Subsection 49(1) - Granting of options
See Also
CIR v. Scottish Provident Institution, [2004] UKHL 52
The Special Commissioners concluded that under an arrangement whereby the respondent ("SPI") granted an option to Citibank International PLC...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Ownership | commercially realistic prospect of put and call not being exercised | 161 |
Mitsui & Co. (Canada) Ltd. v. Royal Bank of Canada, [1995] 2 S.C.R. 187
Before finding that a clause in a lease giving the lessee the unilateral right to compel the lessor to sell helicopters to the lessee at their...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(3) | 143 |
Kopec v. Pyret, [1987] 3 WWR 449 (Sask. C.A.)
A right of first refusal contained in a lease was not an option. An option gives to the optionee at the time it is granted a right which he may...
Canadian Long Island Petroleums Ltd. et al. v. Irving Industries Ltd., [1974] 6 WWR 385, [1975] 2 S.C.R. 715
A right of first refusal, unlike an option, is only a personal right rather than an interest in land, and therefore is not subject to the rule...
Administrative Policy
13 September 2007 External T.I. 2007-0251081E5 F - Transactions d'options d'achat d'actions
In order to effectively convert an otherwise-expiring non-capital loss to a net capital loss, a CCPC (Aco) sells covered options (Options #1) on...
22 January 2020 External T.I. 2014-0559281E5 F - T5008
Respecting the application of s. 49(1) to the writing and sale on an exchange of a naked call option and the reporting of the “cost” of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 40 - Subsection 40(1) - Paragraph 40(1)(a) - Subparagraph 40(1)(a)(i) | option writer can deduct its expenses from deemed s. 49(1) proceeds | 125 |
| Tax Topics - Income Tax Regulations - Regulation 230 - Subsection 230(2) | “cost” of call options closed out by writer is nil, not the cost of offsetting call option purchase/cost re short sale is the FMV of the borrowed shares | 351 |
| Tax Topics - Income Tax Act - Section 9 - Computation of Profit | cost of short sale is FMV of borrowed shares | 59 |
18 July 2011 External T.I. 2010-0370561E5 F - Location avec option d'achat
Where there is a real estate lease with a purchase option, is the landlord deemed to have disposed of the option when granting it, and is a...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Substance | lease is a lease in the absence of sham | 92 |
| Tax Topics - Income Tax Act - Section 68 | where lease is coupled with bargain purchase option, a portion of the rents must be allocated to option proceeds | 147 |
Income Tax Technical News No. 44 13 April 2011 [archived]
CRA stated:
[W]hen a holder of an exchangeable debenture exercises the right to exchange the debenture for the target shares, the holder would...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 111 - Subsection 111(1) - Paragraph 111(1)(a) | inter-provincial loss shifting | 69 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(e) | exchangeable debenture appreciation not recognized | 102 |
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(f) | exchangeable debenture appreciation not recognized | 120 |
| Tax Topics - Income Tax Act - Section 69 - Subsection 69(1) - Paragraph 69(1)(c) | FMV basis in contributed property | 72 |
| Tax Topics - Treaties - Income Tax Conventions - Article 10 | use of s.à r.l. | 131 |
21 December 2006 External T.I. 2006-0170851E5 F - Option d'achat de biens immeubles
Where the owner of a farm granted an option for consideration to sell his farm in 2005 and received a further sum in 2006 to extend the option,...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(4) | refiling when option exercise in subsequent year | 83 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) | recapture of depreciation previously claimed for farm was farming income | 21 |
4 April 2005 External T.I. 2004-0099411E5 F - Transfert de contrat de crédit-bail
CRA noted its position that where a lease had a bargain purchase option, a portion of each lease payment was to be treated as allocable to...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 68 | purchase price for lease with bargain purchase option likely to be allocated to the embedded option | 178 |
2004 APFF Roundtable Q. 13, 2004-008699
Discussion of CRA position that where a lease contains a bargain purchase option, a portion of each rent payment may be considered to be a payment...
92 C.R. - Q.51
Warrants issued in connection with a "poison pill" arrangement are a form of option and, therefore, are subject to the usual option rules.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 15 - Subsection 15(1) | 38 | |
| Tax Topics - Income Tax Regulations - Regulation 4900 - Subsection 4900(1) - Paragraph 4900(1)(e) | 53 |
IT-96R5 "Options Granted by Corporations to Acquire Shares, Bonds or Debentures" under "Shareholder Benefit"
Articles
Jack Bernstein, "Canadian Tax Treatment of Index Participation Units and Exchange Traded Index Derivates", 35 Tax Notes International, 20 September 2004, p. 1107.
Watkins, "Equity Exchangeable Debentures and Appreciation Rights", 1993 Conference Report, C. 20; and Kingissepp, "Summaries of Corporate Finance Panel Discussion", 1993 Conference Report, C. 21
Discussion of whether s. 49 applied to an offering of "appreciation rights" by Canadian Pacific.
