Words and Phrases - "disposition"
17 February 2016 External T.I. 2015-0608261E5 - Splitting of a Multiple Life Insurance Policy
Respecting the exercise by a policyholder of a contractual right to split a universal life insurance policy covering two lives into two policies, CRA indicated that whether there was a disposition on general principles (before looking at s. 148(10)(d)) turned on whether “the changes that are made to the terms of the policy…are so fundamental as to go to the root of the policy.”
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 148 - Subsection 148(10) - Paragraph 148(10)(d) | s. 148(10)(d) does not apply to the exercise of a right to split an insurance policy | 256 |
Buccini v. Canada, 2000 DTC 6685 (FCA)
Following the amalgamation of the taxpayer's employer with other Canadian subsidiaries of the U.S. parent, the taxpayer executed a settlement agreement with the Canadian employer in which he acknowledged that a payment of $83,900 was in full settlement of all claims arising from his employer's unilateral termination of the employee stock option agreement between the taxpayer and the employer. In finding that this sum was a tax-free receipt, and in reversing a finding of the Tax Court Judge that it represented the value of consideration from a disposition pursuant to s. 7(1)(b), Malone J.A. stated that "a 'disposition' under paragraph 7(1)(b) refers to a transaction in which the taxpayer voluntarily agrees to exchange property rights that have accrued under an employee stock option agreement for some other consideration", and noted here that instead there had been a unilateral repudiation of the taxpayer's rights under the option agreement by the employer, and that such unilateral conduct constituted a fundamental breach of the contract that terminated it as of that date.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 6 - Subsection 6(1) - Paragraph 6(1)(a) | 95 |
The Queen v. Golden et al., 86 DTC 6138, [1986] 1 CTC 274, [1986] 1 S.C.R. 209
The phrase "the disposition of any property" means the sale of a particular item or items of property and "the expression 'something else' must be given the widest meaning reasonably assignable, which would include different items and classes of property as well as the rarer class of non-property." The court accordingly rejected the taxpayers' argument that s. 68 could not apply to re-allocate an aggregate consideration of $5,850,000 among various classes of property including land, building and equipment which the taxpayers sold. However, the taxpayers' allocation of $5,100,000 to land and $750,000 to depreciable property was determined to be reasonable.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 248 - Subsection 248(1) - Property | "property" includes a contract right, or potentially covenant to deliver knowhow | 78 |
| Tax Topics - Statutory Interpretation - Context | 27 |
The Queen v. Harvey, 83 DTC 5098, [1983] CTC 63 (FCTD)
The taxpayer was found to have disposed of his stock option rights to a corporation for purposes of s. 7(1)(b) when he agreed to surrender them for a stipulated sum, notwithstanding that the stock option right did not survive such surrender by him.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 7 - Subsection 7(1) - Paragraph 7(1)(b) | 94 |
In re Barne Crown Ltd., [1995] 1 WLR 147 (Ch. D.)
The Court found that in collecting payment upon a cheque from a third party, no disposition of the property of the customer takes place in favour of the bank if the account is already in credit. Accordingly, when the bank credits the customer's account with the amount of the cheque, there is no disposition of the customer's property for purposes of s. 127 of the Insolvency Act (U.K.) which provides):
"In winding-up by the court, any disposition of the company's property ... made after the commencement of the winding-up is, unless the court otherwise orders, void."
Judge Rich Q.C. stated (p. 152) that in "ordinary English usage ... a disposition connotes the transfer or alienation of an asset not its mere conversion into a different form which is nonetheless as much within the control of the owner".
Quincaillerie Laberge Inc. v. The Queen, 95 DTC 155 (TCC)
A payment of $575,000 to the taxpayer by a debtor in default in consideration for an extension of the due date of the loan and the taxpayer's agreement to waive its current rights to take action on the loan, did not represent proceeds of disposition of property. Under the Quebec Civil Code, the obligation was not extinguished, but rather amended as to its term. Garon TCJ. noted (at p. 162) that the definition of "disposition" in what now is s. 248(1) "shows that a 'disposition of property' under this section entails a fundamental transfer of an interest in a property through the use of the words 'redeemed', 'canceled' and 'settled'" and that "the concept of 'disposition of property' does not seem to me more comprehensive or more extensive than that pertaining to the disposition of an interest [for purposes of the Civil Code]".
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(x) | amount received for loan extension | 156 |
Hewlett Packard (Canada) Ltd. v. Canada, 2004 DTC 6498, 2004 FCA 240
The taxpayer (who had an October 31 fiscal year end) followed a practice of purchasing a new fleet of cars from Ford to replace the fleet which it had acquired the previous year. The process of exchanging the cars was initiated and completed within the month of October but the intent of the parties was that title to the old fleet would remain with the taxpayer until November 15, at which point payment by Ford for the old fleet would be effected by way of set-off against the amount payable by the taxpayer for the new fleet.
Noël J.A. found that for purposes of the Act there is no "disposition" (and no acquisition) unless there is a change in the beneficial ownership of the subject property. With respect to a sale transaction, Parliament had specified in s. 13(21)(a) the entitlement which gives rise to a disposition, namely, to the sale price; and the terms "sale price of property that has been sold" are presumed to bear their legal meaning. Accordingly, the old fleet had not been disposed of at year end.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Statutory Interpretation - Provincial Law | 89 |
Olympia and York Developments Ltd. v. The Queen, 80 DTC 6184, [1980] CTC 265 (FCTD)
It was held that since the taxpayer, by executing an agreement respecting the ultimate sale by it of apartment buildings, had "completely divested itself of all of the duties, responsibilities and charges of ownership and also all of the profits, benefits and incidents of ownership, except the legal title," the taxpayer had thereby disposed of the buildings.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 9 - Timing | 78 |
Borstad Welding Supplies (1972) Ltd. v. The Queen, 93 DTC 5457, [1993] 2 CTC 266 (FCTD)
In connection with the sale of the taxpayer's business to an arm's length corporation, it was agreed that refillable cylinders would be rented by the taxpayer to the purchaser at, what was found on the evidence to be, a market rate of rent, and that over the subsequent five years, 1/5 of the cylinders would be purchased each year by the purchaser for a stipulated amount.
In accepting the form of the rental agreement, and rejecting the position of the Crown that the taxpayer had disposed of the cylinders on the date of entering into the sale agreement, Reed, J. indicated that the jurisprudence only found there to be a disposition or acquisition of depreciable property, in circumstances where title had not passed, where all the incidents of title had passed except those retained for the purpose of securing payment of the balance of the purchase price. Here, it was the evident intention of the parties that there be an agreement for the rental of the cylinders until such time as they were purchased, and that there is no question of property in the cylinders being retained as security for payment of the purchase price.