Cases
626468 New Brunswick Inc. v. Canada, 2019 FCA 306
An individual rolled his apartment building into a Newco in consideration for a mortgage assumption and shares with nominal paid-up capital, and...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) | safe income from asset sale was reduced by accrued, but not yet payable, taxes on the gain | 361 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2) | s. 55(2) operated through denying a s. 53(1)(b) ACB bump | 304 |
Fiducie famille Gauthier v. Canada, 2012 FCA 76, aff'g 2011 DTC 1343 [at 1917], 2011 TCC 318
The taxpayer, a family trust, made a non-arm's-length sale of shares to a numbered corporation for a promissory note of approximately $2.6...
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| Tax Topics - Income Tax Act - Section 84.1 - Subsection 84.1(1) | fees borne by transferee were "consideration" | 338 |
Attridge v. The Queen, 91 DTC 5161, [1991] 1 CTC 247 (FCTD)
Given the unreliability of the expert evidence of both the Crown and the taxpayer, Muldoon J. selected a V-day value for the shares of a private...
Winter v. The Queen, 89 DTC 5304, [1989] 2 CTC 55 (FCTD)
The court valued common shares which the taxpayer had gifted to his daughter at $1,089 per share, which was significantly less than a roughly...
McPherson v. McPherson (1988), 48 DLR (4th) 577 (Ont CA)
Mrs. McPherson was entitled to receive a cash payment from Mr. McPherson calculated on the basis that she had a 1/2 interest in a company...
Brant Investments Ltd. v. Keeprite Inc. (1987), 37 BLR 65 (S.C.O.)
While hindsight "is not probative of value at the valuation date, it may be used to measure the reasonableness of assumptions or projections made...
Manning v. Harris Steel Group Inc., [1987] 1 WWR 86 (BCSC)
"Hindsight appraisals are not acceptable to reach a fair value. Information obtained subsequent to the valuation date has a limited use such as...
Re Cyprus Anvil Mining Corp. (1986), 33 DLR (4th) 641 (BCCA)
A mining company ("Cyprus Anvil") whose deposits in the "Faro" operation were expected to be exhausted in 10 years time agreed with the majority...
Buckingham v. Francis, [1986] 2 All E.R. 738 (Q.B.D.)
Staughton, J. stated that in determining the value of a company with minimal tangible asset backing, on a going-concern basis, there were two...
Steen v. The Queen, 86 DTC 6498, [1986] 2 CTC 394 (FCTD), aff'd 88 DTC 6171, [1988] 1 CTC 256 (FCA)
In finding that the "value" of shares of British Columbia Forest Products for purposes of s. 7(1)(a) equalled their price on the TSE, Rouleau, J....
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| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | 53 |
Terry v. The Queen, 85 DTC 5179, [1985] 1 CTC 135 (FCTD)
A fledgling distillery company was found to have a "nominal" fair market value of $1.00 per share, or $667,000, in total, notwithstanding a...
Ronald Elwyn Lister Ltd. v. Dayton Tire Canada Ltd. (1985), 52 OR (2d) 88 (C.A.)
The Court adopted evidence that "the most common method of determining going concern value is that which relates to the capitalization of the...
Yager v. The Queen, 85 DTC 5494, [1985] 1 CTC 89, [1985] DTC 5413 (FCTD)
All the common shares of a private company were held as follows: 44% by Mr. Yager; 4% - Mrs. Yager; 44% - Mr. Fast; and 8% - Mrs. Fast. A minority...
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| Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Rules - Rule 482 | 35 |
The Queen v. Landsman, 84 DTC 6278, [1984] CTC 274 (FCA)
It was appropriate to assume in determining the fair market value of shares, that the owners and officers of affiliated companies would attempt to...
The Queen v. Hugh Waddell Ltd., 83 DTC 5309, [1983] CTC 270 (FCA)
The beneficial owner of shares of a corporation was precluded by the terms of a trust agreement from having his interest in those shares sold for...
Stanton v. Drayton Commercial Investment Co. Ltd., [1982] BTC 269, [1982] 2 All E.R. 943 (HL)
A reference in the Finance Act 1965 to "value" should not be taken as synonymous to "market value". In cases where bargains have been made at...
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| Tax Topics - Income Tax Act - Section 54 - Adjusted Cost Base | cost of shares acquired with treasury shares was the agreed transaction value | 72 |
Carruthers v. The Queen, 82 DTC 6009, [1982] CTC 5 (FCTD)
A minority block of shares in a closely-held company was valued by capitalizing normal earnings and subtracting a minority discount and a further...
