Words and Phrases - "sale price"
23 March 2011 Internal T.I. 2010-0389081I7 F - Disposition of a resource property
The Vendor sold a percentage interest in mineral claims (the “Mining Properties”) for consideration including deferred cash payments and shares to be issued by the public-company Purchaser, in each case, to be paid or issued over a four-year period.
After noting that a Dictionary definition of “sale price” included “Amount paid for a thing purchased,” the Directorate indicated that the full amount of the deferred cash payments (rather than discounted amounts) should be included in the Vendor’s proceeds of disposition under F in the definition of CCDE in s. 66.2(5). Turning to the deferred share issuance consideration, the Directorate noted that the shares’ market price could “fluctuate greatly,” and indicated that the TSO accordingly might:
conclude that such portion of the proceeds of disposition for the Mining Properties by the Vendor is not determinable prior to the date of issuance of the shares by the Purchaser and that such portion of the proceeds of disposition would be recognized for tax purposes at the times of their issuance … .
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Act - Section 66.2 - Subsection 66.2(5) - cumulative Canadian development expense - Element F | proceeds from mineral claims sale included undiscounted deferred cash proceeds, but might exclude share consideration until issued; purchaser’s CEE obligation excluded | 390 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(g) | deferred share consideration potentially not recognized until issuance | 103 |
| Tax Topics - Income Tax Act - Section 12 - Subsection 12(1) - Paragraph 12(1)(b) | full undiscounted amount of future cash consideration to be included as an amount receivable | 209 |
Avril Holdings Ltd. v. Minister of National Revenue, 70 DTC 6366, [1970] CTC 572, [1971] S.C.R. 601
In rejecting an argument that recapture of depreciation should be reduced to reflect the fair market value of debentures received in consideration for the depreciable property being lower than their principal amount, Pigeon J. noted that s. 20(5)(c) of the pre-1972 Act deemed proceeds of disposition of the property to include the sale price, which was equal to the principal amount of the debentures.
| Locations of other summaries | Wordcount | |
|---|---|---|
| Tax Topics - Income Tax Regulations - Schedules - Schedule V | 69 | |
| Tax Topics - Income Tax Act - Section 54 - Proceeds of Disposition - Paragraph (a) | proceeds of disposition based on face amount rather than FMV of debentures received therefor | 66 |