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“shareholders” of Dutch co-op (DC) of FAs in consideration for proportionate “increases” in their membership interests considered to be for “shares” Proposed Transactions Holdco (resident in Canada) transfers a portion of its shares of a Netherlands private limited liability company (“BV”) to a newly-incorporated Canadian subsidiary (“Newco”) under s. 85(1), following which BV is converted to a Dutch cooperative (“DC”), as a result of which all the shares of BV are cancelled and Holdco and Newco automatically become members of DC holding membership interests in proportion to their previous respective shareholdings. The parent of Holdco (“Canco”) then transfers shares of directly-held foreign affiliates (“FAs”) to Holdco in consideration for Holdco shares, and Holdco then transfers such FA shares to DC (and to Newco under s. 85(1)) in consideration for an increase to its membership interest in DC by an amount equal to the FMV of such transferred shares (and for the issuance of Newco shares – with Newco then dropping down its FA shares to DC in consideration for a correlative increase in its membership interest). ...

16 June 2014 STEP Roundtable, 2014-0522961C6- STEP CRA Roundtable- June 2014-- summary under Paragraph 56.4(6)(e) Summary Under Tax Topics- Income Tax Act- Section 56.4- Subsection 56.4(6)- Paragraph 56.4(6)(e) nominal consideration tainting of non-compete- partly reversed immediately above Does the fact that a contract of a restrictive covenant stipulates the amount of $1 as consideration mean that there is consideration, such that the elections, provided under subsection 56.4(7) are inapplicable? CRA stated: While we understand that a nominal amount of consideration may be given by the parties in a contract relating to a restrictive covenant to ensure that the contract is legally binding, it is the CRA's view that this would still constitute an amount of proceeds received or receivable by the particular party for granting the RC. ...

16 June 2014 STEP Roundtable, 2014-0522961C6- STEP CRA Roundtable- June 2014-- summary under Paragraph 56.4(7)(d) Summary Under Tax Topics- Income Tax Act- Section 56.4- Subsection 56.4(7)- Paragraph 56.4(7)(d) nominal consideration tainting of non-compete Does the fact that a contract of a restrictive covenant stipulates the amount of $1 as consideration mean that there is consideration, such that the elections, provided under subsection 56.4(7) are inapplicable? CRA stated: While we understand that a nominal amount of consideration may be given by the parties in a contract relating to a restrictive covenant to ensure that the contract is legally binding, it is the CRA's view that this would still constitute an amount of proceeds received or receivable by the particular party for granting the RC. ...

By virtue of an agreement between the subsidiary and its employees, the subsidiary subsequently transfers the shares to them for no monetary consideration. ... " An issuance of shares has a specific meaning and refers to the delivery of unissued shares by a corporation including the issuance of unissued shares for no monetary consideration. ... …[T]he fact that the employee acquires the shares without monetary consideration is not, in itself, a factor which prevents concluding that the Employer has agreed to issue or sell shares in accordance with section 7. ...

As part of this agreement, the Vendor also agreed to issue, for no significant consideration, warrants to the Purchaser to acquire treasury common shares. The Directorate stated: Taking into account, among other things, the letter of intent and considering the final agreement as a whole, that there would be good arguments for concluding that a portion of the … expenses incurred by the Purchaser constituted consideration given by the taxpayer for a right in respect of a share of the Vendor... [T]hat consideration should be deducted by virtue of paragraph (j) … from Canadian exploration expenses otherwise computed. ...

24 January 2011 Internal T.I. 2010-0389251I7 F- Farm-out agreement and warrants-- summary under Subsection 15(1) Summary Under Tax Topics- Income Tax Act- Section 15- Subsection 15(1) valuation of “free” warrants issued as part of a simple farmout agreement determined based on what would be a s. 15(1) benefit A mining exploration corporation (the "Purchaser") agreed with another mining exploration corporation (the "Vendor") to acquire an interest in the Vendor's unproven resource properties (the "Properties") in consideration for incurring specified exploration expenses. As part of this agreement, the Vendor also agreed to issue, for no significant consideration, warrants to the Purchaser to acquire treasury common shares. ... In commenting on such value, the Directorate stated: In determining the portion of the total consideration for the warrants, we would consider the amount that would have been the benefit under subsection 15(1) if no consideration had been paid for the warrants. ...

19 January 2017 External T.I. 2015-0576751E5 F- Trust, Disposition of depreciable property, Assumption-- summary under Personal Trust Summary Under Tax Topics- Income Tax Act- Section 248- Subsection 248(1)- Personal Trust non-commital as to whether assumption of debt could constitute tainting consideration CRA indicated that the assumption by the beneficiary of debt of a personal trust owing to a bank would not preclude s. 107(2) applying to the distribution provided that such assumption did not result in the trust ceasing to be a personal trust (having regard to the question, not discussed by CRA, of whether such assumption constituted consideration for the acquisition of a beneficial interest in the trust). On this latter point, CRA stated: Under subsection 248(1), a personal trust is defined, among other things, as a trust in which no beneficial interest was acquired for consideration payable directly or indirectly to the trust or to any person or partnership that has made a contribution to the trust by way of transfer, assignment or other disposition of property. The question of whether the assumption by the beneficiary of the debt of the trust constitutes consideration for the acquisition of a beneficial interest in the trust is a question of fact which cannot be determined until after a review of all the facts and of the relevant documentation. ...

2016 Ruling 2015-0571441R3- Dutch Cooperative- 93.2 & 95(2)(c)-- summary under Subsection 85.1(3) Summary Under Tax Topics- Income Tax Act- Section 85.1- Subsection 85.1(3) joint contribution of shares of FA to Netherlands co-op in consideration for credits to their respective membership accounts deemed to be for share consideration Ruling respecting the combined operation of s. 95(2)(c) (similar in this regard to s. 85.1(3)) and s. 93.2) on a joint contribution by the three foreign affiliate shareholders of a foreign affiliate of their respective shareholdings to a Dutch co-operative (with membership interests rather than share capital) in consideration for credits to their respective membership interest accounts. ...

1 March 2002 External T.I. 2002-0118215 F- ACTIONS EMISES GRATUITES AUX EMPLOYES-- summary under Paragraph 7(1)(a) Summary Under Tax Topics- Income Tax Act- Section 7- Subsection 7(1)- Paragraph 7(1)(a) s. 7 rules applicable to shares issued for no consideration to employees Before going on to describe the application of the ss. 7(1.1) and 110(1)(d.1) rules to shares issued for no consideration by a CCPC to employees, CCRA stated: [T]he provisions of section 7 … which deem a benefit to have been received by an employee by reason of employment, are applicable where a corporation has issued shares of its capital stock to its employees for no consideration. ...