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I believe the exchange of CMM for WTG shares is a taxable event. CRA has not given me a definitive answer but after discussing the issue with CRA and reading about it the key point in my determination is that WTG is NOT a Canadian corporation. WTG is incorporated in the British Virgin Islands. According to the CRA a share for share exchange, as defined in the Canadian Income Tax Act, states that for a "rollover" (non-taxable event) to occur the acquiring company must be a Canadian company. If you look at the Corporate structure of WTG you will see that CMM is a Canadian company owned by WTG, and that is no doubt where the "Exchangeable" shares sit. If you got WTG shares you got a British Virgin Island's company.
This really sucks for me as I have a Capital Gain. Someone, anyone, please prove me wrong as I'm headed for a large tax bill.
Quote: "In order for the conditions in subsection 85.1(1) to be satisfied, the purchaser must be a Canadian corporation"
http://www.cra-arc.gc.ca/E/pub/tp/it450r/it450r-e.html
http://www.whitetigergold.com/site/corporate/corpStructure.php
I also called CRA and they told me that if the transaction in your brokerage account is marked as a "disposition" and you have a gain then you will have to report a capital gain. I explained my position as I have a disposition and an acquisition at the same moment and for the same price to which he said CRA MAY make a concession for the transaction because there was no actual sale. He gave me an email address and told me to explain my situation and CRA may permit shareholders to defer taxes until an actual sale is made. I've written to them already and will report back once I hear what they have to say.
http://www.theajmonline.com.au/mining_news/news/2009/may-june/resources-sector-at-risk-of-fraud-in-current-environment-kpmg
Resources sector at risk of fraud in current environment: KPMG
The resources sector may now be exposed to higher levels of fraudulent incidents involving the theft of funds and physical assets, according to KPMG.
The 2008 KPMG Fraud Survey revealed that the most common type of fraud suffered by respondents last year in this sector was theft of funds (57 per cent), followed by theft of physical assets (30 per cent). Other schemes such as false invoicing (15 per cent) and theft of plant and equipment (15 per cent) were also prominent in the resources sector.
Commenting on the results Matt Fehon, KPMG forensic partner said the survey confirmed that because there is a large volume of funds flowing through the sector and large quantities of physical assets that it is a common target for fraudsters. He added that this was likely to increase in the current environment of contract withdrawals reductions, cost pressures and decreased performance for some companies.
The rates of these types of fraud upon organisations in this sector were all proportionally higher than those recorded in the other industry groups. Of the ENR respondents to the survey, the average loss per organisation was $33,000.
“These figures are concerning. Whilst they are not of the magnitude reported in the financial services sector, which is expected, the expansion in the resources sector during the survey period (Feb 2006-Jan 2008) reflects the difficulty organisations have in maintaining effective internal controls and effective oversight of remote locations,” said Fehon.
Although the levels of fraud are high in the resource sector, the survey revealed that in detecting fraud, the sector is more successful because of the use of internal controls. This reflects the positive measures taken to mitigate the risk of fraud and the importance of having effective reporting mechanisms in place.
The survey revealed that approximately half of respondents from all sectors suffered at least one fraud during the survey period, which was also consistent with the reported incidents by organisations in the resources sector.
The survey showed that 80 per cent of fraud in the resources sector was committed by internal parties. The most common motivator for incidences of fraud was greed, which was ranked as a more common motivator than gambling which was reported as the main motivator for many other sectors.
Increased cost pressures will increase the risk of fraud occurring, and potentially for higher sums to be defrauded. In the current environment there are increased risks of theft of confidential information, intellectual property, plant and equipment, as well as financial misstatement, due to variety of reasons including disgruntled or opportunistic employees.
“In order to protect against the risk of fraud organisations need to check that their internal controls, fraud risk management and reporting strategies are robust. Too often the phase ‘prevention is better than the cure’ has been ignored during boom times. The effects now on a company can be catastrophic.” he said.
An electronic copy of the KMPG Fraud Survey 2008 can be obtained from www.kpmg.com.au
"Guys, I will do anything to stop this. Even if it means I have to sacrifice the money I invested in CMM. It's not about the money anymore, it's become a matter of principle now!"
I feel exactly the same way.
If the CSC is short of cash I'm willing to make another donation, perhaps other's would make one, too. I'd hate to see this die now because of a lack of cash. At this point the way I look at it is this, "what's a few more bucks."