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| Tax Topics - Other Legislation/Constitution - Federal - Federal Courts Rules - Rule 465(15) | 55 | |
| Tax Topics - General Concepts - Evidence | 90 |
National System of Baking of Alberta Ltd. v. The Queen, 80 DTC 6178, [1980] CTC 237 (FCA)
Market price is the best test of fair market value. Although the taxpayer held the view on V-Day that the majority shareholder of the company...
Connor v. The Queen, 78 DTC 6497, [1978] CTC 669, aff'd 79 DTC 5256, [1979] CTC 365 (FCA)
A company, whose principal asset was a leasehold interest in a parking garage which was to expire on May 31, 1981, was valued on V-Day by taking...
Bendix Automotive of Canada Ltd. v. The Queen, 78 DTC 6137, [1978] CTC 194 (FCA)
The taxpayer paid a dividend in kind consisting of a control block of CDC shares to its U.S. parent, which thereupon exchanged the CDC shares for...
Corlite Petroleums Ltd. v. The Queen, 76 DTC 6450, [1976] CTC 766 (FCTD)
The value of shares was taken by deducting a 5% discount to reflect the agreement of the holder to submit to any escrow arrangement that the B.C....
West Estate v. Minister of Finance (B.C.), [1976] CTC 313 (BCSC)
An executive died possessed of shares of Wood Gundy which were subject to a buy-sell agreement which provided that all transfers of shares in Wood...
Rosenblat v. The Queen, 75 DTC 5274, [1975] CTC 472 (FCTD)
The taxpayer was granted the right to acquire 300,000 shares of a corporation in consideration of past services in June of 1967 and the shares...
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| Tax Topics - General Concepts - Evidence | 22 | |
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 72 |
Huron Steel Fabricators (London) Ltd. v. M.N.R., 75 DTC 5006, [1974] CTC 889 (FCTD)
The shares of a minority shareholder in a private Ontario company were subject to the standard private-company restrictions on transfer contained...
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| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 128 |
Smith Estate v. M.N.R., 74 DTC 6291, [1974] CTC 317 (FCTD)
At the time of her death in 1969, the deceased owned 2,000 Class B voting shares, and her two sons each owned 12 Class A voting shares, of an...
Henderson Estate v. M.N.R, 73 DTC 5471, [1973] CTC 636 (FCTD), aff'd 75 D.TC 5332, [1975] C.TC 485 (FCA)
The Minister's method of valuing a 15% block of shares that the deceased held in a mining company, which was to take the market price on the TSE...
Winram v. MNR, 72 DTC 6187, [1972] CTC 193 (FCTD)
At the time of his death, the deceased owned 9 Class A voting shares of a private investment company and his wife owned the other Class A share...
Re Mann Estate, [1972] 5 WWR 23 (BCSC), aff'd [1973] CTC 561 (BCCA), aff'd [1974] CTC 222 (SCC)
At the time of his death, the deceased owned 10 voting common shares of a private investment company and his children owned the balance of its...
Beament et al. v. Minister of National Revenue, 70 DTC 6130, [1970] CTC 193, [1970] S.C.R. 680
The deceased had held Class B shares of a private company which were participating as to earnings but only entitled to receive their nominal par...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 100 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | 56 | |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 106 |
Lawson v. Minister of National Revenue, 69 DTC 5155, [1969] CTC 201, [1969] S.C.R. 587
A mining stock promoter acquired treasury shares of a junior mining company and while he was selling as many shares as he could on The Toronto...
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| Tax Topics - Income Tax Act - Section 10 - Subsection 10(1) | 200 | |
| Tax Topics - Income Tax Act - Section 18 - Subsection 18(1) - Paragraph 18(1)(e) | 145 |
Attorney-General of Ceylon v. Mackie, [1952] 2 All E.R. 775 (PC)
Under the Estate Duty Ordinance, 1938 (Ceylon), the 5,000 management shares of a Ceylonese company engaged in the business of buying rubber and...
See Also
Lauria v. The Queen, 2021 TCC 66
On April 1, 2006, the taxpayers, who were executives of Gluskin Sheff+Associates Inc. (“GS+A”) (but with less clout than the founders), sold a...
