CRA indicates that taxpayers can delay flow-through share reporting under the look-back rule in reliance on the COVID-related proposed amendments

COVID-related proposed amendments (principally ss. 66(12.6001), 66(12.731) and 211.91(2.1)) released on December 16, 2020 generally related to a one-year extension of the timelines to spend flow-through share proceeds and make related filings. Should taxpayers file their returns based on such “Proposed Amendments”? For example, where flow-through shares were issued in 2019 under the look-back rule , can the Form T101C (reporting any Part XII.6 taxes payable) be filed before March 2022 rather than March 2021?

CRA first noted its previously-stated position:

It is the CRA’s longstanding practice to ask taxpayers to file on the basis of proposed legislation. … However, where proposed legislation results in an increase in benefits … the CRA’s past practice has generally been to wait until the measure has been enacted. …

Generally speaking, the CRA will not reassess if the initial assessment was correct in law. As a result, a taxpayer’s request to amend their tax records to reflect proposed legislation will be denied.

It then stated:

Based on the foregoing, taxpayers may file their tax returns, including any Form T101C, based on the Proposed Amendments.

Neal Armstrong. Summary of 23 December 2020 External T.I. 2020-0874621E5 under s. 211.91(2.1).