Search - consideration

The term "pension" means periodic payments made in consideration of past services. ... Article XI(3) of the treaty defines the term "pension" as "periodic payments made in consideration of past services" as opposed to referring only to "periodic payments". We could not simply ignore the words "made in consideration of past services". ...

In general terms, this exception applies where an employer has incurred an expense or made an outlay as consideration for group term life insurance in respect of a period that ends more than 13 months after the consideration is made. ...

Clauses 6202.1(1)(a)(iii)(A) and (B) provide that the new share will not be a prescribed share under subparagraph 6202.1(1) (a) (iii) of the Regulations if, inter alia, the new share is convertible or exchangeable only into another share of the corporation that, if issued, would not be a prescribed share ("non-prescribed share") and, if all the consideration receivable by the holder on the conversion or exchange of the new share is limited to such a non-prescribed share receivable on the conversion or exchange.       ... There must be some sort of benefit or payment etc. conveyed to the shareholder on the conversion that may reasonably be  considered to be a repayment or return by the corporation (or a specified person) of all or part  of the consideration for which the share was issued. 2.      ... Where a person agrees to acquire flow-through shares and non flow-through shares from a corporation for fair market value consideration and the consideration for which flow-through shares are to be issued is determined within 60 days of entering into the flow-through share agreement, and the terms of the flow-through shares provide for their conversion into additional non flow-through shares of the corporation on a fair market value basis, it is our view that paragraph 6202.1(2)(a) of the Regulations will not apply to cause the flow-through shares to be prescribed shares. ...

Accordingly, while it may be argued that, in the circumstances described above, the consideration paid by the corporate investor should be deducted in computing its safe income on the basis that such amounts were paid to obtain a reduction (through a tax credit) in an income tax liability of the corporate investor, you suggest that safe income need not be so reduced because the amounts expended were paid to acquire the property. ... EXHIBIT Calculation of Safe Income Where SRTC property acquired Example Corporate taxpayer that has operating income of $10,000,00,0 acquires an SRTC property described in subsection 127.3(2)(a)(iii) to (v) of the Act for consideration equal to $4,000.000 and becomes entitled to a tax credit, within the meaning of paragraph 127.3(2)(a) of the Act, equal to $2,000,000. ... Operating Income $10,000,000 less- Tax@ 485 $4,800,000- Tax Credit 2,000,000- Net Tax $2,800,000 (2,800,000) less Net Outlay for SRTC property not deducted in computing operating income- Consideration Paid $4,000,000- Cost (ss. 127.3(6)) 2,000,000- Net Outl ay $2,000,000 (2,000,000) Safe Income on Hand immediately after acquisition of SRTC property $5,200,000 Gain on Disposition of SRTC property- Non Taxable Gain (1/3) $100,000- Taxable Cap. ...

Opco issues 300 Class B Common Shares to the shareholder for consideration of $1. 3. ... As consideration for the shares, the shareholder will receive one additional common share of Newco which will have an adjusted cost base and paid-up capital identical to that of the shares being transferred. ... In step 3 above, one additional common share is issued as consideration for the Class A Common Shares. ...

The revised IT's may not contain the administrative practice regarding the receipt of non-share consideration of less than $200 instead of a fraction of a share as described in section 1.2 of the course material. ... Under section 2.2 of the course material and lesson plan, we feel that the statement "unlike sections 51 and 85.1 non-share consideration, or boot, can also be received" is not totally correct in that subsection 85.1(3) permits the receipt of non-share consideration. ... On page 7.2, paragraph 4, please refer to our comment 1 with respect to the administrative practice concerning the receipt of non-share consideration of less than $200 instead of a fraction of a share. 9. ...

It is our view that the following considerations, which are referred to in your memorandum, would not appear to be relevant to the determination of whether the Main Purpose Test has been met: (a) the use of section 85 by the shareholder; (b) the fact that the shareholder has achieved significant benefits from other tax planning in the years under review; and (c) the fact that the shareholder is willing to take additional steps to ensure that his spouse does not benefit from the growth in the investment corporation. 4. The following considerations may be relevant to the determination of whether the Main Purpose Test has been met: (a) value of the consideration received by the shareholder on the transfer to the investment corporation; (b) the rights to future income or future growth in respect of the transferred property or property substituted therefor (i.e. whether future income or future growth can reasonably be expected to accrue to someone else as a result of the transfer); and (c) amount of the potential benefit to the spouse of the taxpayer (which assists in the determination of whether it is one of the "main" purposes, or an "incidental" purpose). Paragraph 85(1)(e.2) In determining whether the fair market value of the preferred shares of the investment company that were received by the taxpayer as consideration is equal to the fair market value of the shares of the operating company transferred to the investment company, the department normally considers retractable shares with a redemption amount equal to the fair market value of the transferred property to have full fair market value where there can be no erosion of this value (by payment of dividends on other classes of shares, for instance). ...

Clauses 6202.1(1) (a) (iii) (A) and (9) provide that the new share will not be a prescribed share under subparagraph 6202.1(1) (a) (iii) of the Regulations if, inter alia, the new share is convertible or exchangeable only into another share of the corporation that, if issued, would not be a prescribed share ("non-prescribed share") and, if all the consideration receivable by the holder on the conversion or exchange of the new share is I imited to such a non-prescribed share receivable on the conversion or exchange. ... There must be some sort of benefit or payment etc. conveyed to the shareholder on the conversion that may reasonably be considered to be a repayment or return by the corporation (or a specified person) of all or part of the consideration for which the share was issued. 2. ... Where a person agrees to acquire flow-through shares and non flow-through shares from a corporation for fair market value consideration and the consideration for which flow-through shares are to be issued is determined within 60 days of entering into the flow-through share agreement, and the terms of the flow-through shares provide for their conversion into additional non flow-through shares of the corporation on a fair market value basis, it is our view that paragraph 6202.l(2)(a) of the Regulations will not apply to cause the flow-through shares to be prescribed shares. ...

To crystallize a capital gains exemption, the individual sells his common shares to Opco for cancellation and, in consideration, Opco issues him shares of another class of its capital stock whose stated capital for corporate purposes and fair market value are $600,000. ... (i) Is the individual deemed to have received a $100,000 dividend under subsection 84(1) of the Act, since subsection 85(2.1) of the Act reduces the paid-up capital of shares issued in consideration of a $100,000 amount? ... It is our opinion that, in the example you submitted to us, subsection 84(1) applies to deem the individual to have received a $100,000 dividend at the time the shares of another class were issued in consideration for the cancelled common shares. ...

In the Plan which you described in your letter of September 20, 1984, each Member's consideration is seen to be his/her undertaking to forgo a certain value of employee benefits and/or salary for the next Plan Year. Paragraph 5 of interpretation bulletin 339R indicates that the agreed consideration should relate closely to the coverage provided, being based on some method of computation involving actuarial or similar studies. ... In our opinion, the Member's consideration cannot be said to be based on a computation involving actuarial or similar studies with the result that neither the Plan nor any of the individual agreements contemplated therein qualify as a private health services plan. ...