CRA confirms strict requirements for s. 94(1) “electing contributor” and “electing trust” elections
The s. 94(1) definition of “electing contributor” permits a resident contributor to elect to have income of the s. 94 trust attributed to the contributor. This definition stipulates that the election must be made in writing “on or before the contributor’s filing due date for the first taxation year of the contributor for which the election was to take effect” (the “initial year”).
CRA confirmed that this language requires that the election be filed on or before the filing due date of the contributor for the initial year - even if the personal return of the contributor was filed after such due date. CRA considers that it does not have the discretion to allow a late-filing. If the contributor misses the deadline for a particular year, this does not preclude the contributor from filing this election for a subsequent taxation year, which would then become the initial year.
The s. 94(1) definition of “electing trust” permits a trust to elect to be a separate trust in respect of its :non-resident portion.”
CRA indicated that as long as the election is filed with the trust’s income tax return for its first taxation year throughout which it is deemed to be resident in Canada and in which it holds property that is part of its non-resident portion, the election would not be considered to be filed late even if the trust return for that year is filed late. Conversely, where the election is not included with the income tax return as filed, the election is considered late, with no Ministerial discretion to allow a late-filing of the election.