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| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | gain appropriately assessed under s. 69(1)(b) where shares transferred to family trusts two months before closing an IPO at 5% of the IPO price | 327 |
| Tax Topics - Income Tax Act - Section 152 - Subsection 152(4) - Paragraph 152(4)(a) - Subparagraph 152(4)(a)(i) | sophisticated taxpayers were careless in not valuing shares at a value reflecting an imminent IPO | 613 |
Shanda Games Ltd v Maso Capital Investments Ltd & Ors (Cayman Islands), [2020] UKPC 2
The respondent (Shanda) was an exempted limited company incorporated in the Cayman Islands whose American Depository Shares (“ADSs”) were...
Fink v. Canada (Attorney General), 2018 FC 936, aff'd 2019 FCA 276
The taxpayer realized s. 7 stock option benefits in 2007 as a result of the exercise of warrants that had been issued to him by his employer...
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| Tax Topics - Other Legislation/Constitution - Federal - Financial Administration Act - Section 23 - Subsection 23(2) | it was reasonable for CRA to not recommend FAA relief for s. 7 stock option benefits, as contrasted to s. 7 stock purchase plan benefits | 251 |
Louie v. The Queen, 2018 TCC 225, rev'd in part on "advantage" issue (for subsequent years) 2019 FCA 255
The taxpayer directed 71 “swaps” under which TSX-listed shares were transferred between her self-directed TFSA and her taxable trading account...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(10) | share swap transactions were series notwithstanding that their particulars and end point were not known in advance | 189 |
| Tax Topics - Income Tax Act - Section 207.05 - Subsection 207.05(3) | holder rather than trustee liable for advantage tax | 148 |
| Tax Topics - Income Tax Act - Section 207.01 - Subsection 207.01(1) - Advantage - Paragraph (b) - Subparagraph (b)(i) | temporal limitation placed on the advantages considered to arise from TFSA swap transactions | 643 |
Mady v. The Queen, 2017 TCC 112
The taxpayer, who owned all the shares of his dental corporation (“MDPC”), agreed to sell all the MDPC shares to third-party purchaser (the...
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| Tax Topics - Income Tax Act - Section 74.5 - Subsection 74.5(11) | transfer from wife to higher-income husband was infused with his income-splitting purpose (as well as regulatory breach if she didn’t transfer) | 393 |
| Tax Topics - General Concepts - Ownership | wife and children did not acquire beneficial interest in shares the taxpayer was to transfer to them, under tax plan, until the share transfer occurred | 263 |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(2) | family members did not acquire beneficial interest in new shares until after completion of s. 86 reorg | 297 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) - Subparagraph 69(1)(b)(i) | contemporaneous arm’s length sale price established that shares previously transferred at undervalue | 478 |
| Tax Topics - Income Tax Act - Section 163 - Subsection 163(2) | was not responsible under s. 163(2) for the unbeknownst sharp practice of his tax advisor | 692 |
| Tax Topics - General Concepts - Price Adjustment Clause | no jurisdiction to comment on application of price adjustment clause where the affected taxpayers are not appellants | 233 |
Grimes v. The Queen, 2016 TCC 280
The taxpayer trust was deemed under s. 104(4) to have disposed of common and preferred shares of a holding company (“Holdco”) for their fair...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(4) - Paragraph 104(4)(a) | FMV determined with minority discount and without discount for shareholder taxes | 201 |
Montminy v. The Queen, 2016 TCC 110, rev'd 2017 FCA 156
The taxpayers were management employees of a software company (“Cybectec”), which was a wholly-owned subsidiary of a holding company...
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| Tax Topics - Income Tax Regulations - Regulation 6204 - Subsection 6204(1) - Paragraph 6204(1)(b) | shares tainted by right to sell immediately after exercise to controlling shareholder | 260 |
UBS AG v Commissioners for HMRC; DB Group Services (UK) Ltd v. Commissioners for HMRC, [2016] UKSC 13
Lord Reed found that a scheme to avoid income tax on bankers’ bonuses, which entailed awarding the employees redeemable shares in an offshore...
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| Tax Topics - General Concepts - Tax Avoidance | unexpressed intention of Parliament to give relief for restrictive conditions attached to shares only where those conditions had a commercial purpose | 574 |
Kruger Wayagamack Inc. v. The Queen, 2015 DTC 1112 [at 667], 2015 TCC 90, aff'd 2016 FCA 192
Kruger Inc. was the 51% shareholder of the taxpayer. The taxpayer was associated with Kruger under s. 256(1.2)(c) as the Kruger bloc had more that...
