21 September 2021 Internal T.I. 2019-0807491I7 - Subsections 93.1(5) and (6)

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: Whether a coming-into-force election for subsection 93.1(5) and (6) can be considered filed based on a taxpayer's filing position, or late-filed.

Position: No.

Reasons: A taxpayer's filing position cannot fulfil the requirement to make an election. The taxpayer relief provisions do not provide the taxpayer with the ability to make the subsection 93.1(5) coming-into-force election after its due date.

									September 21, 2021

Ms. Carme Lau								HEADQUARTERS
International and Large Case File Manager				Income Tax Rulings
International and Large Business Centre of Expertise			Directorate
XXXXXXXXXX								Julia Clarkson 

Attention: Carme Lau 							2020-080749

Subsection 93.1(5)

We are replying to one of the issues referred to in your January 7, 2019, request (XXXXXXXXXX) concerning the application of subsection 93.1(5). We apologize for the delay in responding.

We note that the descriptions, defined terms and discussion of section 95 and related sections mentioned in this response are taken from the May 23, 2019, Statement of Principal Issues prepared by Section 36 of our Directorate in response to your request (XXXXXXXXXX) and we accept them without reviewing them.

All statutory references in this document are to the Income Tax Act, R.S.C. 1985, (5th Suppl.) c.1, as amended (the “Act”), unless stated otherwise.

You are seeking our guidance with respect to the following question (referred to in your request as Issue #2):

Although no specific election was filed by Canco to “grandfather” the application of subsection 93.1(5), can the CRA accept Canco’s filing position as described in the Facts of XXXXXXXXXX as a late-filed election?

Canco is a member of a partnership (“USP”) that holds the shares of a limited liability company (“LLC2”).

We understand that the interest paid by a non-resident corporation (“USOpco”) to LLC2 in LLC2’s December 31, 2011 ($80M) and 2012 ($91M), taxation years is considered to be foreign accrual property income as defined under subsection 95(1) (“FAPI”) unless it is deemed to be active business income (“ABI”) by virtue of clause 95(2)(a)(ii)(B).

If the interest received by LLC2 is FAPI in respect of Canco, it is included in the taxable earnings (and taxable surplus) of LLC2. If the interest is deemed to be ABI in respect of Canco, it is included in the exempt earnings (and exempt surplus) of LLC2. Section 36 has concluded that the interest would be deemed to be ABI in respect of Canco.

If the interest received by LLC2 is FAPI in respect of USP, there are no surplus implications to LLC2 in respect of USP (surplus computations of a foreign affiliate are not maintained in respect of a taxpayer that is a partnership). Any FAPI in respect of USP would be included in USP’s income and be allocated out to Canco as FAPI pursuant to paragraph 96(1)(f).

It is the characterization of LLC2’s income in respect of USP and the implications arising from FAPI characterization in respect of USP that are central to the issue addressed in this document and by Section 36 in their statement of principal issues for XXXXXXXXXX.

Any references or discussion in this document pertaining to the characterization of LLC2’s interest as FAPI or as ABI is in connection with the characterization of the income in respect of USP only. The characterization of LLC2’s income in respect of Canco is not relevant for purposes of this interpretation as it is not affected by the characterization of the income in respect of USP or by subsection 93.1(5).

Clause 95(2)(a)(ii)(B) will only deem LLC2’s interest income to be ABI if USP has a qualifying interest (“QI”) in USOpco.

Paragraph 95(2)(m) outlines when a taxpayer would be considered to have a QI in respect of a foreign affiliate, and there are certain “reading rules” with respect to that definition of QI. As noted in the Facts, USP does not own any shares of USOpco, and therefore, USOpco is not a foreign affiliate of USP. Therefore, USP would not have a QI in respect of USOpco based on paragraph 95(2)(m) and its “reading rules”.

In addition to the QI definition in paragraph 95(2)(m), paragraph 95(2)(n) will deem a non-resident corporation to be a FA of one or more corporations if certain conditions are met. However, this paragraph 95(2)(n) deeming rule does not apply to USP since USP is not a corporation for purposes of the Act.

