Search - consideration

18 August 2012- 7:34pm CRA gives s. 84(2) ruling on distribution of share consideration received for sale of a business Email this Content CRA ruled that where a Canadian public corporation transfers a Canadian business to a Newco, and sells Newco to a public company purchaser in consideration for equity of the purchaser, it can then distribute that equity to its shareholders, without there being a deemed dividend by virtue of the exemption in s. 84(2) (PUC distribution on the discontinuance or reorganization of a business). ...

10 June 2014- 10:35am True North Apartment REIT to acquire apartments from Drimmer in consideration for traditional exchangeable LP units Email this Content Subsidiary LPs of True North Apartment REIT are proposing to acquire 29 apartment buildings from entities owned by Daniel Drimmer (who also is its CEO and owns its manager) for consideration including exchangeable LP units, so that the effective interest of Drimmer in the REIT will increase from 18.9% to 41.2%. ...

27 December 2012- 12:40pm Pacific Rubiales includes nominal cash in consideration for acquisition of C&C Energia in order to enhance bump Email this Content C&C Energia is spinning-off 95% of the shares of a newly-formed exploration subsidiary (Platino Energy), followed by an acquisition of all the C&C Energia shares by Pacific Rubiales in exchange for Pacific Rubiales shares (representing 7% of its shares in aggregate) and nominal cash consideration – so that no rollover treatment is available unless the C&C Energia shareholders make a joint s. 85 election with Pacific Rubiales. ...

10 September 2015- 9:35pm CRA considers that contributions of capital to a trust may constitute consideration Email this Content The definition of a personal trust refers inter alia to "an inter vivos trust no beneficial interest in which was acquired for consideration payable directly or indirectly to…the trust. ...

15 January 2015- 7:54am CRA recognizes that a transfer for nominal consideration can be a gift Email this Content When asked whether a transfer of an immovable for $1 to a non-arm’s length person can be a gift, CRA responded that, in the absence of sham "the genuine legal relations must be respected in tax matters" – which sounds generally favourable. Note also that in ITTN No. 44, CRA stated, apparently based on s. 69(1)(c) re "gifts," that "a corporation that receives property from its shareholder for no consideration has a cost basis for that property equal to its FMV. ...

14 November 2017- 10:10pm CRA rules that the Ontario electricity rebate does not reduce the consideration for the supply Email this Content There currently is an 8% rebate under the Ontario Rebate for Electricity Consumers Act, 2016 equal to the provincial portion of HST on the electricity bills of residential, farm, small business and other eligible customers. CRA has ruled that the rebate is financial assistance and does not reduce the consideration for the supply of the electricity nor the HST itself – so that input tax credits or public service body rebate claims of the recipient are not reduced by the rebate amount. ...

14 July 2024- 11:26pm Barwicz – Tax Court of Canada finds that a distribution by a discretionary trust in satisfaction of a capital interest occurred for no consideration for s. 160 purposes Email this Content The taxpayer was one of nine beneficiaries of a discretionary inter vivos personal trust which ceased to be resident in Canada on December 17, 2001 as a result of the replacement of its sole trustee by a Barbados corporate trustee. ... Gagnon J confirmed the Crown’s position that the taxpayer had not given consideration to the trust for either distribution (e.g., in exchange for part or full satisfaction of his capital interest in the trust) so that he was liable under s. 160(1) for the trust’s unpaid departure tax. In this regard, Gagnon J first noted: [I]f one party is enriched and the other impoverished by the same amount, it will be possible to conclude that the party who became richer did not offer equivalent consideration …. ...

23 May 2013- 4:49pm Daishowa- Supreme Court finds that assuming an obligation on a property is not consideration if the obligation is "embedded" in the property Email this Content The taxpayer held forest tenures, which under Alberta law were subject to reforestation obligations.  ... Therefore, the reforestation obligations were an intrinsic factor that reduced the purchase value of the tenures rather than a "distinct existing liability" that a purchaser could assume as part of the consideration it paid- i.e. more like anticipated future repairs on a property rather than a mortgage encumbrance. ...

6 August 2013- 2:42pm Alamos consideration for Esperanza acquisition includes warrant sweetener Email this Content In the acquisition of Esperanza by a Newco subsidiary of Alamos under a B.C. plan of arrangement, the shareholders of Esperanza are receiving out-of-the-money warrants on shares of Alamos in addition to cash.  (For another warrant consideration example, see Coeur d'Alene offer.)  ...

6 September 2013- 1:05pm Simultaneous exchanges of consideration on a Canadian Buyco indirect acquisition of a subject corporation generally are a bad idea Email this Content When a Canadian corporation controlled by a non-resident parent (a CRIC) makes a direct or indirect investment in a foreign "subject corporation," a corresponding deemed dividend to the parent generally can be avoided only to the extent of the cross-border paid-up capital immediately before the investment time.  Accordingly, if the non-resident parent accomplishes an acquisition of a Canco holding the subject corporation by using a Canadian Buyco and – in order to avoid extra cash movements – structures the acquisition so that there are simultaneous (i) transfers of the shares of Canco to Buyco, (ii) payments of the cash purchase price to the Canco shareholders by it on behalf of Buyco, and (iii) issuance of shares by Buyco to it in consideration for such cash payment, there generally will be a deemed dividend to it rather than a suppression of the PUC of the shares it holds in Buyco.  ...