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| Tax Topics - Income Tax Act - Section 251 - Subsection 251(2) - Paragraph 251(2)(b) - Subparagraph 251(2)(b)(i) | de jure control requires strategic control, not merely operational control | 93 |
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(1) - Paragraph 256(1)(a) | de jure or de facto control requires strategic control, not merely operational control | 340 |
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(1.2) - Paragraph 256(1.2)(c) | effect of s. 256(1.2)(g) is as if company were run by 3rd party | 254 |
| Tax Topics - Income Tax Act - Section 256 - Subsection 256(5.1) | de facto control requires strategic control, not merely operational control | 216 |
Avrams v. The Queen, 2012 TCC 247
The taxpayer's common law husband transferred significant blocks of shares of a TSXV-listed public company, of which he was CEO, to the taxpayer...
Douglas Zeller and Leon Paroian Trustees of the Estate of Margorie Zeller v. The Queen, 2008 DTC 4441, 2008 TCC 426
At the time of the death of the taxpayer, she was the sole shareholder of a holding company ("701") that, in turn, held a 50% interest in a...
Lockhart v. The Queen, 2008 DTC 3044, 2008 TCC 156
A start-up company ("AVL") of which the taxpayer was the president issued shares to him in recognition of past services. Although at the time of...
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| Tax Topics - Income Tax Act - Section 5 - Subsection 5(1) | 83 |
Laflamme v. The Queen, 2008 DTC 482, 2008 TCC 255
In the context of estate freeze transactions, a trust that the taxpayer had established for the benefit of his children transferred a portion of...
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| Tax Topics - Income Tax Act - Section 56 - Subsection 56(2) | 202 |
McClintock v. The Queen, 2003 DTC 576, 2003 TCC 259
Rip T.C.J. accepted the position of the Minister that the fair market value of shares of a Canadian-controlled private corporation three months...
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| Tax Topics - Income Tax Act - Section 125 - Subsection 125(7) - Canadian-Controlled Private Corporation | 113 |
Shepp v. The Queen, 99 DTC 510, [1999] 1 CTC 2889 (TCC)
Non-voting Class B common shares of a private company that generally were non-voting and not entitled to dividends (although the directors could...
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| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | 103 |
Dairy Queen Canada Inc. v. The Queen, 95 DTC 634, [1995] 2 CTC 2543 (TCC)
Bell TCJ. rejected the view of the Crown's expert valuator that the taxpayer was a special purchaser and, therefore, the fair market value of...
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| Tax Topics - Income Tax Act - Section 212.1 - Subsection 212.1(1) | 53 |
Husky Oil Ltd. v. The Queen, 95 DTC 316, [1995] 1 CTC 2184 (TCC), aff'd 95 DTC 5244 (FCA)
In finding that the taxpayer had paid the fair market value of shares acquired by it in an arm's length loss utilization transaction, where the...
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| Tax Topics - Income Tax Act - Section 246 - Subsection 246(1) | 128 | |
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | common interest of the parties did not evince that each was not acting in its own interests | 133 |
Ritson Estate v. MNR, 93 DTC 1078, [1993] 2 CTC 2750 (TCC)
The executors were unsuccessful in establishing that the fair market value of shares of the deceased should be discounted for the requirement...
Groupe d'Investissement Savoie, Lavoie Inc. v. M.N.R., 92 DTC 1531, [1992] 1 CTC 2355 (TCC)
The taxpayer acquired the personal residence of a related individual in consideration for issuing non-voting preference shares which were...
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| Tax Topics - Income Tax Act - Section 160 - Subsection 160(1) | 126 |
Leung v. MNR, 92 DTC 1090, [1992] 1 CTC 2110 (TCC)
Shares of a private consumer electronics company with a 20:1 debt to equity ratio which was "propped up" through shareholder loans, were found to...
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| Tax Topics - General Concepts - Effective Date | price adjustment clause effective | 76 |
Holt v. Holt, [1990] 1 WLR 1250 (TCC)
The appellant owned the only Class A share of a cattle and sheep farming company having a net asset value of not less than $800,000. 999 Class B...
Taylor Estate v. MNR, 90 DTC 1777, [1990] 2 CTC 2304 (TCC)
"In preparing a valuation to be used as evidence in court, a valuer may not accept figures that he did not check or take facts for granted over...
