CRA states that a s. 98(3) election will be invalid if it does not cover all the partnership property

CRA considers that an election under s. 98(3) (for the conversion of a partnership into a co-ownership on a rollover basis) is not available unless "the election is made in respect of all of the property of the partnership." Furthermore, as s. 98(3) is not listed in the election amendment provision (Reg. 600), "there is no discretion to permit an amended election."

This appears to indicate that if, for example, following the winding-up of a real estate partnership with $100 million of accrued recapture or capital gains, the election does not list the $1,000 of prepaid insurance, the election will be invalid, with no facility to later amend to correct this oversight.

Brilliant! This accords with the principle of statutory interpretation that the literal words of a provision should be applied mechanically, in the same way that a computer would run a piece of applications software [citation not available].

Neal Armstrong. Summary of 6 October 2014 T.I. 2014-0540611E5 under s. 98(3).