To overcome this “void” with paragraph 95(2)(n) in the context of partnerships, and to overcome certain other issues involving partnerships in the foreign affiliate regime, subsections 93.1(5) and (6) were enacted into law on December 16, 2014. (footnote 1) These subsections were addressed in a comfort letter issued by the Department of Finance dated May 26, 2011, (footnote 2) which states:

“93.1(5) Computing FAPI in respect of partnership — For the purpose of applying a relevant `provision in respect of a foreign affiliate [LLC2] of a taxpayer [USP] resident in Canada, if at any time the taxpayer is a partnership of which a particular corporation [Canco] resident in Canada, or a foreign affiliate of the particular corporation, is a member and if, based on the relevant assumptions, the particular corporation [Canco] and the taxpayer [USP] would be related, then

(a) a non-resident corporation [USOpco] that is, at that time, a foreign affiliate of the particular corporation [Canco] is deemed to be, at that time, a foreign affiliate of the taxpayer [USP] ; and

(b) the taxpayer [USP] is deemed to have, at that time, a qualifying interest in respect of that foreign affiliate [USOpco] if the particular corporation [Canco] has, at that time, a qualifying interest in respect of the non-resident corporation [USOpco].

93.1(6) Relevant provisions and assumptions — For the purposes of subsection (5),

(a) the relevant provisions are…

(iii) paragraphs 95(2)(a) and (g), and…

(b) the relevant assumptions are that

(i) the partnership is a non-resident corporation having capital stock of a single class divided into 100 issued shares that each have full voting rights, and

ii) each member of the partnership (other than another partnership) owns, at any time, the proportion of the issued shares of that class that

(A) the fair market value of the member's interest held, directly or indirectly through one or more partnerships, in the partnership at that time

is of

(B) the fair market value of all the interests in the partnership held directly by members of the partnership at that time.”

The Facts reveal that Canco indirectly, through corporations, owns 37% of USOpco. Therefore, USOpco is a foreign affiliate of Canco and Canco has a QI in USOpco. Canco indirectly, through USP, owns 100% of LLC2. Therefore, LLC2 is a foreign affiliate of Canco. (footnote 3)

For a particular taxation year of LLC2 that ended after July 12, 2013, subsections 93.1(5) and (6) deems:

• USP to be a non-resident corporation wholly-owned by Canco for that taxation year (for purposes of subsection 93.1(5)), (footnote 4)
• USP to be related to Canco for purposes of clause 95(2)(a)(ii)(B) (footnote 5) ,
• USOpco to be, at the time of an interest payment, a foreign affiliate of USP (footnote 6) and
• USP to have, at that time, a qualifying interest in USOpco. (footnote 7)

Application date(s) of subsections 93.1(5) and (6)

The coming-into-force rule (“CIF provision”) for subsections 93.1(5) and (6) is found in subsection 21(15) of the relevant bill. (footnote 8) It provides that these subsections apply to taxation years of foreign affiliates of a taxpayer that end after July 12, 2013, unless an election is made to have them apply on January 1, 2010. (footnote 9) More specifically, the CIF provision states:

“Subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), apply in respect of taxation years of foreign affiliates of a taxpayer that end after July 12, 2013. However, if the taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the day that an information return referred to in subsection 229(1) of the Income Tax Regulations is required (or would be required if the taxpayer were a Canadian partnership), pursuant to subsections 229(5) and (6) of the Income Tax Regulations, to be filed in respect of the fiscal period of the taxpayer that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), are deemed to have come into force on January 1, 2010.”

Had these subsections applied at the time of USOpco’s 2011 and 2012 interest payments, the interest paid by USOpco to LLC2 would have been deemed to be ABI to LLC2 under clause 95(2)(a)(ii)(B).

As noted above, to make the CIF provision election a taxpayer needed to elect in writing in respect of all its foreign affiliates and file the election with the Minister of National Revenue on or before the day that was the later of:

(i) the day that a T5013 information return (footnote 10) was (or would be) required to be filed under subsection 229(5) and (6) of the Regulations in respect of the fiscal period of the taxpayer that includes December 16, 2014; and

(ii) the day that was one year after December 16, 2014 (the date of Royal Assent).

In this case, the “taxpayer” is USP, making the day referred to in (i) June 30, 2015. (footnote 11) Therefore, USP was required to file the election by December 16, 2015.

It is worth noting that the deadline to file the election lines up with the deadline to file Form T5013. However, the provision does not state that the election should be made “in” that information return for the year. It even contemplates that the filing of Form T5013 may not even be required, as the partnership may not be a Canadian partnership. In our view, this wording supports the interpretation that the election is separate from any return that might be required to be filed by the taxpayer.

Was the CIF provision election filed?

In its response to audit Query 2014-FA1.1, Canco confirmed that USP did not make the election but pointed out that the net result was the same if the election had been filed:

“Please note, the 91(5) deduction claimed in the 2012 and 2013 partnership returns of USP resulted in no “net” FAPI reported. This effectively put us in the same position as if we did file the election.”

Presumably Canco’s reference to “us” is intended to be a reference to USP.

A review of Rulings documents and court decisions did not yield any previous commentary on the CIF provision.

The CIF provision requires that the taxpayer provides the CRA with a written election by a specified date. No specific form is mentioned or prescribed for making this election. Therefore, one can conclude that the form of the election is not important, just that it be made.

With a view to being thorough, we considered if there is any recourse under the Act for USP to otherwise be considered to have filed the election.

Could the election be considered effectively filed based on the taxpayer’s filing position?

What the CRA has accepted as “an election in writing under subsection 21(15) of 2014, c. 39 in respect of all its foreign affiliates” has not currently been addressed by Rulings. However, Canco’s assertion that its filing position has “effectively” placed them in “the same position” as if they had filed the election is considered irrelevant.

The courts have considered taxpayer situations where an election was not filed by its due date. The Tax Court of Canada (“TCC”) stated in Financial Collection Agencies (footnote 12) : “Just because it may be obvious from the return of income how a taxpayer wishes to report a particular transaction or item of income does not in itself free the taxpayer of the necessity of filing a form of election as required.” In that case, the election being considered is one available under subsection 39(4). A subsection 39(4) election must be filed “in prescribed form in the taxpayer’s return of income” for the year (or an earlier taxation year).

In the more recent Dhaliwal (footnote 13) case, the TCC concluded that the taxpayer had effectively made an election to have subsection 50(1) apply in his 2007 taxation year, despite not providing a written statement to that effect as he had electronically filed his tax return.

As noted in CRA document E 2015-0567541O6, the CRA’s policy regarding written statements or elections required when a return is electronically filed appears to have been released subsequent to the Dhaliwal decision. RC4018, Electronic Filers Manual states “All elections, including the supporting documentation, must be submitted to us in writing, unless otherwise indicated. In order for an election to be considered valid, it must be submitted by the due date established in the Act.” (footnote 14)

This requirement for paper documentation clearly existed in 2012, as noted in CRA document E 2012-0465981C6, which reports comments made at the 2012 CTF Atlantic Tax Conference held in November 2012: “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.”

Given that subsection 50(1) does not provide any prescribed form or manner for making the necessary election, but requires that the election be made “in the taxpayer’s return of income for the year”, the Dhaliwal decision does not support considering USP’s filing position to be the notice that the CIF provision election was made as that provision clearly requires that the election be made in writing and does not require it to be made “in the taxpayer’s return” for the year.

In addition to the Dhaliwal case, the decision in Estate of Zoltan Kokai-Kuun v The Queen (2015 TCC 217) supports the fact that a subsection 50(1) election cannot be made after the time specified in the provision.

As alluded to in the Zoltan case, subsection 50(1) is a provision that is listed in Regulation 600. However, as the taxpayer did not request relief under subsection 220(3.2) and the TCC did not have jurisdiction with respect to that provision, (footnote 15) it was not discussed in any detail in the decision. (footnote 16)

Note that the policy regarding the requirement for paper documentation regarding elections was clearly in place before December 16, 2015, the deadline for the CIF provision election to be filed in this scenario.

In the course of our analysis, we considered other provisions in the Act that require a written election.

Subsection 56.4(13) states, “For the purpose of paragraphs (3)(b) and (c) and subsection (7), an election in prescribed form filed under any of those provisions is to include a copy of the restrictive covenant and be filed (a)…on or before the person's filing-due date for the taxation year that includes the day on which the restrictive covenant was granted; and (b)…on or before the day that is six months after the day on which the restrictive covenant is granted.” Canada.ca webpage (footnote 17) states, “Since we have not published a prescribed form for the elections contained in section 56.4 of the Income Tax Act, the seller (grantor) and buyer (payor) have to file a jointly-signed letter to make the election.”

Subsection 256(9) will apply to the timing of a taxpayer’s acquisition of control “unless the corporation elects in its return of income under Part I filed for its taxation year…”. This is similar to subsection 50(1), in that there is no box to tick to make the election. In addition, as this election does not clearly tie to any one transaction, it becomes more difficult to rely on amounts reported in a tax return to support that the election has been made. T4012, T2 Corporation - Income Tax Guide 2019 states: “To elect under subsection 256(9), include a note with your return for the tax year ending immediately before control was acquired and enter the hours and minutes that specify the time of day at line 065.”

In Terminal Norco Inc. v The Queen (2006 TCC 139), the taxpayer put forth an alternative argument to amend its return to recognize a late-filed election under subsection 1103(1) of the Income Tax Regulations (“Regulations”) to allow certain property to be treated as Class 1 depreciable property. Subsection 1103(1) requires that the taxpayer “elect” to have the treatment apply, and subsection 1103(3) of the Regulations requires such an election to be made “not later than the last day on which the taxpayer may file a return of his income for the taxation year in accordance with section 150 of the Act.” There is no prescribed form for making this election. In paragraph 91 of its decision, the TCC denied the taxpayer’s request, stating that “there is no provision in the Act or Regulations permitting a taxpayer to make a late-filed subsection 1103(1) election.” The TCC also stated, “In the absence of such a provision, it must be presumed that Parliament did not intend that a taxpayer would have a right to do so.” However, the TCC did mention the possibility of taxpayer relief in a footnote. While the footnote specifies 220(3.1), it is presumed to be a typo; we consider the TCC to have mean subsection 220(3.2), the provision that allows late-filed elections.

Paragraph 86.1(2)(f) requires that “the taxpayer elects in writing filed with the taxpayer's return of income for the taxation year in which the distribution occurs that this section apply.” There is no prescribed form to make this election. In Coster v The Queen (2003 TCC 112), the taxpayer was denied the ability to make a late election under paragraph 86.1(2)(f) as, at the time that the CRA received the taxpayer’s letter to make the election, the election was not listed in Regulation 600 as one that was prescribed for the purpose of subsection 220(3.2). However, at the time of the trial, the provision was listed in Regulation 600. In paragraph 12, the Court stated:

“As a matter of law, the appeal for the taxation year 2000 is dismissed. Recognizing, however, that only the Minister has discretion to extend time under subsection 220(3.2), I recommend that the Appellant (Mr. Coster) write a fresh letter to CCRA asking that the Minister exercise his/her discretion under subsection 220(3.2) of the Act to extend the time for the Appellant to make an election under paragraph 86.1(2)(f); and that Mr. Webb's letter of September 20, 2001 be regarded as a late election. Also, I strongly recommend that such discretion be exercised in the Appellant's favour having regard to the facts ...”

This case supports the fact that in order to accept a late election, an election must be made and prescribed for the purpose of subsection 220(3.2). The Court did not suggest that Mr. Coster request an amendment to his return; it suggested that he write a letter to request an extension to allow a late-filed election, and to regard his previous letter to be the actual election. There is no mention of subsection 220(2.1) or consideration of waiving the need to file a written election. However, reliance on this case should be made with caution, as the decision was heard under the TCC’s informal procedures and the taxpayer’s filing position did not reflect a position that the election had been made.

Based on our analysis, it is our view that where a provision states that an election is available to the taxpayer, but no prescribed form is provided, the taxpayer is still required to make the election known to the CRA. Generally, in such instances, a written letter attached to the return of income is sufficient. Unless the election provision is listed in Regulation 600, thus allowing possible relief under subsection 220(3.2), the taxpayer has no ability to make the election after its due date.

Could the election be late-filed under subsection 220(3.2)?

The CIF provision requires that an election be filed by a specific point in time.

The Minister has the power to extend the time to make an election under subsection 220(3.2) if, among other things, the election was required to be made “under a prescribed provision” and the extension is applied for within 10 calendar years of the end of the relevant taxation year (or fiscal period).

While the timeframe in this situation would allow such an extension, the CIF provision is not prescribed under the Act. (footnote 18) Subsection 220(3.21) and section 600 of the Income Tax Regulations (the “Regulations”) do not list subsection 93.1(5) (or section 93.1) as a prescribed election provision for the purposes of subsection 220(3.2). Subsection 93.1(5) is a deeming provision that does not require an election to be made. The election is required by the CIF provision, which is part of the Economic Action Plan Act, No. 2 that introduced subsection 93.1(5) into the Income Tax Act.

The CRA’s position is that there is no requirement or ability that the Minister extend subsection 220(3.2) “to elections other than those listed in section 600 of the Regulations.” (footnote 19) This restriction on which elections (or designations deemed to be elections under subsection 220(3.21)) can receive relief is likely intended to prevent taxpayers from engaging in retroactive tax planning.

On that basis, we are of the view that relief under subsection 220(3.2) is not available to USP. (footnote 20)

Could the filing of the election in the CIF provision be waived under subsection 220(2.1)?

Subsection 220(2.1) provides that if “any provision of the Act or a regulation requires a person to file a prescribed form, receipt or other document”, subsection 220(2.1) authorizes the Minister to waive that requirement, although such a document would need to be provided at the Minister’s request.

This provision has been used by the CRA to waive the requirement that would otherwise apply to all taxpayers to file certain forms with their T1 income tax returns, such as child care expenses supporting documentation, (footnote 21) or Form T5013 (footnote 22) for partnerships with 5 or fewer members. It may also have been similarly used to allow all taxpayers required to file Form T1134 to do so in a manner that reduced duplication of information. (footnote 23)

To our knowledge, subsection 220(2.1) has never been used to waive the filing of an election document or form that is required under the Act. This is consistent with the previously noted longstanding position of the CRA that subsection 220(2.1) cannot override subsection 220(3.2). This interpretation is primarily based on the concept that subsection 220(2.1) is a general provision, and is therefore not considered to override a more specific provision within the same section of the Act. (footnote 24) Subsection 220(3.2) provides a specific mechanism for late, amended or revoked elections.

In our view, subsection 220(2.1) does not provide the Minister with the discretion to remedy the fact that no election was made under the CIF provision.

On the one hand, the discretion granted to the Minister by subsection 220(2.1) is to waive the requirement to file a prescribed form, receipt or other document or to provide prescribed information required by any provision of the Income Tax Act or the Income Tax Regulations.

Subsection 93.1(5) does not require an election; its application is based on the facts of a taxpayer’s situation. As noted above, the election is only brought into play through the CIF provision, which is a provision of the statute that contains the amendment to the Income Tax Act that introduced subsection 93.1(5). Other provisions of the Act require a taxpayer to file a document to make an election. However, the distinction is that such a requirement is made by a provision of the Act itself, not by the amending legislation. We have not been able to find anything that supports treating a provision of amending legislation as a provision of the Act such that the condition of application of subsection 220(2.1) is met.

On the other hand, should we be wrong in our view be that the CIF provision is not considered to be a provision of the Act for purposes of subsection 220(2.1), we are of the view that the provision does not give the Minister the discretion to cause a taxpayer to have made an election.

An election involves that a taxpayer “must make a decision to forego one option in favour of another on the basis of an assessment of tax risks which may or may not materialize depending on uncertain events.” (footnote 25) That description appropriately describes the election under the CIF provision, which potentially could impact the application of other provisions in addition to subsections 93.1(5) and (6).

The Minister has limited discretion to allow a taxpayer to make an election beyond its due date. The proposition that she would have discretion to make an election for the taxpayer appears to be incompatible with the concept of electing. The scheme of the Act emphasizes in most provisions that provide for an election or designation the importance for the taxpayer to clearly communicate in writing their decision of whether to take advantage of the option provided.

One might argue that subsection 220(2.1) could be applied to waive the deadline for filing elections not covered by a specific late-filing provision, including subsection 220(3.2).

It continues to be Rulings’ view that allowing subsection 220(2.1) to waive a taxpayer’s requirement to file an election not listed in Regulation 600 would negate the specific intention of Parliament in limiting late elections to only those that are prescribed in section 600 of the Regulations. It seems reasonable to conclude that the implied exclusion rule supports this view: the implication is that the exclusion of an election from the list in Regulation 600 is that Parliament does not intend for the taxpayer to have the ability to late-file that election. (footnote 26) In addition, the exercise by the Minister of such discretion would effectively result in elections not prescribed in Regulation 600 being filed late without any penalty, which is incompatible with the scheme of subsection 220(3.2). The objective of subsection 220(3.5) appears to be to balance flexibility while promoting compliance with the Act. The fact that it does not apply to subsection 220(2.1) provides additional contextual support to the view that subsection 220(2.1) is not applicable to elections.

Given the above analysis, it is our view that subsection 220(2.1) does not grant discretion to the Minister to assist the taxpayer in this situation.

Conclusion

In summary, based on the above, it is our view that USP has not made the required election, and does not meet the necessary criteria to be allowed to file the CIF provision election now. Therefore, it is our view that subsections 93.1(5) and (6) do not apply in respect of the 2011 and 2012 interest payments made by USOpco to LLC2.

Unless exempted, a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Revenue Agency’s electronic library. After a 90-day waiting period, a severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. You may request an extension of this 90-day period. The severing process removes all content that is not subject to disclosure, including information that could reveal the identity of the taxpayer. The taxpayer may ask for a version that has been severed using the Privacy Act criteria, which does not remove taxpayer identity. You can request this by e-mailing us at: ITRACCESSG@cra-arc.gc.ca. A copy will be sent to you for delivery to the taxpayer.

Yours truly,

Yves Moreno
Division Director
International Division
Income Tax Rulings Directorate
Legislation Policy and Regulatory Affairs Branch

FOOTNOTES

Note to reader: Because of our system requirements, the footnotes contained in the original document are shown below instead:

1 See by Bill C-43 (S.C. 2014, c. 39, s. 21(8)).

2 The comfort letter recommended to the Minister of Finance that the Act be amended to provide that:

• “Forco be considered to be a foreign affiliate of LP for purposes of the inter-affiliate dividend exclusion from FAPI with respect to Forco's dividends paid to FA4, and
• LP be considered to have a qualifying interest in respect of Forco and its subsidiaries, and Forco and its subsidiaries be considered to be foreign affiliates of LP, for the purposes of determining the excluded property status of the shares of Forco in the context of a disposition of the Forco shares by FA4.”

3 Supported by subsection 93.1(1).

4 See the relevant assumptions noted in paragraph 93.1(6)(b).

5 Paragraph 95(2)(a) is a relevant provision noted in subparagraph 93.1(6)(a)(iii).

6 Paragraph 93.1(5)(a) applies because USOpco is, at that time, a foreign affiliate of Canco.

7 Paragraph 93.1(5)(b) applies because Canco has, at that time, a qualifying interest in USOpco (as defined in paragraph 95(2)(m)).

8 As previously mentioned, these subsections were enacted as part of the Economic Action Plan 2014 Act, No. 2 on December 16, 2014 (S.C. 2014, c. 39, s. 21(8)).

9 It appears that the making of the election under subsection 21(15) of Bill C-43 also triggered the early application of several other amendments, none of which appear to be relevant in the Facts according to Team 36.

10 The information return required under subsection 229(1) of the Income Tax Regulations.

11 In accordance with subsection 229(5) of the Income Tax Regulations. Subsection 229(6) is assumed not to be applicable in this case.

12 Financial Collection Agencies (Quebec) Ltd. v MNR (90 DTC 1040, ([1990] 1 C.T.C. 2178 (TCC))). See also CRA document 2010-0381311E5 and Robertson v The Queen ([1996] 2 CTC 2269).

13 Dhaliwal v The Queen (2012 TCC 84).

14 See CRA document E 2015-0567541O6. This statement is also found in the 2020 version of RC4018.

15 See paragraph 67 of Estate of Zoltan Kokai-Kuun v The Queen (2015 TCC 217).

16 The subsection has been part of the listing in Regulation 600 since 2001, and possibly earlier.

17 See https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/changes-your-business/selling-a-business/restrictive-covenant/election-restrictive-covenants.html.

18 It has been assumed that the CIF provision itself is not prescribed, as defined in subsection 248(1) of the Act. Paragraph (a) of that definition does not apply, as no form is specified. Paragraph (b) has not been met, as the election is not mentioned in Regulation 600. However, paragraph (a.1) of the definition states that for “the manner of making or filing an election” prescribed means “authorized by the Minister.” It is reasonable to conclude that paragraph (a.1) would be relevant in the absence of a prescribed form for an election provided for in a provision within the Act. However, it seems to be too big of a stretch to conclude that the Minister could authorize the allowance of an election in the absence of a prescribed provision within the Act.

19 See CRA documents E2017-0717421M6 and E2017-0704921M6, neither of which are publicly available.

20 Note that if it was available, it would not be granted until after the payment of a penalty calculated under subsection 220(3.5) of the Act (see paragraph 51 of IC07-1R1).

21 See ¶1.47 of Income Tax Folio S1-F3-C1, Child Care Expense Deduction.

22 See CRA’s response to question 24 in CRA document 2003-TEI-QA.

23 See CRA document 2009-0316721C6.

24 See MNR v ConocoPhillips Canada Resources Corp (2017 FCA 243), particularly paragraphs 25 and 48 to 51.

25 See The Queen v Nassau Walnut Investments Inc. ([1997] 2 FC 279, 97 DTC 5051, [1998] 1 CTC 33).

26 The implied exclusion rule is discussed in Ruth Sullivan, Statutory Interpretation in a Nutshell, the Canadian Bar Review (2003) at p. 60. (Sullivan). An analogy to explain this rule is a “No dogs allowed” sign in a store window. Even though the sign does not list other types of pets, such as cats or birds, it is implied that these other types of pets are also not permitted.