Mayson v. MNR, 85 DTC 341, [1985] 1 CTC 2395 (TCC)
The taxpayer's voting and non-voting common shares were found to have the same per-share V-Day value given that, in light of the shareholdings in...
Curry Estate v. U.S., 83-1 U.S.TC ¶13:518 (5th. C.A. 1983)
In finding that the non-voting shares of a private company held by the decedent were worth as much per share as his voting shares (which gave him...
Ahmanson Foundation v. U.S., 81-2 U.S.TC ¶13:438, 674 F. 2d 761 (9th C.A. 1981)
At the time of his death, the decedent held an income interest in approximately 10% of the non-voting common shares of a holding company ("HFA")...
Fiddes Estate v. MNR, 70 DTC 1117, [1970] Tax A.B.C. 156
At the time of his death, the deceased owned ten voting common shares of a B.C. personal corporation and his adult daughter owned 975 non-voting...
Barber Estate v. MNR, 66 DTC 315, 41 Tax A.B.C. 27
At the date of death of the deceased, he owned 4,497 Class B shares of a private investment company and his wife owned the only other issued...
Administrative Policy
2023 Ruling 2022-0958241R3 - Public Spin-Off Butterfly
CRA ruled on a butterfly spin-off by a listed Canadian corporation (DC) of its indirect interest in a foreign project to a “SpinCo” to be held...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.02) | public company spin-off with s. 51 reversal of new s. 86 common shares | 948 |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | new common shares created on s. 86 reorg then immediately converted under s. 51 back to old common shares | 124 |
| Tax Topics - Income Tax Act - Section 89 - Subsection 89(1) - Public Corporation - Paragraph (b) | public spinco to elect effective before its shares were listed | 84 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(3.1) - Paragraph 55(3.1)(a) | pre-butterfly transactions included DC acquiring shares under a plan of arrangement | 71 |
3 December 2015 External T.I. 2015-0593941E5 F - Allocation of the safe income on hand
Where Mr. A holds 99 Class A discretionary-dividend common shares of Opco and his estranged wife (Ms. A) held 1 Class B discretionary-dividend...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) | flexible allocation of SIOH where discretionary common shares | 1317 |
| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(b) | quaere whether 7% reduction is significant/ $50,000 is significant in absolute terms | 46 |
4 May 2015 External T.I. 2013-0502761E5 F - Stock Options and Earnout
At the very moment of the acquisition by employees of shares under a stock options agreement, it is agreed that their shares will be subsequently...
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| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | FMV of shares at time of stock option exercise determined by valuing earn-out clause in subsequent sales agreement | 209 |
10 October 2014 APFF Roundtable, 2014-0538121C6 F - Détermination de la JVM des actions
Would CRA consider deferred taxes on properties owned by a corporation in determining the fair market value of its shares? Consider, for example,...
10 October 2014 APFF Roundtable Q. 26, 2014-0538201C6 F - 2014 APFF Roundtable, Q. 26 - Cost of property
On a non-arm's length transfer of capital property by a non-resident in favour of a resident Canadian, whether by donation or disposition, what...
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| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(2) | arm's length transfer price prevails over FMV | 182 |
| Tax Topics - Income Tax Act - Section 247 - New - Subsection 247(3) - Paragraph 247(3)(a) - Subparagraph 247(3)(a)(iii) | general requirement for penalty elimination re transfer pricing capital setoff adjustment | 146 |
11 October 2013 APFF Roundtable, 2013-0495721C6 F - APFF 2013- Round table question 7
In the context of a general discussion as to complying with the Sommerer exception from S. 75(2) for sales of property (here, a rental property or...
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| Tax Topics - Income Tax Act - Section 75 - Subsection 75(2) | Sommerer FMV sale exception maintained with price adjustment clause | 214 |
5 October 2012 APFF Roundtable, 2012-0454061C6 F - Transfer of a Lossco to a related corporation
An individual holding a former small business corporation with no assets or liabilities but with significant non-capital losses ("Lossco") claims...
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| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | related but not affiliated transfer of Lossco shares to father's or brother's company | 267 |
| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | lossco with no assets or liabilities cannot be insolvent | 417 |
| Tax Topics - Income Tax Act - Section 88 - Subsection 88(1.1) | lossco losses maintained on father-son or sibling transfers and s. 88(1.1) wind-up | 266 |
10 June 2011 Roundtable, 2011-0404641C6 F - Shareholders Agreement and FMV
CRA noted that 2008-0285241C6 “stresses that the clauses of a shareholders' agreement must not result in a reduction of the FMV of the freeze...
