (“NQS”) that were gifted to it, the amount of the original gift will be deemed in some circumstances to equal the fair market value of the “consideration” received by the donee for that subsequent disposition. CRA indicated that, unless the context indicates otherwise, “the notion of ‘consideration’ is broad enough to encompass any amount, good or service received upon the disposition of property,” so that the “consideration” received by the donee would not be limited to s. 54 proceeds of disposition, and would include a deemed dividend received by the qualified donee under s. 84(3) on a redemption of shares. ...

The Crown itself made what might seem like the opposite argument, namely, that on the redemption by Oldco of its preferred shares held by Newco for a $30 million note, “no consideration was effectively given to Oldco in return.” ... Noël CJ stated that there indeed was consideration going the other way in the form of “Newco in turn … surrender[ing] the shares which had a corresponding $30 million value in its hands.” ... In rejecting the Crown’s submission that the determination as to whether full consideration had been paid by Newco should be determined by the “overall result” produced by the series of transactions, Noël CJ stated that “the adequacy of the consideration given must be measured against the value of the property transferred by way of a ‘snapshot’ taken at the point in time when the transfer takes place.” ...

23 April 2015- 9:40am CRA recognizes that the s. 7 rules apply to agreements to sell shares for no cash consideration Email this Content CRA recognizes (e.g., in IT-113R4, para. 7) that the s. 7 rules can apply where an employer issues its shares to an employee for no monetary consideration. After up to three years of deliberation, CRA has concluded that the s. 7 rules can also apply to an employee incentive arrangement under which an employer purchases shares of a non-arm's length corporation (e.g., an open-market purchase of its non-resident parent’s shares) and grants those shares to the employees for no monetary consideration. ...

18 May 2017- 11:52pm CRA rules that a fee charged on assigning receivables was part of the GST-exempt consideration for the receivables sale Email this Content A car dealer enters into contracts with customers, which could be conditional sales contracts, instalment sales contracts, credit agreements or finance contracts with instalments, and immediately sells each contract to a lender for cash consideration. Consistently with Canada Trustco, CRA found that a separate fee charged by the car dealer on selling the contracts was also part of the consideration for the assignment, so that the fee was also exempted from GST/HST. ...

8 September 2020- 11:10pm Valovic – Tax Court of Canada finds that shareholders’ services were not consideration for dividends received by them for s. 160 purposes Email this Content An electrician and his spouse provided their services as electrician and administrator to their equally-owned corporation, and received dividends and salary. In rejecting their submission that, for s. 160 purposes, the annual dividends were paid for equivalent consideration, being a portion of their services, Monaghan J noted that decisions of the FCA/TCC “accepted and endorsed the view expressed in Neuman that dividends relate to shareholding and rejected the argument that there was consideration for the dividends.” ...

17 July 2015- 12:11am CRA finds that s. 108(7) does not apply to qualify a usufruct trust as a personal trust where the usufruct was created for valuable consideration Email this Content S. 108(7)(b) provides that where all the beneficial interests in an inter vivos trust, which were acquired by way of transfer of property to it, were acquired by one person (s. 108(7)(a)) or by related persons (s. 108(7)(b)), their beneficial interests are deemed to have been acquired for no consideration (so that inter alia the trust can qualify as a personal trust). Where father transfers the bare ownership of land to his son for consideration, so that father becomes a usufructuary, ss. 248(3)(a) and (d) deem father to have settled a trust of which he and his son are the beneficiaries. CRA considers that in this situation "as the bare owner did not transfer, assign or dispose of any property to the deemed trust… paragraph 108(7)(b) cannot apply to deem the beneficial interest of the bare owner to have been acquired for nil consideration." ...

1 January 2019- 11:04pm The consideration for the proposed Pan American acquisition of Tahoe includes future contingent Pan American share deliveries Email this Content Under the proposed acquisition of Tahoe Resources by Pan American Silver pursuant to a B.C. ... Because the right to receive Pan American shares under the CVRs is not absolute, the CVRs are considered to represent “boot” rather than share consideration for s. 85 election purposes. ... The U.S. tax disclosure treats the Arrangement as a “D” reorg, The CVRs are likely just deferred share consideration. ...

30 September 2021- 10:58pm Odette Estate – Tax Court of Canada finds that a promissory note subsequently repaid in cash could not be equated to cash consideration for s. 118.1(13)(c) purposes Email this Content The appellant estate donated shares of a private company (Edmette), which were non-qualifying securities, to a private foundation with which it did not deal at arm’s length. ... The donation of the Edmette shares was deemed by s. 118.1(13)(a) to not be a gift except to the extent “of the fair market value of any consideration (other than a non-qualifying security of any person) received by the donee [i.e., the foundation] for the disposition” by it of the Edmette shares. ... The only consideration received at the time of the disposition was the Promissory Note. … Parliament does not want to grant a tax credit where the donor is not impoverished and the charity is not enriched. ...