Search - consideration

I forgot to mention the consideration Email this Content Private investors have financed and constructed public projects such as hospitals and contracted for a stream of regular future payments (e.g., management or operating fees) from the government until maturity, when the financing is paid off.  Following a favourable ruling, many such projects have been structured on the basis that, in consideration for the agreement of the consortium to construct the facility and operate it during the term to maturity, it is granted a licence to use the property, which qualifies as a Class 14 depreciable property. When asked what happens when the participants forget to state that the construction costs are incurred in consideration for the grant of the licence, CRA expressed incredulousness that "such an important matter" could be missed; and stated that it was "possible" that some other evidence could be found establishing the cost of the licence. ...

Tech India – Delhi High Court finds that the mere right to customize software purchased for resale does not render the consideration a royalty Email this Content The Indian case law on the distinction between a software royalty (subject to withholding) and the purchase of software as a product apparently is well developed. ... Bakhru J. stated: In cases where payments are made to acquire products which are patented or copyrighted, the consideration paid would have to be treated as a payment for purchase of the product rather than consideration for use of the patent or copyright. ...

Koffyfontein finding that the consideration paid for shares on a debenture conversion is to be determined at that conversion time Email this Content Agnico convertible debentures, which had been issued for U.S.$1,000 per debenture, were converted into common shares at a time that the U.S. dollar had depreciated in value, thereby in the view of CRA giving rise to a s. 39(2) FX gain. However, Woods J found that the relevant date for translating the amount paid by Agnico on settling the debentures should be viewed as the date when the "true consideration" for the shares (with which Agnico repaid the debentures) had been received, which she found was the date when the U.S.1,000 was received on the prior issuance of each debenture. ... Koffyfontein, [1904] 2 Ch. 108] (CA) arguably casts doubt on the correctness of Agnico given the finding there that the consideration paid for shares on the conversion of debentures usually is to be determined at the time the obligation to repay is extinguished, and not when the debentures are issued. ...

15 June 2016- 10:50pm CRA might apply s. 15(1), but likely not s. 56(2) or 246(1), where a family member subscribes nominal consideration for Opco shares and receives a large discretionary dividend Email this Content CRA appears to consider that in the scenario where a company owned by Mr. ... A for nominal consideration, and then pays a substantial dividend to Mrs. ... A as consideration for the share does not represent the fair market value of such share at the time of subscription.” ...

19 September 2016- 10:50pm Proposed Vail Resorts acquisition of Whistler includes exchangeable share consideration (likely bearing dividends) and an exchange-rate adjusted cash component Email this Content Vail Resorts is proposing to acquire Whistler Blackcomb under a BC Plan of Arrangement for a combination of shares and cash, paid by a B.C. subsidiary of Vail Resorts (Exchangeco). Resident Whistler shareholders who so elect will receive the share consideration in the form of exchangeable shares of Exchangeco under a largely conventional exchangeable share structure, with those shares being listed on the TSX and having a sunset date seven years out. The cash component of the consideration is nominally in Canadian dollars, except that it is based on an exchange rate of 0.7765 so that, for example, if the exchange rate is less than this six days before the Arrangement implementation date, the Whistler shareholders will receive a correspondingly lower amount. ...

25 January 2017- 7:07am Stock ’94- European Court of Justice finds that interest on a loan funding a taxable supply of goods was part of the consideration for a single supply of the goods Email this Content A Hungarian company was set up to assist Hungarian farmers by lending them money to fund the purchase by them from it of current assets needed in their business. The European Court of Justice (subject to some further findings of facts to be made by the local court) essentially applied the single supply doctrine to find that the loan interest was part of the consideration for the sale of products by the company to the farmers, so that the interest was subject to VAT (even though, of course, interest on loans viewed as being for a separate supply was VAT-exempt). ... However, it is not obvious that the Tax Court could not treat interest on the deferred purchase price for a taxable supply as itself being part of the taxable consideration for a single supply. ...

28 March 2018- 11:37pm Stewardship Ontario – Tax Court of Canada finds that statutorily-mandated waste recycling charges were consideration for a taxable supply Email this Content Stewardship Ontario (“SO”) was a not-for-profit corporation that operated, as part of a regime governed by the Waste Diversion Act, 2002 (Ontario), an Ontario program for recycling various types of waste such as paints, solvents, batteries, empty propane tanks and antifreeze. ... As to the Crown’s argument that the “Steward Fees” were a “regulatory charge” rather than a “user fee,” he stated that they were payable by “operation of law” (i.e., under the Waste Diversion Act) and thus came within the definition of consideration. ... The Queen, 2018 TCC 59 under ETA s. 123(1) – supply, consideration, service, s. 141.01(2). ...

10 July 2019- 12:01am National Car Parks – Court of Appeal of England and Wales finds that car park machines that did not refund coin payments thereby received extra consideration for VAT purposes Email this Content A customer pays for parking in a car park by going to the ticket machine which, on its tariff board, displays a price for one hour of £1.40 – but also states that change is not given. ... In finding that the consideration received by the car park owner (NCP) for VAT purposes was £1.50, and rejecting NCP’s submission that £0.10 was a gratuitous payment, Newey LJ stated: The best analysis would seem to be that the contract was brought into being when the green button was pressed. ... Summary of National Car Parks Ltd v Revenue and Customs [2019] EWCA Civ 854 under ETA s. 123(1) – consideration. ...

19 January 2022- 10:43pm 9056-2059 Québec – Tax Court of Canada finds that ETA s. 153(2) requires a reasonable allocation of consideration between component supplies Email this Content In order to promote the sale of its farm products (mostly honey), the appellant developed a “labyrinth” of trails on its forest lands and, when it sold tickets for access by visitors to the trails, stipulated that the ticket, generally sold for $12, also constituted a coupon of $1.50 to be applied to the purchase of honey or other products. ... Before confirming the resulting reassessments that treated $1.50 of the ticket prices as being zero-rated consideration for the honey or other food products, and the balance as consideration that was subject to tax, Boyle J indicated that s. 153(2) required that the “cost of admission to … the … forest must be reasonably divided between access to the labyrinth and other activities, and the mandatory purchase of a coupon to be exchanged for a honey or maple food product,” and then stated: Appellant was unable to present any valid reason why the value of the initial coupon should be other than $1.50, which is what it charged for the same coupons when purchased individually. ...

9 January 2023- 11:39pm CRA confirms that shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV Email this Content The acquisition of a non-resident target (Target) by a Canadian corporation (Opco) and its Canadian parent (Parent) entailed: Parent forming two new stacked non-resident subsidiaries (Merger Sub1 holding Merger Sub2); Merger Sub2 being merged into Target with Target being the survivor, with the shareholders of Target having their shares converted into shares issued by Parent and cash paid by Merger Sub1 (which it had borrowed from Opco) and with Merger Sub1 becoming the parent of Target; and Merger Sub2 then immediately being merged into Merger Sub1 with Merger Sub1 as the survivor. In order that Parent could get basis for having issued the share consideration, it was stated in a funding agreement to have issued such shares in consideration for the issuance to it by Merger Sub1 of common shares of Merger Sub1 – and CRA ruled that indeed those shares issued to Parent had a cost to it equal to the FMV of the shares issued by it in turn to the Target shareholders plus any related costs incurred by it. ...