TERMINAL NORCO INC.,
HER MAJESTY THE QUEEN,
REASONS FOR JUDGMENT
 This is an appeal of a reassessment of the Appellant's taxation year ending June 30, 1993, by which the Minister of National Revenue (the "Minister") added $664,593 of recaptured capital cost allowance ("recapture") to the Appellant's income in respect of the disposition by the Appellant of all of its depreciable property to another corporation, Terminal Norcan Inc., during that year.
 In reassessing the Appellant, the Minister assumed that the Appellant controlled Terminal Norcan immediately after the disposition and therefore that the Appellant was prevented by paragraph 85(5.1)(e) of the Income Tax Act (the "Act") from realizing terminal losses on the disposition of any of the depreciable property which would have offset the additional recapture.
 The Appellant takes the position that it did not control Terminal Norcan immediately after the disposition, and therefore that paragraph 85(5.1)(e) is not applicable.
 In the alternative, the Appellant contends that it is entitled to amend its tax return for the year in issue so that it may take advantage of the election provided for in subsection 1103(1) of the Income Tax Regulations (the "Regulations"). That election would eliminate the increase in recapture.
 During the relevant period, the Appellant was a wholly-owned subsidiary of Norco-Calex Ltd. Norco-Calex and its subsidiaries (referred to at the hearing as "the Norco-Calex Group") imported and sold petroleum products. The Group's wholesale operations, which were the subject of the transactions giving rise to this appeal, were carried on partly through the Appellant, which owned and operated a terminal and storage facility for petroleum products, and partly through Les Pétroles Calex Ltée and Calex Inc. The Appellant's terminal and storage facility consisted of land as well as depreciable property such as storage tanks, pipelines, buildings and miscellaneous equipment.
 Saul Abracen owned the majority of the shares of Norco-Calex Ltd. and, along with his son, Jonathan Abracen, and a long-time employee, Marcel Bergeron, managed the operations of the Norco-Calex Group. Jonathan Abracen and Marcel Bergeron were also minority shareholders of Norco-Calex Ltd.
 In July of 1992, Saul Abracen offered to sell the wholesale operations of the Norco-Calex Group to Marcel Bergeron, who proceeded to assemble a group of investors ("the Consortium") to carry out the purchase.
 In a letter of intent to Norco-Calex dated August 6, 1992, the Consortium set out its intention to purchase the wholesale operations for $4.75 million. The bulk of the purchase price - $4.55 million - was allocated to the purchase of the Appellant's assets (the "Assets"). The remainder of the purchase price was split between the assets of Calex Inc. and the assets of Les Pétroles Calex Ltée. Cash of $4.5 million was to be payable on closing with the balance of $250,000 payable over three years.
 On August 10, 1992, Norco-Calex indicated its interest in the proposal by executing the letter of intent and returning it to the Consortium along with a letter from its lawyer, David Sohmer, of Spiegel Sohmer. The letter added certain conditions and stated that the letter of intent did not constitute a binding agreement but rather set forth the parameters within which the parties intended to negotiate.
According to the letter of intent, the Consortium planned to acquire the Assets through a new company to be named "Terminal Norcan". It was agreed that Marcel Bergeron would arrange for the incorporation of Terminal Norcan and that the Appellant would initially own all of its shares. The Appellant was to transfer the Assets to Terminal Norcan at fair market value, free of encumbrances, and then transfer the shares of Terminal Norcan to another new company set up by the Consortium.
Terminal Norcan was incorporated on August 19, 1992, with the Appellant as its sole shareholder, and Saul Abracen, Jonathan Abracen and Marcel Bergeron as its directors.
According to the evidence, the principal reason that Terminal Norcan was incorporated was to permit the Consortium to obtain all of the necessary operating permits and licences for the terminal prior to its acquisition. The Consortium would then be in a position to operate the terminal as soon as it acquired the shares of Terminal Norcan from the Appellant. According to Marcel Bergeron, the Consortium could not afford to acquire the terminal and then apply for the permits, because this would have resulted in months of delay.
The Consortium wished to have the Appellant own the shares of Terminal Norcan at the outset, in order to speed up the process of getting the permits. David Sohmer testified that the Consortium felt that if the transfer of the terminal was to a subsidiary of the Appellant rather than to an unrelated party, it would be easier to obtain the necessary environmental permits.
Another reason that the Consortium wanted Terminal Norcan to be owned initially by the Appellant was to allow the Consortium to avoid paying mutation tax, which was imposed on the transfer of real property and payable by the purchaser. Under the mutation tax legislation, a transfer of land from a parent corporation to its wholly-owned subsidiary was exempt.
The closing date for the transactions was originally set for September 10, 1992, but was rescheduled a number of times, in part to give Marcel Bergeron time to arrange for the environmental permits. The Consortium was hoping to get permission from the Quebec Ministry of the Environment ("MENVQ") for Terminal Norcan to temporarily operate the terminal without the certificate of authorization required under section 22 of the Quebec Environment Quality Act ("QEQA"). The Appellant was not required to have this certificate because it had acquired the terminal before the QEQA came into force and its activities were grandfathered under the legislation. Both Norco-Calex and the Consortium wished to avoid having to have Terminal Norcan apply for the certificate before the transfer of the terminal took place, because the process for obtaining the certificate was time-consuming and could have led to costly clean-up orders being made against the Appellant.
The closing was also delayed because the Consortium had difficulties raising the purchase money. In mid-September of 1992, it advised Norco-Calex that it would be unable to pay the full amount of $4.5 million required on closing. Norco-Calex then agreed to a reduced cash payment of $3.75 million on closing, with the balance of $1 million payable over sixty months and secured by a debenture, and a mortgage against the terminal land.
On October 9, 1992, MENVQ advised Terminal Norcan that it would be permitted to operate without a section 22 certificate after the transfer of the terminal, provided that it applied for one by December of 1992. Once this notice was received, the closing was scheduled for October 13 and 14, 1992.
The sale of the Assets to Terminal Norcan was scheduled to close on October 13. The closing of the sale of the shares of Terminal Norcan to the Consortium's new company, Groupe Pétroles Norcan Inc. ("GPN"), and the sale of the assets of Pétroles Calex and Calex Inc., were both scheduled for October 14. According to Janice Naymark, the corporate lawyer from Spiegel Sohmer who worked on the deal for the Norco-Calex Group, the sale of the Assets was done prior to the shares of Terminal Norcan being sold, so that the Appellant would have time to register its security for the $1 million debenture given by Terminal Norcan.
The closing agenda and binders were prepared by McMaster Meighen, the lawyers acting for the Consortium. The following wording appeared on the cover page of the closing agenda:
ALL TRANSACTIONS FORMING PART OF THE CLOSING ARE DEEMED TO BE INTERDEPENDENT AND NO TRANSACTION, DELIVERY OF DOCUMENTS OR OTHER ACTION SHALL BE DEEMED TO HAVE BEEN COMPLETED UNTIL ALL SUCH TRANSACTIONS, DELIVERIES AND ACTIONS HAVE BEEN COMPLETED.
The closing binders contained all of the agreements and related documents that were to be executed on October 13 and 14, 1992.
The first part of the closing took place on October 13, 1992, as planned. Saul Abracen, on behalf of both the Appellant and Terminal Norcan, executed the Asset Purchase Agreement and the Deed of Sale transferring the Assets to Terminal Norcan for consideration in the amount of $4,641,500, paid by two promissory notes for $3,641,500 and $1 million. The related resolutions of the shareholder and director of the Appellant authorizing the sale were also signed by Saul Abracen, and the related shareholders' and directors' resolutions for Terminal Norcan authorizing the purchase were signed by Saul and Jonathan Abracen and Marcel Bergeron. Marcel Bergeron, as an authorized director of Terminal Norcan, signed the two promissory notes, and the debenture, and the mortgage for $1 million. The Deed of Sale and the mortgage were also notarized on October 13, 1992.
On the afternoon of October 13, 1992, the Consortium's lawyers advised Spiegel Sohmer that the funds necessary to close were not available and that the second part of the closing could not proceed on October 14, 1992. Apparently, one of the members of the Consortium had second thoughts about participating in the deal. Without his contribution of funds, the purchase could not be completed. Marcel Bergeron asked for, and was given, a short extension of time to resolve the problem, and was able to convince the member to proceed. The money necessary to complete the deal was paid to Spiegel Sohmer in trust on Friday, October 16, 1992. On that same day, Spiegel Sohmer registered the Deed of Sale for the Assets and the mortgage against the terminal land.
