Words and Phrases - "contribution of capital"

The individuals Shareholders of the Corporation incur capital expenditures respecting its Building. In indicating that there generally was an increase to the ACB of their shares, the Directorate stated:

[A] transaction that otherwise increases the capital of a corporation without any consideration being given by the corporation in respect of that increase may result in a contribution of capital … . For example, a contribution of capital occurs where a shareholder has fully paid for shares with no par value and subsequently agrees to make an additional contribution to the corporation (e.g., to remove a deficit or to provide funds for expansion, without the issuance of any additional shares). However, paragraph 53(1)(c) will apply only where a contribution of capital to a corporation by a taxpayer holding shares of the capital stock of the corporation results in an increase in the fair market value of the shares of the capital stock held by the taxpayer. …

[Here] the capital expenditures incurred by the Shareholders with respect to the Building constitute a contribution of capital to the Corporation. Accordingly, to the extent that such contribution would result in an increase in the fair market value of the shares held by the Shareholders in the Corporation, we would be of the view that paragraph 53(1)(c) would apply to provide for an increase in the ACB of such shares.­­­­­­­­­­­­­­­­­­­­­