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| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | freeze preferred shares must not have a clause that impairs their FMV, e.g., retractability for a NIB term note | 184 |
28 November 2010 CTF Roundtable, 2013-0487431C6 - Value of Vote-Only Shares 2010 CTF Conference
The questioner referenced the CRA statement at the 2009 British Columbia Tax Conference that, in the context of an estate freeze of a...
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| Tax Topics - Income Tax Act - 101-110 - Section 104 - Subsection 104(4) - Paragraph 104(4)(a) | 95 | |
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(5) | 170 |
25 August 2010 External T.I. 2010-0374231E5 F - Safe income allocation
After noting that safe income of Opco “old” common shares was required to be allocated, on their s. 51 exchange for new common shares and...
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| Tax Topics - Income Tax Act - Section 55 - Subsection 55(2.1) - Paragraph 55(2.1)(c) | safe income required to be allocated to prefs and new common shares received on a s. 51 exchange even where the redemption amount of the prefs matched the amount of such safe income | 377 |
30 March 2010 Internal T.I. 2010-0354391I7 F - P.VI.1:Rachat à l'enchère hollandaise modifiée
Deemed dividends on the purchase for cancellation of common shares tendered under a modified Dutch auction came within the (a)(i) and (e)(i) FMV...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Short-Term Preferred Share - Paragraph (a) - Subparagraph (a)(i) | deemed dividends on redemption of common shares tendered under modified Dutch auction came within (a)(i) and (e)(i) FMV exception | 278 |
31 May 2004 Internal T.I. 2004-0077341I7 F - Déduction de 110(1)d) de la Loi
The Directorate indicated that in determining the FMV of shares for purposes of the test in s. 110(1)(d)(ii), it:
generally uses the price at...
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| Tax Topics - Income Tax Act - 101-110 - Section 110 - Subsection 110(1) - Paragraph 110(1)(d) - Subparagraph 110(1)(d)(ii) | FMV may depart from the market price of shares | 95 |
16 December 2003 Internal T.I. 2003-04616
With respect to the situation where a parent corporation ("Parentco") would elect to have s. 50(1) apply in respect of the shares of one of its...
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| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) | 106 |
16 December 2003 Internal T.I. 2003-0046167 F - Section 50- Shares of Insolvent Corporation50(1)
The Directorate found that the sale of a subsidiary (Lossco) of the taxpayer with no assets or liabilities but with non-capital losses to another...
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| Tax Topics - Income Tax Act - Section 50 - Subsection 50(1) - Paragraph 50(1)(b) - Subparagraph 50(1)(b)(iii) | corporation not insolvent if affiliates intend to pay its creditors, and its shares have value if it has non-capital losses | 264 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(b) | sale of Lossco with no assets but non-capital losses for nil consideration to another subsidiary generated a gain under s. 69(1)(b) | 125 |
28 June 2001 External T.I. 2001-0073205 - SUBSTANTIAL ISSUER BID
Where a corporation proceeds with a substantial issuer bid at a price that is at a premium over the previous trading price of its shares on a...
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| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Short-Term Preferred Share | 104 |
IT-113R4 "Benefits to Employees-Stock Options"
Where an employee requires shares pursuant to a stock option agreement that prohibits transfers of the shares for a period of time, the shares...
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|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | 84 |
24 November 1997 External T.I. 9722845 - VALUE OF OPTIONS
Respecting the application of s. 7(1.4), RC stated that "the use of a ten-day closing price averaging, prior to the spin off, which is acceptable...
14 October 1997 External T.I. 9706535 - MUTUAL FUND VALUATION
In finding that the fair market value of mutual fund units held by an RRSP would take into account redemption fees, RC stated that "if units of a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 146 - Subsection 146(8.8) | 66 |
24 July 1997 External T.I. 9716015 - SWAP OF EMPLOYEE STOCK OPTIONS
In response to an inquiry as to whether a formula for determining the number of new options to be issued to an employee in replacement of her old...
1 May 1997 External T.I. 9639985 - SECTION 3860 OF THE CICA HANDBOOK
Notwithstanding the application of section 3860 of the CICA Handbook, the removal of a retraction feature from preferred shares generally would...
3 December 1993 T.I. 920099 [no discount for future taxes]
"The value of property relates to the attributes of the property itself and is unaffected by the tax position."
93 C.R. - Q. 47
The share provisions that RC requires to be present in order to be satisfied that the fair market value of estate freeze shares is equal to the...
13 January 1993 T.I. (Tax Window
underline;">, No. 28, p. 22, ¶2370): Preferred shares that carry a dividend based on the prime lending rate, and preferred shares that are...
Tax Professionals Mini Round Table - Vancouver - Q. 4 (March 1993 Access Letter, p. 102)
Discussion of criteria for determining the "value" of publicly treated shares for purposes of s. 7(1)(a).
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(a) | 16 |
1993 Conference for Advance Life Underwriting, Q. 13 (931011) (C.T.O. "CALU Ques. 13-Buy-Sell Agreement & Valuation of Shares")
Where a corporation is required under a bona fide shareholders' agreement to pay life insurance proceeds as a capital dividend either to the...
1992 A.P.F.F. Annual Conference, Q. 11 (January - February 1993 Access Letter, p. 54)
In valuing shares, RC will take into account accumulated tax losses of the corporation if they may eventually be deductible in the computation of...
10 February 1992 Income Tax Severed Letter 9201015 - Forgiveness of Employee Loans
The fair market value for purposes of s. 6(15) of shares which are actively traded is their average trading price on the day in question.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(15) | 102 |
20 November 1991 External T.I. 91M11075 F - Transfer of Shares to RRSP
Where a taxpayer acquires a share without a ready market value and in respect of which she is entitled to a tax credit and, within 30 days,...
4 October 1991 T.I. (Tax Window, No. 10, p. 16, ¶1498)
Where a public corporation plans to distribute, as a dividend in kind, all the shares of a wholly-owned subsidiary which have a fair market value...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 212 - Subsection 212(2) | 59 |
23 and 29 August 1991 T.I. (Tax Window, No. 8, p. 20, ¶1411)
A shareholders' agreement which limits the number of preferred shares that may be retracted in the year adversely affects the fair market value of...
24 July 1991 T.I. (Tax Window, No. 7, p. 11, ¶1369)
Discussion of criteria for establishing that the fair market value of estate freeze preference shares is equal to their redemption amount.
14 June 1991 T.I. (Tax Window, No. 4, p. 11, ¶1309) [maintaing value of preferred sahres]
Where related persons on a s. 86 reorganization change their common shares of Opco into retractable preferred shares, one of the related persons...
Harris, "An Update of Revenue Canada's Approach to the Butterfly Reorganization", 1991 Conference Report
The view of Revenue Canada expressed at the 1981 Round Table, that deferred taxes in respect of a property to be transferred pursuant to an s....
15 November 1990 T.I. (Tax Window, Prelim. No. 2, p. 14, ¶1078)
A taxpayer will not be considered to have conferred a benefit pursuant to s. 85(1)(e.2) where the redemption and retraction amount of preferred...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) - Paragraph 85(1)(e.2) | 60 |
30 April 1990 T.I. (September 1990 Access Letter, ¶1419)
Discussion of the valuation of shares of a corporation where there is a non-arm's length buy-sell agreement among the shareholders and the...
19 April 1990 T.I. (September 1990 Access Letter, ¶1433)
In light of the jurisprudence, a minority discount generally will be applied to the valuation of shares held by a minority shareholder, for...
18 April 1990 T.I. (September 1990 Access Letter, ¶1430)
Where it is impossible to establish the fair market value of shares of a Quebec business investment company, it will be assumed that the value...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(6) | 13 |
1 March 1990 T.I. (August 1990 Access Letter, ¶1384)
In the absence of other evidence as to value, RC has taken the position that the fair market value of shares of a prescribed venture capital...
October 1989 A.P.F.F. Round Table - Q.9 (Jan. 90 Access Letter, ¶1075)
The fair market value of property which is to be transferred on a rollover basis should be determined without regard to the tax position of the...
October 1989 Revenue Canada Round Table - Q.18 (Jan. 90 Access Letter, ¶1075)
Listing of factors that are considered in assessing the size of a minority discount.
ATR-22R (14 April 89)
Favourable ss.15(1), 56(2) and 86(2) rulings were given with respect to an estate freeze transaction under s. 86(1) entailing the issuance of...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 33 | |
| Tax Topics - Income Tax Act - Section 86 - Subsection 86(1) | 55 | |
| Tax Topics - Income Tax Application Rules - Subsection 26(27) | 31 |
ATR-36 (4 Nov. 88)
RC gives a favourable s. 15(1) ruling with respect to an estate freeze transaction where father receives redeemable retractable non-cumulative...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 120 | |
| Tax Topics - Income Tax Act - Section 74.4 - Subsection 74.4(2) | 46 |
87 C.R. - Q.37
RC will provide to the taxpayer a detailed explanation of the proposed valuation or appraisal.
