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Subsection 85(1) - Commentary

Availability of election Where a taxpayer disposes of property to a taxable Canadian corporation for consideration that includes shares in the capital of the corporation, the taxpayer and corporation may make a joint election in the prescribed form (i.e., on form T2057). ... It has been found that the requirement that the consideration for the disposition of the property include shares can be satisfied where the transferee corporation is under an obligation to issue shares to the taxpayer, but does not do so immediately (Dale). ... The minimum elected amount (subject to further limitations discussed below) is the value of consideration received by the taxpayer other than shares (the "boot"). ...

5 October 2018 APFF Financial Strategies and Instruments Roundtable

Preliminary CRA written response The jurisprudence indicates that the word "consideration" is a broad term, which can be either a right, an interest, a profit or a benefit for one party, or a waiver, a disadvantage, a loss or a liability for the other party. ... In the absence of an indication to the contrary in the context, it appears to us that the word "consideration" must, for the purposes of subsection 148(7), receive the broad meaning generally accorded to it in the jurisprudence. ... The Department of Finance Canada is also continually reviewing the Income Tax Act and rules that could be changed through taking into consideration tax policies and competing priorities. ...

Shares - Commentary

Presumption of consistency In a close case, there is a presumption that where a taxpayer has reported gains in previous years on share sales as being on capital account, losses in the year under consideration also should be treated as having been realized on capital account (Kriplani, Rajchgot, see also Le Bel). ... S. 54.2 deems shares issued to a taxpayer in consideration for the transfer of substantially all the assets of an active business to be capital property. Where shares have been issued by a corporation as consideration for real property transferred to it and s. 54.2 does not apply, CRA nonetheless generally will consider those shares to be capital property (25 October 1991 T.I.). ...

Paragraph 212.3(18)(d) - Commentary

S. 212.3(18)(d) provides that s. 212.3(2) (including, by implication, the paid-up capital grind rule in s. 212.3(7)) does not apply to a direct acquisition by a CRIC of shares of a subject corporation (described in s. 212.3(10)(a)) or an indirect acquisition of shares of a subject corporation by the CRIC resulting from the direct acquisition of shares of another corporation resident in Canada (as described in s. s. 212.3(10)(f)), where such acquisition of shares was received by the CRIC as the sole consideration for an exchange of a debt obligation owing to the CRIC, other than an exchange to which s. 51(1) applies. ...

26 February 2008 CBA Roundtable

CRA Comments In order for a taxpayer to qualify for consideration under the Voluntary Disclosures Program (VDP) they must meet the four of conditions set out in Information Circular 00-1R2. ... Therefore we would invite you to submit a specific fact based situation for our consideration. ... In addition, the trade-in approach applies only to the recipient of tangible personal property who is supplying used tangible personal property as full or partial consideration to the supplier. ...

24 November 2015 Annual CTF Roundtable

Oral Response A file with a similar series of transactions was recently referred to the GAAR committee for consideration. ... I'll mention a couple examples of situations we consider offensive: A situation where you have a redemption of a share in consideration for a note in a reorganization that would be exempt under 55(3)(a), and the note would be used to generates basis that would be in excess of the ACB of the shares being redeemed. ... For example, an exchange of shares would be subject to tax if the amount of the non-share consideration received exceeds the ACB of the shares being exchanged. ...

26 May 2016 IFA Roundtable

Official Response 26 May 2016 IFA Roundtable Q. 2, 2016-0642061C6- AOA & Notional Expenses 3) Application of ss. 84(3) and (4) to a functional currency tax reporter Assume a Canadian corporation (“ Issuer ”) that has a US$ “elected functional currency” (“ EFC ”), within the meaning of subsection 261(1), issues for full fair market value consideration preferred shares to a shareholder (“ Shareholder ”) with a redemption value of US$100,000 at a time when US$1.00 = C$1.00. ... Where there is still doubt in a particular situation, including where certain anomalies arise based on these principles, we would invite taxpayers to submit additional questions to us for consideration. ... Just to be clear, the maintenance of legal stated capital in a foreign currency does not change any of these answers, as PUC is fundamentally a Canadian-dollar tax concept, absent functional currency considerations. ...

26 April 2017 IFA Finance Roundtable

Could you provide us with an update on Finance’s consideration of this issue or any work being done relating to the possible broadening of the repayment requirement? ... If you accept that there should be a triggering events rule, then an obvious case would be where there is a taxable sale at fair market value for cash consideration, and that would be pretty clear. ... Of course, whether the rules are actually going to apply would depend on whether the linkage test would be met, and that would require consideration of all of the relevant facts and circumstances to determine whether there is sufficient linkage. ...

27 October 2020 CTF Roundtable

Shares received on a refreeze do not reduce the “outstanding amount” as determined under ss. 74.4(3) Redemption of refrozen preferred shares for cash consideration reduces the “outstanding amount” only to the extent of the value of those shares leaving an indefinite “outstanding amount” on which the corporate attribution rules will continue to compute deemed interest income Preliminary Response Prud’Homme: The short answer is, yes, we agree. ... That said, if an estate freeze is subject to s. 74.4(2), the deemed interest benefit is computed based on the outstanding amount determined under s. 74.4(3), and the shares received on the refreeze in the example constitute excluded consideration as defined in s. 74.4(1). ... Regarding the second question, we also agree that the redemption of refrozen shares for cash consideration will reduce the outstanding amount, but only to the extent of the FMV of those shares. ...

26 November 2020 STEP Roundtable

The determination of whether the GAAR would apply to any particular situation would require a full consideration of all the facts and circumstances. ... However, where Canada has entered into a tax treaty with the country to whom taxes are paid, consideration must be given as to whether the provisions of the treaty may affect and modify the general sourcing rules. ... Consideration should be given to whether any particular estate could be deemed to be resident in Canada pursuant to section 94.] ...

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