There’s no requirement to file an amended s. 85(1) election if you breach the PUC limit in s. 85(2.1)

The Rulings Directorate has confirmed that, where shares were issued by a Canadian corporation to its shareholders including a non-resident corporation on a contribution of property for which a s. 85(1) election was filed, there was an automatic downward adjustment under s. 85(2.1) to the paid-up capital of such shares if their stated capital exceeded the limit in s. 85(2.1).  CRA initially had considered instead that this downward adjustment could not take place because it was too late to file an amended s. 85(1) election form – so that a deemed dividend arose to the non-resident under s. 84(1).

Neal Armstrong.  Summary of 17 June 2013 Memorandum 2013-0475621I7 under s. 85(2.1).