David Sohmer testified that he waited before registering the Deed of Sale and mortgage until Spiegel Sohmer received the purchase funds from the Consortium in order to ensure that the deal would go ahead. He said that if the funds had not been received by October 16, 1992, Norco-Calex would have ended the deal, and the documents signed on October 13, 1992, would have been treated as void since there was no reason to transfer the Assets to Terminal Norcan in the absence of a sale to the Consortium. Mr. Sohmer did admit, however, that there was no formal escrow agreement regarding the documents that had been executed on October 13, 1992.
The second part of the closing occurred on Monday, October 19, 1992. The Share Purchase Agreement by which the Consortium's company, GPN, acquired the shares of Terminal Norcan from the Appellant, was executed by Saul Abracen on behalf of the Appellant and Terminal Norcan, and by Marcel Bergeron on behalf of GPN.
The shareholders' and directors' resolutions required for the sale were executed, and Saul and Jonathan Abracen resigned as directors of Terminal Norcan.
The remaining agreements and related resolutions necessary to transfer the assets of Les Pétroles Calex Ltee. and Calex Inc. to companies owned by the Consortium were also executed by the parties on October 19, 1992.
The $3.75 million that had been paid in trust to Norco-Calex's lawyers on October 16, 1992, was paid out on October 19, 1992, as follows:
$3,641,500 to the Appellant to pay out the promissory note given by Terminal Norcan as partial consideration for the purchase of the terminal assets;
$100,000 to Les Pétroles Calex Ltée for its assets; and
$8,500 to Calex Inc. for its assets.
Janice Naymark gave evidence that two steps listed in the closing agenda as part of the transfer of the Assets from the Appellant to Terminal Norcan were not completed as planned on October 13, 1992. She said that the bulk sale affidavit, that was to be sworn by Saul Abracen in conjunction with the sale of the Assets to Terminal Norcan, and the delivery of the Trust Deed executed by Terminal Norcan on October 13, 1992, in respect of the $1 million debenture, were not completed until October 19, 1992.
Ms. Naymark also testified that certain wording in Schedule C to the Asset Purchase Agreement was changed on October 19, 1992. She explained that the Appellant had been unable to clear an old charge off the title to the terminal land as the holder of the charge could not be located. The debt secured by the charge had been paid off some years before by the Appellant, but the charge had not been cancelled. The Consortium required the Appellant to indemnify it for any cost it might incur in relation to the charge after the transfer and, according to Ms. Naymark, the wording of the indemnification was still not finalized when Mr. Abracen executed the Agreement on October 13, 1992. The wording was finalized between Ms. Naymark and McMaster Meighen on October 18, 1992, and the amended wording was inserted in the Asset Purchase Agreement.
Ms. Naymark also said that it was not intended that Terminal Norcan would operate the terminal until its shares were acquired by GPN, and for this reason it was not registered for sales tax and had no employer number for making employee source deductions.
Tax and financial reporting of the transactions
The Appellant's accountant, Stephen Coplan, testified that for the purposes of the Appellant's tax return and financial statements for the year ending June 30, 1993, he treated the sale of the Assets to Terminal Norcan as a sale to an arm's length party. He said that he considered the transfer of those assets to Terminal Norcan "a one second accommodation" and that "as far as we were concerned, the sale was to the third party directly".
The financial statements for the year included the following note:
7. During the year the company sold its operating assets to a non-related party. Consequently the company will have no more operations in subsequent years except for investment activities.
In preparing the Appellant's tax return, its accountant allocated the proceeds of disposition from the sale of the Assets between the land and the various items of depreciable property that had been sold. He then reduced the undepreciated capital cost ("U.C.C.") for each class of depreciable property that the Appellant disposed of by the allocated amounts, as required by subsection 13(21) of the Act. This resulted in a negative balance of U.C.C. in each class. Since there was no property left in any of the classes, the negative U.C.C. balances gave rise to a recapture of $895,626. That amount was included in the Appellant's income pursuant to subsection 13(1) of the Act.
Mr. Coplan also prepared a tax return for Terminal Norcan, showing a taxation year beginning and ending on October 19, 1992. He explained that the return was required because there had been a change of control of Terminal Norcan on October 19, 1992, which triggered a year end for tax purposes. The return showed a loss of $478 as a result of Capital Cost Allowance (CCA) being taken on the depreciable property acquired from the Appellant. Mr. Coplan said that he prepared the return on the basis that the company had no operations and carried on no business, and that the amount of CCA was automatically calculated by the software program used to prepare the return, which he did not suppress.
Audit of the Appellant
In the course of a subsequent audit of the Appellant, the Revenue Canada auditor determined that the allocation of the proceeds from the disposition of the Assets made by the Appellant, between the land and the various items of depreciable property, did not match the allocation of the proceeds agreed upon by the Appellant and Terminal Norcan in the Asset Purchase Agreement. The auditor therefore reallocated the proceeds in accordance with the Agreement. The Appellant accepts that this reallocation made by the auditor was correct.
The amount of proceeds for some items of the Appellant's depreciable property was increased and in other cases it was decreased. As a result, the auditor recalculated the U.C.C. balance at year end for each class of depreciable property to take into account the revised proceeds. For those classes of property for which the proceeds were increased, the previous negative U.C.C. balance increased as well, resulting in an increase to recapture. Where the proceeds were decreased meanwhile, the negative balance decreased as well, resulting in less recapture. In the case of three classes of property, Class 1, 2 and 17, the U.C.C. balance changed from a negative amount to a positive amount. Normally, where there is a positive balance left in a class after all the assets in that class are disposed of, the positive balance gives rise to a terminal loss for the taxpayer. However, in this case the auditor also determined that, because the Appellant controlled Terminal Norcan immediately after the transfer of the Assets, paragraph 85(5.1)(e) of the Act applied to deny the Appellant any terminal losses. The relevant portions of that provision, as applicable for the year in issue, read as follows:
(5.1) Idem. Where a person or a partnership (in this subsection referred to as the "taxpayer") has disposed of any depreciable property of a prescribed class of the taxpayer to a transferee that was
(a) a corporation that, immediately after the disposition, was controlled, directly or indirectly in any manner whatever, by the taxpayer, ...
and the fair market value of the property at the time of the disposition is less than both the cost to the taxpayer of the property and the amount (in this subsection referred to as the "proportionate amount") that is the proportion of the undepreciated capital cost to the taxpayer of all property of that class immediately before the disposition that the fair market value of the property at the time of the disposition is of the fair market value of all property of that class at the time of disposition, the following rules apply:
(e) the lesser of the cost to the taxpayer of the property and the proportionate amount in respect of the property shall be deemed to be the taxpayer's proceeds of disposition and the transferee's cost of the property;
Therefore, the overall result of the reallocation of the proceeds from the sale of the depreciable property was an increase in recapture of $664,593, which was added to the Appellant's income for its taxation year ending June 30, 1992.
On February 28, 1996, prior to the Minister issuing the reassessment in issue, the Appellant purported to make an election pursuant to subsection 1103(1) of the Regulations to include all of its depreciable property in Class 1, as of the beginning of its taxation year ending June 30, 1992. Subsection 1103(1) reads:
In respect of properties otherwise included in any of Classes 2 to 10, 11 and 12 in Schedule II, a taxpayer may elect to include in Class 1 in Schedule II all such properties acquired for the purpose of gaining or producing income from the same business.
This election would have eliminated the additional recapture by having all of the U.C.C. of the Appellant's depreciable property aggregated into one class, against which the proceeds of disposition received by the Appellant would have been deducted.
The Minister did not accept this election however, as it was not made on or before the last day on which the Appellant could file its return of income for the year, as required by subsection 1103(3) of the Regulations. It reads:
To be effective in respect of a taxation year, an election under this section must be made not later than the last day on which the taxpayer may file a return of his income for the taxation year in accordance with section 150 of the Act.
In November of 1996, subsequent to the reassessment being issued, the Appellant filed an amended tax return for the taxation year in question, in which it treated its depreciable property as having all been transferred to Class 1, as if an election under subsection 1103(1) of the Regulations had been made in time. The Minister never acted upon this amended return.
The Appellant's counsel argued that paragraph 85(5.1)(e) of the Act does not apply in the circumstances of this case because Terminal Norcan was not controlled by the Appellant immediately after it acquired the Assets from the Appellant. Counsel maintained that the sale of the Assets to Terminal Norcan occurred simultaneously with the transfer of the shares of Terminal Norcan to GPN on October 19, 1992. He stated that the transaction by which the Norco-Calex Group disposed of its wholesale operations "has to be treated as happening at one time with each element dependent on the other element and that no part of the transaction was effective until every part of the transaction was effective" and furthermore, that this was the intention of the parties.
In support of this position, counsel relied on:
(i) the wording found on the cover page of the closing agenda;
(ii) the evidence of Janice Naymark, David Sohmer and Jonathan Abracen that they were of the view that the transfer of the assets to Terminal Norcan and the sale of Terminal Norcan's shares to the purchasers were "all one thing", and that the transfer of the assets to Terminal Norcan was done solely to get the assets to the purchasers; and
(iii) the evidence of David Sohmer that the Asset Purchase Agreement would have been treated by the Appellant as ineffective, and that the Deed of Transfer and the mortgage against the terminal land would not have been registered if the Consortium had been unable to complete the deal.
Counsel also asserted that the transfer of the Assets to Terminal Norcan was legally incomplete and ineffective until the bulk sale affidavit relating to the transfer of the Assets to Terminal Norcan was sworn by Saul Abracen, the Trust Deed for the mortgage against the terminal land was delivered to the trustee and Schedule C to the Asset Purchase Agreement was amended. These steps were not completed until October 19, 1992.
Counsel relied on the decision of this Court in Lloyd v. The Queen, 2002 DTC 1493, as authority for the proposition that a taxpayer, as well as the Minister, may attack the validity of a transaction on the basis that it is legally ineffective or incomplete.
Counsel also referred to the decision of the Federal Court of Appeal in Paxton v. The Queen. In that case, the Minister reassessed the taxpayer for a gain on the sale of certain shares to a third party. The taxpayer alleged that prior to signing the agreement to sell the shares to the third party, he had entered into an oral contract to sell the same shares to his children, and was acting as their agent in the sale to the third party. The taxpayer transferred the shares to his children subject to the condition that the children transfer them to the third party the next day. The Court held that the alleged oral contract between the taxpayer and his children was ineffective because they had failed to properly document the transaction. The Court further held that the transfer of the shares to the children was not a transfer within the meaning of subsection 73(5) of the Act, as there was no transfer of the right to the use or enjoyment of the shares to the children.
Counsel appeared to draw an analogy between the transfer of the shares to the children in the Paxton case, and the transfer of the Assets by the Appellant to Terminal Norcan. Counsel argued that Terminal Norcan did not have the right to the use or enjoyment of the Assets because of the Appellant's pending sale of the shares of Terminal Norcan to the Consortium.
Counsel also argued that the obligations found in of all of the agreements between the Norco-Calex Group and the Consortium, that were completed on October 13 and 19, 1992, constituted a single "indivisible obligation" within the meaning of article 1124 of the Civil Code of Lower Canada ("CCLC") which was in force at the time. Those provisions read:
Art. 1124. An obligation is indivisible:
1. When it has for its object something which by its nature is not susceptible of division, either materially or intellectually ;
2. When although the object of the obligation is divisible by its nature, yet from the character given to it by the contract, this object becomes insusceptible not only of performance in parts but also of division.
Counsel argued that the object of the entire set of transactions in this case was to transfer the wholesale operations belonging to the Norco-Calex Group to the Consortium, and that the parties intended this obligation to be indivisible. Counsel said that there was no obligation on the Appellant to transfer the Assets to Terminal Norcan in the absence of the obligation to sell the shares of Terminal Norcan to the Consortium, and therefore that the Appellant's obligation to transfer the Assets to Terminal Norcan was indivisible from the obligation to transfer the shares of Terminal Norcan. He said that since the individual transactions making up this indivisible obligation could not be completed separately, the time of completion of the individual transactions coincided with the time of the execution of the last agreement necessary to carry out the entire obligation.
The Appellant relied on the decision of the Quebec Court of Appeal in Provigo Inc. v. 9007-7876 Québec Inc. et al.,  J.Q. no 13625 (Q.L.), in which Provigo Inc. had contracted with 9007-7876 to purchase a number of its supermarkets and a wholesale grocery business. Due to a number of circumstances, Provigo refused to complete the purchase of the wholesale business, but agreed to complete the purchase of the supermarkets. 9007-7876 brought an action against Provigo for breach of contract, alleging that Provigo's obligation to purchase the wholesale business was indivisible from its obligation to purchase the supermarkets.
According to the Court's interpretation of the contract between Provigo and 9007-7876, Provigo's obligation to purchase Aligro was indivisible from its obligation to purchase the supermarkets, and Provigo did not have the option to perform only one part of the obligation.
Counsel for the Appellant submitted that even if I found that the Appellant did control Terminal Norcan immediately after the transfer of the assets, the appeal should still be allowed because the Minister erred in not accepting the Appellant's amended return in which it reported its income on the basis that it had made an election under subsection 1103(1) of the Regulations. Counsel cited the case of Nassau Walnut Investments Inc. v. The Queen, and said that:
the jurisprudence over the years has developed that taxpayers have been allowed to file amended returns to correct errors in returns and the Courts just said, as long as it's not retroactive tax planning, as long as it's an innocent error made in good faith, the time to correct is either during an audit after the time of appeal or by filing an amended return, and that you are entitled to do this.
Counsel asserted that the Appellant's failure to file the subsection 1103 election was an innocent error and that it was therefore entitled to correct that error by filing an amended return, prior to the taxation year becoming statute-barred.
The Respondent's counsel submitted that the Appellant was attempting to recharacterize the transactions in issue on the basis of their economic effect. According to the Supreme Court of Canada in Shell Canada Ltd. v. Canada:
...this Court has never held that the economic realities of a situation can be used to recharacterize a taxpayer's bona fide legal relationships. To the contrary, we have held that, absent a specific provision of the Act to the contrary or a finding that they are a sham, the taxpayer's legal relationships must be respected in tax cases. Recharacterization is only permissible if the label attached by the taxpayer to the particular transaction does not properly reflect its actual legal effect....
Respondent's counsel said that each of the transactions, especially the one by which the Appellant transferred the assets to Terminal Norcan, must be given their legal effect, and that as a result, Terminal Norcan was controlled by the Appellant immediately after the sale.
With respect to the matter of whether the Appellant is entitled to file an amended return, counsel said that the Appellant was out of time to file a subsection 1103(1) election, and that there was no provision in the Act for making a late-filed election.
Counsel also stated that the various agreements in this case were separate, with each giving rise to separate and distinct obligations. The Asset Purchase Agreement created a complete obligation in itself, as did the Share Purchase Agreement. Further, these agreements did not state that the obligations were interrelated, and therefore the notion of indivisibility was not applicable.
The first issue to be decided is whether the Appellant controlled Terminal Norcan immediately after the Appellant disposed of its assets to Terminal Norcan, within meaning of paragraph 85(5.1)(e) of the Income Tax Act.
That provision is applicable where the transferor controlled the transferee directly or indirectly in any manner whatsoever immediately after the transfer of the property. In this case the Minister assumed that the Appellant, by virtue of its ownership of 100% of Terminal Norcan shares, had de jure control of Terminal Norcan at the relevant time.
For the reasons that follow, I find that the Appellant owned all of the shares of Terminal Norcan and therefore controlled Terminal Norcan immediately after the transfer of the assets.
Intention of the parties
Firstly, I do not accept the Appellant's submission that the Appellant, Terminal Norcan and GPN all intended the transfer of the assets to occur simultaneously with the share transfer. This position is based principally upon the wording on the cover page of the closing agenda which stated that all of the transactions were deemed to be interdependent, and that no transaction was deemed to be completed until all of the transactions were completed.
I do not accept that this wording has the effect suggested by counsel for the Appellant; that is, that all of the transactions executed between October 13 and October 19, 1992, became effective simultaneously upon the last of those transactions being completed. None of the signed contracts in the closing binders expressly adopts the wording from the cover page, or otherwise stipulates that the obligations they contain are conditional on the completion of all of these contracts. In fact, the Asset Purchase Agreement itself states at paragraph 18:
18. This Agreement constitutes the only agreement between the parties hereto with respect to the subject matter hereof and supersedes any and all prior negotiations and understandings.
Also, the interpretation placed on the wording by the Appellant's counsel is inconsistent with the preponderance of the evidence which shows that the parties intended the asset transfer to occur prior to the share sale.
It was undisputed that the terminal assets were transferred to Terminal Norcan for two reasons: to enable the Consortium to avoid the payment of the mutation tax, and to facilitate the task of obtaining the necessary operating permits for the Terminal prior to its acquisition.
The plan to avoid the payment of the mutation tax was dependent on Terminal Norcan being a subsidiary of the Appellant at the time the assets were transferred. In the Deed of Transfer, the Appellant and Terminal Norcan declared that:
The Purchaser [Terminal Norcan] is a subsidiary of the Vendor [the Appellant] and benefits, in consequence, from the exemption from payment of transfer duties by application of section 19(d) of the [Act to Authorize Municipalities to Collect Duties on Transfer of Immoveables].
The Deed of Salealso provided that the mutation tax that would have otherwise been payable, if Terminal Norcan was not a subsidiary of the Appellant, was $101,423.00.
David Sohmer testified that the mutation tax was a secondary consideration for having Terminal Norcan owned by the Appellant. He acknowledged however, that it was well known at the time that a purchaser could avoid paying mutation tax if the property was first sold to a subsidiary of the vendor, and the shares of the subsidiary then sold to an arm's length party.
It also appears that the transfer of the operating permits was predicated on Terminal Norcan being a subsidiary of the Appellant after the transfer of the assets, since the parties felt that it would be easier to obtain new permits, or transfer existing permits, if the new owner of the terminal was a subsidiary of the Appellant.
Furthermore, the Share Purchase Agreement contained the representation that Terminal Norcan owned the Assets. Paragraph 4.06 of the Agreement read, in part:
[Terminal Norcan] owns, possesses and has good and marketable title to its undertaking, property and assets... having acquired said undertaking, property and assets by bulk sale from the [the Appellant];
The reference to "assets acquired by bulk sale" from the Appellant is obviously a reference to the terminal assets transferred under the Asset Purchase Agreement. I note that Terminal Norcan, along with the Appellant, was a party to the Share Purchase Agreement. The representation confirms that it was the parties' intention that Terminal Norcan would already be the owner of the terminal assets at the point when its shares were transferred to GPN.
Further evidence of the parties' intention that the transfer of the assets to Terminal Norcan would happen prior to the sale of the shares of Terminal Norcan to GPN can be found in the letter dated September 24, 1992, addressed to Janice Naymark from the lawyers acting for Marcel Bergeron, in which they agreed to a new closing date for the transactions of October 2, 1992. The letter stated in part:
With respect to the inter-company transfer prior to our closing, we confirm to you that it will be everybody's best interest if the same could be completed on September 30th.
Janice Naymark confirmed in her testimony that the "inter-company transfer" in question was the transfer of the assets by the Appellant to Terminal Norcan and that the transfer was to be executed two days before the remaining transactions. This was to allow the Appellant the time to register its security for the $1,000,000 debenture from Terminal Norcan, prior to giving up control of Terminal Norcan.
Although the closing was delayed, the execution of the Asset Purchase Agreement, and the registration of the Deed of Transfer and the mortgage, in fact all took place prior to the execution of the Share Sale Agreement between the Appellant and GPN on October 19, 1992.
The registration of the Deed of Transfer resulted in the transfer of the title of the terminal assets to Terminal Norcan on October 16, 1992. In my view, there is no doubt that Terminal Norcan also acquired beneficial ownership of the assets at that time. As already set out above, on October 19, 1992, Terminal Norcan and the Appellant represented in the Share Purchase Agreement that Terminal Norcan had full legal and beneficial ownership of the assets. The fact that Terminal Norcan was not assessed for any income from the use of the assets between October 16, 1992, and October 19, 1992, is not material to the determination of the legal effect of the agreements entered into by the Appellant and Terminal Norcan. The proper tax consequences of these arrangements to Terminal Norcan are not in issue in these proceedings.
While I agree that a party may attack the validity of a transaction on the basis that it is legally ineffective or incomplete, I do not accept the Appellant's argument that the Asset Purchase Agreement remained incomplete until October 19, 1992.
Nothing in the bulk sale provisions of the CCLC that were in effect at the relevant time rendered a transfer of assets ineffective if a bulk sale affidavit was not obtained. Furthermore, there is nothing in the evidence that would lead me to conclude that the Appellant and Terminal Norcan intended that the affidavit had to be delivered prior to the transfer in order to make the transfer effective. No time for the delivery of the affidavit is set out in the Agreement and I would infer from the fact that Terminal Norcan paid the purchase price to the Appellant, and from the fact that the transfer was registered prior to the receipt of the affidavit, that the parties did not intend the transfer of the assets to be conditional upon the Appellant providing it.
In addition, there was no evidence that the Appellant and Terminal Norcan intended the transfer of the Assets to be conditional on the delivery of the trust deed to the trustee.
Finally, in the absence of any evidence to the contrary, I find that the amendment of Schedule C of the Asset Purchase Agreement did not change the date that the Agreement first came into effect. The fact that the Agreement was amended does not mean that it was incomplete prior to the amendment being made.
With respect to the Appellant's contention that the impending sale of the shares of Terminal Norcan to GPN prevented the transfer of the beneficial ownership of the Assets to Terminal Norcan on October 16, 1992, I fail to see how the planned sale of the shares of Terminal Norcan could have in any way affected the transfer of the use and enjoyment of the Assets to Terminal Norcan. Unlike the situation in the Paxton case, the Assets here were not the subject of a pre-existing arrangement whereby they were to be sold to a third party, and this argument is therefore without foundation.
I also reject the Appellant's argument that all of the agreements by which the Norco-Calex Group transferred the wholesale operations to the Consortium created one indivisible obligation within the meaning of article 1124 of the CCLC.
 Firstly, it seems conceptually impossible to have an indivisible obligation created under separate contracts involving different parties. In Provigo, the purchase of the supermarket and the purchase of the wholesale grocery operation were two elements in a single contract between Provigo and 9007-7876. The issue there was whether the two obligations under the same contract could be severed. That case is distinguishable on the basis that the obligations which were found to be indivisible were all owed by Provigo to the same party.
 The concept of indivisibility applies to obligations contained in one contract and can not be extended to obligations arising under a number or series of contracts between various parties. The simple fact that obligations are set out in different contracts is conclusive that the parties do not consider those obligations to be indivisible.
Conclusion on first issue
 It is apparent that the Appellant did not intend to retain ownership of the Terminal Norcan shares for longer than was necessary to enable the Consortium to obtain the necessary operating permits and to avoid the payment of the mutation tax. It is also apparent that the Appellant did not obtain any advantage as a result of the transfer of the Assets to Terminal Norcan. However, the Appellant agreed to structure the transactions in this manner to accommodate the Consortium, and the resulting contracts that were entered into created legal relations and obligations that must be respected.
 In Friedberg v. The Queen the Federal Court of Appeal noted:
In tax law, form matters. ... If a taxpayer arranges his affairs in certain formal ways, enormous tax advantages can be obtained, even though the main reason for these arrangements may be to save tax (see The Queen v. Irving Oil 91 DTC 5106, per Mahoney, J.A.). If a taxpayer fails to take the correct formal steps, however, tax may have to be paid.
 For all of the above reasons, I find that the Appellant disposed of the Assets to Terminal Norcan on October 16, 1992, prior to the transfer by the Appellant of the shares of Terminal Norcan to GPN. Therefore, the Minister correctly applied paragraph 85(5.1)(e) of the Act in the calculation of the Appellant's income.
 I now turn to the Appellant's second argument, that it was entitled to file an amended return incorporating an election under subsection 1103(1) of the Regulations.
 This argument as well can not succeed.
 Although the Appellant has framed this issue in terms of whether it is entitled to amend its 1992 tax return, in reality it is seeking to make a late-filed subsection 1103(1) election. The "correction" which the Appellant claims to make in the amended return is a recalculation of its income based on all of its depreciable property being included in Class 1, which would only be the case if the Appellant had filed a valid subsection 1103(1) election. Therefore, in order to accept the Appellant's argument that it was entitled to file an amended return, I must necessarily determine whether the Appellant has a right to late-file the election.
 The decision of the Federal Court of Appeal in Nassau Walnut Investments Inc. v. The Queen does not assist the Appellant. There, the Court found that the taxpayer was permitted to make a late-filed designation of safe income even though paragraph 55(5)(f) of the Act required that the taxpayer make the designation at the time it filed its return for the year, and nothing in the Act expressly permitted a late-filed designation. However, in that case the Court distinguished between designations and elections under the Act. Robertson, J.A, writing for the Court, said at paragraph 31:
In contradistinction to a designation, and as a general proposition, when an election is to be made the taxpayer must make a decision to forego one option in favour of another on the basis of an assessment of tax risks which may or may not materialize depending on uncertain events. In addition to this qualitative difference, the Act itself implicitly recognizes that a designation and an election are not one and the same.
 The Court went on to note that in cases involving a request to make a late-filed election, the courts have held that, in the absence of an express provision to the contrary, a taxpayer is not entitled to do so.
 As was noted by counsel for the Respondent, there is no provision in the Act or Regulations permitting a taxpayer to make a late-filed subsection 1103(1) election. In the absence of such a provision, it must be presumed that Parliament did not intend that a taxpayer would have a right to do so.
Conclusion on the alternative argument
 For the above reasons, the Appellant is not entitled to make a late-filed subsection 1103(1) election, and its amended return is therefore invalid.
 The appeal is dismissed with costs.
Signed at Ottawa, Canada, this 2nd day of May 2006.