11 January 2001 Internal T.I. 2000-0037167 F - CLAUSE D'AJUSTEMENT DE PRIX -- summary under Adjusted Cost Base

The vendor agreed in the share sale agreement to indemnify the purchaser for any loss suffered after the purchase of the shares in respect of a specified matter arising before the sale. In applying IT-365R2, para. 9 to reduce the ACB to the purchaser of its shares by the amount of the damages received pursuant to this clause, CCRA indicated that this payment was a capital payment linked to the acquisition of the shares of the corporations concerned and was primarily intended to protect the purchaser against any loss of value. It was essentially a mechanism for adjusting the price paid for such shares and should therefore reduce the cost of those shares to the purchaser.