Search - consideration

Approximately a year later, while the controlling shareholder was negotiating an asset sale by Prairie Cereals, the taxpayer agreed with Prairie Cereals and the shareholder that in consideration for the payment to him of $34,600 upon completion of the sale, he would release Prairie Cereals and the shareholders from the terms of the previous agreement. ... That pre-emptive "right was as much part of the consideration for accepting the office of sales manager and entering into the contract of employment and as much remuneration for services as an officer or under the contract of employment as the regular monthly remuneration (p. 1365). Accordingly, the $34,600 could reasonably be regarded as having been received by the taxpayer as partial consideration for his acceptance of the office of sales manager, or as partial remuneration for services as an officer of Prairie Cereals or under his contract of employment. ...

The Queen, 2015 TCC 278-- summary under Section 138 Summary Under Tax Topics- Excise Tax Act- Section 138 s. 138 did not apply where the allocation of consideration among the components was apparent The appellant, which was a for-profit operator of a B.C. residential care home, was invoiced periodically, based on an flat hourly rate, by a third-party independent contractor ("HARPS") for the services of its "care aides" (who performed personal services and provided assistance to residents with the activities of daily living), and "activity aides" (who focused on social activities for the residents and whose time represented 5.4% of the total). ... He stated (at paras. 75-6): [T]he method of invoicing the activity aide and care aide supplies does not result in those services being provided for a single consideration. ... Therefore, the consideration for each category of worker would be determinable and separate amounts. ...

MNR (1941), 2 DTC 513 (Ex Ct), rev'd [1942] S.C.R. 269, 2 DTC 561-- summary under Subsection 84(2) Summary Under Tax Topics- Income Tax Act- Section 84- Subsection 84(2) The Premier Trust Company ("Premier") acquired all the shares of the taxpayer and other shareholders of the Security Loan and Savings Company ("Security") in consideration for (at the option of the shareholder) 1.5 shares of Premier for each Security share, or a combination of cash of $102 and 0.5 shares of Premier for each Security share. ... A portion of the consideration so received by the taxpayer would have been includable in her income (under s. 19(1)) to the extent of her share of the "undistributed income" (i.e., accumulated retained earnings)- but for the fact that the Act was interpreted as excluding from undistributed income the income which Premier had earned prior to 1935 (the point on which the case was reversed in the Supreme Court of Canada). McLean J. noted that on the facts there clearly was a discontinuance ("whether that was bought about by a sale to or amalgamation with the Premier Company") or a winding-up of the business (notwithstanding the absence of a formal liquidation procedure), and that the transactions resulted in a distribution of Security property notwithstanding "that the consideration received by the Appellant for her shares happened to reach her directly from the Premier Company and not through the medium of the Security Company (p. 516). ...

The Queen, 2006 DTC 2376, 2006 TCC 44-- summary under Subsection 245(4) Summary Under Tax Topics- Income Tax Act- Section 245- Subsection 245(4) surplus stripping The taxpayer, who held 14.28% of the common shares of a Canadian private corporation ("Consercom") transferred a 9.76% block to a wholly-owned holding company ("6311") in consideration for preferred shares of 6311 with a high paid-up capital (thereby giving rise to a capital gain eligible for the capital gains exemption). The taxpayer also transferred shares of a Canadian private corporation ("Gestion") that he owned together with his brother to 6311 in consideration for shares of 6311. ... After finding that s. 84.1 was intended to prevent the stripping of surpluses of an operating company, that although Parliament had assumed that a shareholder with less than a 10% block of shares would not be able to strip the surpluses of that company, such influence could be exercised when two related shareholders held all the shares of a company (Gestion), and that there would not have been an abusive transaction if the taxpayer had transferred to 6311 only the Consercom shares, Archambault J. found that there was an abuse here where 6311 used the surpluses from Gestion to redeem the preferred shares that had been issued in consideration for the Consercom shares. ...

Drayton (regarding shares acquired in consideration for the issuance of treasury shares) as finding that “since the transaction was at arm's length and otherwise unimpeachable, the cost of the sha r es was the consideration agreed between the parties and not the par value, or market value of the shares” (para. 22), Pelletier JA indicated (at para. 31) that: Absent factors which would make the transaction impeachable, the agreement of the parties determines the cost to the corporation of issuing shares in exchange for property. and (at para. 32) that The cost to the Appellant of issuing shares as part consideration for the assets... is the amount agreed between the parties, as evidenced by the stated capital of the common shares in the Appellant. ...

The Queen, 2012 DTC 1019 [at at 2575], 2011 TCC 520-- summary under Ownership Summary Under Tax Topics- General Concepts- Ownership presumption of resulting trust where property transfer for no consideration Seeking to protect herself from being sued by her brother, the taxpayer transferred title to all her real properties for no consideration to corporations under her majority control. ... Hogan J. noted (para. 30) that "a transfer of property for no consideration generally results in a rebuttable presumption of a resulting trust". ...

The Queen, 2012 DTC 1019 [at at 2575], 2011 TCC 520-- summary under Disposition Summary Under Tax Topics- Income Tax Act- Section 248- Subsection 248(1)- Disposition rebuttable presumption of resulting trust on transfer for no consideration Seeking to protect herself from being sued by her brother, the taxpayer transferred title to all her real properties for no consideration to corporations under her majority control. ... Hogan J. noted (para. 30) that "a transfer of property for no consideration generally results in a rebuttable presumption of a resulting trust". ...

After noting that, in the context of s. 14, "'consideration'... must be understood as the thing that the recipient of a payment gives in exchange for the payment", Sharlow J.A. found that the consideration given by the taxpayer for the $9 million payment was the release of any claim by it for compensation for the destruction of the goodwill of its business, and that under the mirror image rule the amount was not an eligible capital amount because the expropriation was effected for civic purposes rather than for the purposes of producing profit, and an expenditure made by the taxpayer for this purpose would not qualify as an eligible capital expenditure. Words and Phrases consideration ...

Harman J. found (p. 361) that): "The special commissioner was entirely entitled to reach the conclusion that there is no basis on which a separate and additional monetary value could be placed upon the guarantee as part of the consideration to be added to the undoubted monetary price paid which was the true open market price of the shares." and went on to find that the guarantee clearly fell within s. 22(4)(b) of the Finance Act 1965 which deemed the disposal of an asset to be for consideration equal to the market value of the asset where the asset was acquired "wholly or partly for a consideration that cannot be valued". ...

D’Arcy J found that the Annual Resort Fees were consideration for a service rather than intangible personal property, stating (paras. 237-8): The Appellant does not provide any rights in consideration of the Annual Resort Fee. … What it supplies is the agreement to use the Annual Resort Fees to fund its operations. … This…is the supply of something other than property. The Annual Resort Fees were "not part of the ongoing consideration the Members....pay to maintain their membership in the Appellant" given inter alia that the memberships were supplied by a different entities (the "Developers" who also had acquired occupancy rights to the Vacation Homes and had sold the Resort Points giving members the rights to book stays at the homes). ...