Construction PCA – Court of Quebec finds that assessing a late-filing penalty for a s. 85 election does not preclude assessing the election as invalid
The ARQ issued a penalty assessment for the late filing of the Quebec equivalent of amended s. 85(1) election forms – then, when it learned from CRA that no shares had been issued by the transferee at the time of the drop-down and that such shares were only purportedly issued after the fact upon CRA identifying this deficiency, assessed the transferor taxpayer on the basis that the drop-downs had not occurred on a rollover basis (but without cancelling its separate penalty assessment).
Lareau JCQ rejected the taxpayers’ submission that, by issuing the penalty assessments, the ARQ had accepted the late elections and should not have issued further assessments now denying rollover treatment without having cancelled the previous assessment.
Neal Armstrong. Summary of Construction PCA Inc. v. Agence du revenu du Québec, 2019 QCCQ 8876 under s. 85(7).