# Cash-in-lieu tax treatment



## leeder (Jan 28, 2012)

When Agrium and Potash merged into Nutrien, I got some cash-in-lieu. How do I treat this amount on the tax return?


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## leeder (Jan 28, 2012)

Can anyone help me with this question on cash-in-lieu on fractional shares?


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## AltaRed (Jun 8, 2009)

What did the proxy material say at the time? It may just be an ACB reduction on your remaining shares with no immediate tax consequences.


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## humble_pie (Jun 7, 2009)

AltaRed said:


> What did the proxy material say at the time? It may just be an ACB reduction on your remaining shares with no immediate tax consequences.




imho cash in lieu resulting from a capital reorg should be a taxable capital gain or loss, since it is the product of a capital disposition

even if the rest of the shares in a merger reorg carry on with their original tax base & no taxation consequences at time of reorg, nevertheless that tiny cash in lieu for a leftover partial share is an actual real-life taxable disposition

i do not think the tax authorities will be straining at the gate to find these tiny gain/losses though


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## AltaRed (Jun 8, 2009)

Or it might be Return of Capital, i.e. not taxable at the time, but a cap gains in the future. There would have been shareholder materials at the time that should have spoken of likely income tax treatment.


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## humble_pie (Jun 7, 2009)

AltaRed said:


> Or it might be Return of Capital, i.e. not taxable at the time, but a cap gains in the future. There would have been shareholder materials at the time that should have spoken of likely income tax treatment.



you're right. Nobody ever reads those documents but the OP should have read the documents

ps. _what. do. you. think. might. happen. if. he. doesn't. declare. the. cash. in. lieu._


PPS brainstorm ... if it were really a ROC this would show as an adjustment to broker's ACB (or book value or whatever they're calling it)

all the more reason to say it's a tiny little capital gain or loss or maybe it was just a gift from the great spirit


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## AltaRed (Jun 8, 2009)

I agree it could be anything and whether the broker adjusts or not, we will have to have the OP comment on that. 

I won't be doing anything other than a ROC assumption with ACB reduction.... with the cash-in-lieu I got for the fractional share of TRI, unless BMO IL issues a T5008 or a tax slip saying otherwise. 

In the specific TRI case, the ~9% of actual shares purchased back were specified by TRI as a 'return of capital' via a reverse split, and BMO IL reduced the book value accordingly.


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