| 19(1) | 5-9757 |
| G. Arsenault | |
| (613) 957-2126 |
July 18, 1990
Dear Sir:
This is in reply to your letter dated March 2, 1990 respecting the determination of the fair market value of options.
We are not entirely certain as to whether we understand your questions. However, we can confirm that the fair market value of an option at any particular time is a question of fact which will depend upon all of the circumstances in each case.
Generally, the term "fair market value" is understood to mean the highest price available in an open and unrestricted market between informed, prudent parties acting at arm's length and under no compulsion to act, expressed in terms of money or money's worth.
The word "market" in the term "fair market value" is not a reference to any particular specific market, e.g. it is not meant as a reference to a particular public exchange.
The price at which similar or identical property has traded on a public exchange is generally evidence that is relevant in the determination of fair market value. However, such evidence is not necessarily determinative, especially where the transactions on the particular exchange are small and/or isolated.
We hope the foregoing is of assistance to you.
Yours truly,
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch