26 March 1986 Income Tax Severed Letter RCT 85-243

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.

Penalty for filed elections and returns: Subsections 83(4), 85(8), 93(6), 131(1.3) and 162(1)

This is in reply to your memorandum of January 31, 1986 in which you requested our opinion on the application of the late filing provisions referred to above.

As set out in your memorandum, all of the above provisions (except for subsection 162(1)) base the penalty on the period of time including each month or part of a month commencing on the date the election was required to be filed in the case of subsections 85(8), 93(6), 96(6) and the earlier of the day on which the dividend became payable or was paid in the case of subsections 83(4) and 131(1.3). In the case of subsection 162(1), the penalty is calculated by reference to the number of complete months in the period between the date on which the return was required to be filed and the date on which the return was actually filed.

We are of the opinion that for purposes of calculating the penalties referred to above (except those provided under subsection 162(1)), a month is a calendar month as provided in section 28 of the Interpretation Act and that calculated from a particular date a month is that period of time from that date to the day before the same date in the next month on the calendar. This is consistent with the usual meaning of the word month as "any of usually twelve portions into which the year is divided or any period between the same date in successive such portions". Thus, the number of months and part months in the following periods would be:

Time Period          Number of Months         Number of Part Months
April 26 to May 8           -                           1
April 26 to May 25          1                           -
April 26 to May 26          1                           1
April 30 to May 29          1                           -
April 30 to May 30          1                           1

In the case where the same date in the next calendar month cannot occur because that next calendar month has a lesser number of days, the first month would end on the last day of that next calendar month. Each succeeding month would be calculated by reference to the date at the commencement of the period. An example would be as follows:

Time Period          Number of Months         Number of Part Months
January 31 to February 28    1                          -
January 31 to March 1        1                          1
January 31 to March 30       2                          -
January 31 to March 31       2                          1
January 31 to April 1        2                          1

This appears to be consistent with the calculation of a period of months after or before a specified day as provided in subsection 25(7) of the Interpretation Act.

With respect to the reference in subsection 162(1) to the number of complete months in the period between the date on which the return is required to be filed and the date on which the return is filed, we are of the opinion that a complete month is the same as a month and that the reference to a complete month is only to add greater certainty that part months shall not be included for purposes of calculating the penalty. In calculating the period in which the number of months fall, the day on which the return was required to be filed should be excluded from the calculation and the day on which the return is filed should be included. Subsection 25(3) of the Interpretation Act provides that "where there is a reference to a number of days, not expressed to be clear days, between two events, in calculating the number of days there shall be excluded the day on which the first event happens and there shall be included the day on which the second event happens." In view of this provision, where a return is required to be filed on the last day of a particular calendar month and is filed on the last day of a following month, each following calendar month should be included in the calculation as a complete month. An example would be as follows:

Time Period                Number of Complete Months
February 28 to March 28                 -
February 28 to March 29                 -
February 28 to March 31                 1
February 28 to April 27                 1
February 28 to April 30                 2
and
February 15 to March 14                 -
February 15 to March 15                 1

XXX