26 June 1991 Internal T.I. 9115917 F - Rollover to Corporation - Timing of Election

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.

SUBJECT:  Elections under subsection 85(1) by 19(1) (the "taxpayer")

We are responding to your memorandum, dated June 11, 1991, in which you asked for our comments on the issues raised by        24(1)    (the taxpayer's representative) in their letters to your division and to the Kingston District Office.

Facts

24(1)

Issue     

Can the second election filed be considered to be a valid election under subsection 85(1) that is filed in accordance with subsection 85(6), or is it to be considered to be an election that would be an amended election under subsection 85(7.1) if, in the opinion of the Minister, the circumstances of the case are such that it would be just and equitable to permit the election made under subsection 85(1) to be amended?

Discussion

In the view of the taxpayer's representative, the election filed on April 26, 199 ( is a valid election which meets all of the requirements of subsection 85(1).  Since this is the case, in the opinion of the representative, no relief under subsection 85(7.1) need be sought since the election was, in fact, made before it was so required.

It is our view that the first election filed in July of 1989 is the only election that meets the requirements of subsection 85(1).  There is nothing in section 85, in the absence of subsection 85(7.1), that suggests that a second election may be filed.  Nor is there anything in subsection 85(7.1) to suggest that a second election does not fall within that provision because it is filed within the time limits set out in subsection 85(6).

Conclusion

In our view, the second election may only be accepted as an amended election pursuant to subsection 85(7.1).

Since it is not a matter over which this division has jurisdiction (paragraph 900 (2)(b) of the Regulations delegates the power to exercise the discretion of the Minister under subsection 85(7.1) to the Director-Taxation in a District Office), we offer no comment on the question of whether it would be just and equitable to allow an election to be amended where it is sought to be amended before the expiry of the time limits set out in subsection 85(6) for filing the original election.

Should you have any questions regarding our comments, please contact the writer.

Yours truly,

Director Reorganizations and Non-resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch