CRA will not allow a late PAS election even where the surplus balances in question change through reassessment

A Reg. 5901(2)(b) election, to have a dividend treated as paid out of pre-acquisition surplus, must be made by the filing-due date for the taxation year in question. But what if CRA subsequently assesses the year in question so as to change the relevant surplus balances? The answer is the same:

[C]onsidering…that…[Reg.] 600…provide[s] no discretion to the Minister to extend the time for making an election under paragraph 5901(2)(b)… there is no… statutory or administrative discretion available to the CRA… to allow the taxpayer to late-file any required election… .

Although there are uncertainties as to how to deal with the carryback to an earlier year of a foreign accrual capital loss that was realized in 2011 (i.e, a year ending after the effective date of the introduction of the FACL rules), "it is the CRA's current practice to generally not challenge FACL carrybacks that straddle August 19, 2011, provided there is no double use of any such loss."

Neal Armstrong. Summaries of 21 April 2015 Memo 2014-0560811I7 under Reg. 5901(2)(b), Reg. 5903.1(1) and Reg. 5907(1) – net earnings.