CRA acknowledges that its T2 Guide is wrong

S. 88(2)(a)(iv) indicates that on a Canadian corporate winding-up (otherwise than under s. 88(1)) the year end of the corporation is deemed to end immediately before the distribution time for the purposes (only) of computing specified tax accounts – e.g., the capital dividend account or pre-1972 CSOH.  The T2 Guide states that a tax return should be prepared for the taxation year that ends with the distribution and that a new year end can be chosen for the taxation year that commences immediately thereafter.

In response to an earnest inquiry, CRA acknowledged that these statements (and a corresponding line in the T2 return) are wrong, and will be corrected in the next edition.

Neal Armstrong.  Summary of 10 December 2013 T.I. 2013-0480771E5 F under s. 88(2).