CRA finds that an amalgamated corporation could not make an election to extend its predecessors’ year ends

Where a CCPC grants an option to a non-resident to acquire a controlling interest, so that it ceases to be a CCPC, s. 249(3.1) will deem it to have a year end immediately before that time.  However, if this deemed year end occurs within what otherwise would have been the first seven days of its taxation year, it may elect under s. 249(3.1)(c) to extend the previous "normal" taxation year end to coincide with the deemed year end.

Not surprisingly, CRA considers that this election cannot operate where the status-changing event occurs in the first seven days of life of an amalgamated CCPC.  Even if CRA had been receptive to the narrow interpretation of the s. 87(2)(a) "new corporation" rule suggested in Guaranty Properties and (to some extent) Pan Ocean, there likely would have been the same result.

Neal Armstrong.  Summary of 28 November 2013 T.I. 2013-0504221E5 F under s. 249(3.1).