A corporation, whose deadline for filing an s. 85(1) election was the last day of February (February 28), did not file the election until March 28 (or 31) of the next month. Based on 26 March 1986 RCT 85-243 which, after referring to the Interpretation Act, stated that “[in] calculat[ing] from a particular date a month is that period of time from that date to the day before the same date in the next month on the calendar”, the number of “each month or part of a month” from February 28 to the March 28 (or 31) filing date for purposes of computing the s. 85(8) penalty would be two, i.e., the period to March 27 would constitute one complete month, and the period consisting of March 28 (or March 28 to March 31) would be a part of a month.
CRA indicated that the above approach did not represent its current practice, and the penalty would be based on there only being one penalty month. After referring to ss. 85(6) and 85(8), it stated:
[T]he analysis of the provisions listed above favours an interpretation whereby the calculation of the number of "each month or a part of a month" in the period must exclude the date on which the election must be made, but include the date on which the election is made.
Thus, where an election must be made no later than the last day of a particular calendar month, the month in question ends on the last day of the subsequent calendar month. It follows that in the situation submitted, the late election made on March 28, 29, 30 or 31, 202X+1 will result in a penalty equivalent to only one "month or part of a month".