Paragraph 49(1)(a)
Administrative Policy
17 April 2007 External T.I. 2007-0230381E5 F - Option d'achat de biens immeubles
CRA indicated that where an option was granted on a farm consisting of a principal residence and the farmland:
[T]he portion of the consideration...
Subsection 49(2) - Expired option — shares
See Also
Garner v. Pounds Shipowners and Shipbreakers Ltd., [1997] BTC 223 (Ch. D.)
The taxpayer received £399,750 for granting an option to buy land at a sale price of over £4M, but subject to a condition that the taxpayer was...
Subsection 49(3) - Where option to acquire exercised
Cases
Salt v. The Queen, 84 DTC 6395, [1984] CTC 414 (FCTD)
It was argued by a taxpayer who had granted an option to purchase his land that the Act included no provision permitting the taxation of payments...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - General Concepts - Fair Market Value - Land | 45 | |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(c) | 112 | |
| Tax Topics - Income Tax Act - Section 68 | 55 |
See Also
Mitsui & Co. (Canada) Ltd. v. Royal Bank of Canada, [1995] 2 S.C.R. 187
Major J. noted, with respect to a clause in a lease that gave the lessee the unilateral right to compel the lessor to sell helicopters to the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | 106 |
Administrative Policy
10 October 2024 APFF Roundtable Q. 9, 2024-1028901C6 F - Exercice d’une option d’achat et vente du véhicule
An individual, after having paid $12,500 in lease expenses during the first 48 months of an automobile lease, exercises the option under the lease...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) | vehicle lease payments converted into recapture on option exercise and vehicle sale | 116 |
17 February 2021 External T.I. 2018-0768051E5 F - Contrat de crédit-bail
Regarding a lease to “Aco” of a truck tractor (the “Vehicle”) with a term of 48 months and a bargain purchase option at maturity, CRA...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 20 - Subsection 20(1) - Paragraph 20(1)(c) - Subparagraph 20(1)(c)(ii) | leasing contract cannot be recharacterized as a secured loan funding an acquisition of depreciable property | 246 |
| Tax Topics - Income Tax Act - Section 68 | lease payments for vehicle lease with bargain purchase option are allocated between ACB of option and deductible lease payments | 301 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(5.2) | acquisition of leased vehicle pursuant to bargain purchase option followed by sale of vehicle could engage s. 13(5.2) | 131 |
| Tax Topics - Income Tax Act - Section 16.1 - Subsection 16.1(1) | truck tractor is prescribed property | 26 |
| Tax Topics - General Concepts - Substance | lease payments, but not the lease itself, could be recharacterized | 93 |
25 April 2005 Internal T.I. 2004-0108301I7 F - Coût d'une automobile
The cost (for purposes of C of the standby charge formula under s. 6(2)) of an automobile acquired by the employer at the end of its lease...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(2) - Element C | cost of automobile acquired pursuant to exercise of bargain purchase option increased under s. 49(3) by portion of each preceding lease payment treated as an option premium | 154 |
2003 Ruling 2003-0028033 - LEASE-BARGAIN PURCHASE OPTION
A lease is amended to add an option to purchase and to increase the annual lease payment by an amount that would be in excess of the fair market...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(28) | 159 |
28 November 2001 Internal T.I. 2001-0091247 - Employer Stock Opt. & Section 116116(5)
S.49(3) did not apply to deem the exercise of employee stock options held by a non-resident former employee to not be a disposition of the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 116 - Subsection 116(5) | no acquisition of property by the obligor corporation when its debt repaid or employee stock option exercised | 131 |
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Disposition | 131 |
6 September 1994 External T.I. 9419865 - ARE SPECIAL WARRANTS FLOW-THROUGH SHARES?
Special warrants to acquire shares that if not exercised prior to the specified expiry time are deemed to be exercised at that time without any...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 66 - Subsection 66(15) - Flow-Through Share | 26 |
IT-96R5 "Options Granted by Corporations to Acquire Shares, Bonds or Debentures" under "Shareholder Benefit"
Articles
Will House, Janes Painter, "Granting an Option to Acquire an Interest in a Partnership", Canadian Tax Focus, Vol. 12, No. 3, August 2022, p. 8
Consequences of grant of option to acquire partnership interest (p. 8)
- A and B formed Partnership, each contributing $100. Partnership then...
Subsection 49(4)
Administrative Policy
21 December 2006 External T.I. 2006-0170851E5 F - Option d'achat de biens immeubles
Regarding where the owner of a farm (the correspondent’s father) granted an option for consideration to sell his farm in 2005 (resulting in the...
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 49 - Subsection 49(1) | capital gain when amount received for extending an option | 52 |
| Tax Topics - Income Tax Act - Section 13 - Subsection 13(1) | recapture of depreciation previously claimed for farm was farming income | 21 |