87 C.R. - Q.38
The principal criteria for determining the appropriate size of a minority discount are listed.
ATR-17 9 February 1987 (Cancelled)
The trustees of an employee benefit plan will distribute common shares of "EmployerCo" which were purchased by the trustees on the open...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 32.1 - Subsection 32.1(1) | deduction for employer portion of previous contributions to employee stock purchase plan | 422 |
81 C.R. - Q.35
RC may accept more than the prescribed value for shares of a public corporation held on V-Day where the taxpayer was the member of a group of...
81 C.R. - Q.45
Preferred shares issued on an estate freeze generally have a value equal to their redemption amount if they are retractable.
81 C.R. - Q.53
The value of property relates to the attributes of the property itself and is unaffected by the tax position of the owner.
80 C.R. - Q.13
In order for preference shares to have a value equal to their redemption amount they must be retractable, entitled to a dividend (not exceeding a...
80 C.R. - Q.15
Where an option agreement is entered into by parties dealing at arm's length, RC will take the option price into consideration in determining fair...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | 27 |
80 C.R. - Q. 52
RC valuators only deal with valuation assignments resulting from completed transactions.
IC 89-3 "Policy Statement on Business Equity Valuations"
3. (a) Fair market value is the highest price, expressed in terms of money or money's worth, obtainable in an open and unrestricted market between...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 70 - Subsection 70(5) | 21 |
IT-269R3 "Part IV Tax on Taxable Dividends Received by a Private Corporation or a Subject Corporation"
"Where a corporation is controlled ... and the recipient [of a dividend] does not control, and is not a member of the group that controls, the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 186 - Subsection 186(4) | 0 |
IT-140R3 "Buy-Sell Agreements"
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 251 - Subsection 251(1) - Paragraph 251(1)(c) | 36 |
IT-96R5 "Options Granted by Corporations to Acquire Shares, Bonds or Debentures" under "Shareholder Benefit"
Where a corporation grants to a shareholder an option to acquire shares in the corporation, the amount of any benefit is the greater of the...
Articles
Shaun Doody, "The Effect of Embedded Capital Gains on Fair Market Value", Tax Litigation, 2011, p. 1094
Courts in both Canada (including in 1234 Mountain Realty Corp. v. Ionidis, [2000] QJ No 264, varied [2002] JQ No. 5674 QCCA, Re Canadian Rocky...
Alan MacNaughton, Amin Mawani, "CRA: Employee Stock Options TFSAs", Canadian Tax Highlights, Vol. 17, No. 5, May 2009
Discussion of CRA Shift to Using Black-Scholes Rather than Intrinsic Value.
David Lewy, "Valuation and Family-Business Share Structures - Some Musings", CCH Tax Topics, No. 1920, 16 October 2008, p. 1
Discussion of Valuation of Control Premium.
Donald N. Cherniawsky, "Further Comments on Revenue Canada's Approach to Exclusionary Dividend Shares: The Shepp case", Business Vehicles, Vol. V, No. 2, 1999, p. 238.
D.M. Chernawsky, "Revenue Canada Issues Valuation, on Exclusionary Dividend Shares", Business Vehicles, Vol. IV, No. 4, 1998, p. 210.
Wolfe D. Goodman, "American Family Limited Partnerships as an Estate Planning Tool?", Goodman on Estate Planning, Vol. VI, No. 3, 1997, p. 454
His answer is that they continue to have a value equal to their redemption amount if the holder continues to control the company through another...
Sutherland, "The Valuation for Tax Purposes of Controlling Holdings of Unquoted Shares", British Tax Review, 1996, No. 4, p. 397.
Dorner, "Reality Check", CA Magazine, August 1995, p. 54
In the author's experience, small private businesses typically sell for a purchase price between 3.2 and 3.7 times adjusted earnings.
Bradley, "Forward Participation Shares - Emerging Income Tax Issues", 1991 Conference Report, p. 8:2.
Wise, "The Valuation of Preferred Shares Issued on a Section 85 Rollover", 1984 Canadian Tax Journal, March-April, p. 239.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 85 - Subsection 85(1) | 0 |