Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Principal Issues: When a tax return is filed electronically, how is an election included in the return?
Position: The CRA's goal is to expand the NETFILE and EFILE programs to remove most exclusions and barriers to electronic filing. This includes adding the ability for taxpayers to file forms and elections electronically. However, we are not yet at a point where this can be done. Until then, for returns that are filed electronically, all elections, including the supporting documentation, must be submitted to us in writing, unless otherwise indicated.
Reasons: See response.
2012 CTF Atlantic Conference
November 9-10, 2012
Question 8 - Filing Electronically
1. When a tax return is filed electronically, how is an election included in the return?
For example:
(a) The language in subsection 50(1) requires that the taxpayer "elect in the return". How should a subsection 50(1) election be made when the tax return is filed electronically?
(b) Reg. 1101(5b.1) requires that the election be made by letter attached to the return. How is this done if the return is filed electronically?
(c) Further, if the return is not filed by the due date, a letter which must be attached to the return is arguably not filed with the Minister in accordance with section 150, therefore the election cannot be made.
Please comment on CRA's position in the above scenarios.
2. How should one make the subsection 50(1) selection if one is filing electronically? Subsection 50(1) requires the taxpayer to elect "in the return". See Dhaliwal v. The Queen, 2012 TCC 84. Does the CRA agree with that case?
3. For the Reg. 1101(5b.1) election, how does one provide a "letter attached to the return" if filing electronically? Also, if the return is not filed on time, a letter attached to the return is arguably not attached to a return "filed with the Minister in accordance with section 150", and so the election cannot be made. Is this the CRA's view?
CRA Response
1. As explained in RC4018, Electronic Filers Manual, electronic filers are required to inform their clients that elections, designations, agreements, waivers, and special elective returns must be submitted in paper format by the appropriate due dates as established in the Income Tax Act.
A taxpayer can indicate in the software that they are making an election and the software will build an Election indicator field. This is there for EFILE as well. Completion of this field code does not constitute an election; it is designed only to inform us that an election form or a letter/note containing the required information is being submitted in paper format.
While our electronic services evolve every year, the ability to electronically file these documents is not available yet.
The Minister has discretion as to how to accept elections. With respect to the election under subsection 1101(5b.1) of the Regulations, the CRA will not deny the election on the basis that it was mailed separately and not attached to the electronic return.
2. As explained in RC4018, Electronic Filers Manual, electronic filers are required to inform their clients that elections, designations, agreements, waivers, and special elective returns must be submitted in paper format by the appropriate due dates as established in the Income Tax Act.
A taxpayer can indicate in the software that they are making an election and the software will build an Election indicator field. This is there for EFILE as well. Completion of this field code does not constitute an election; it is designed only to inform us that an election form or a letter/note containing the required information is being submitted in paper format.
3. The CRA's goal is to expand the NETFILE and EFILE programs to remove most exclusions and barriers to electronic filing. This includes adding the ability for taxpayers to file forms and elections electronically. However, we are not yet at a point where this can be done.
Until then, for returns that are filed electronically, all elections, including the supporting documentation, must be submitted to us in writing, unless otherwise indicated. This instruction applies to subsection 50(1) elections.
Michel Gauthier
2012-046598
November 9, 2012
All rights reserved. Permission is granted to electronically copy and to print in hard copy for internal use only. No part of this information may be reproduced, modified, transmitted or redistributed in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, or stored in a retrieval system for any purpose other than noted above (including sales), without prior written permission of Canada Revenue Agency, Ottawa, Ontario K1A 0L5
© Her Majesty the Queen in Right of Canada, 2012
Tous droits réservés. Il est permis de copier sous forme électronique ou d'imprimer pour un usage interne seulement. Toutefois, il est interdit de reproduire, de modifier, de transmettre ou de redistributer de l'information, sous quelque forme ou par quelque moyen que ce soit, de facon électronique, méchanique, photocopies ou autre, ou par stockage dans des systèmes d'extraction ou pour tout usage autre que ceux susmentionnés (incluant pour fin commerciale), sans l'autorisation écrite préalable de l'Agence du revenu du Canada, Ottawa, Ontario K1A 0L5.
© Sa Majesté la Reine du Chef du Canada, 2012
Email this Content