CRA indicates that a late-filing of a PLOI election does not cause the related deemed interest to be statute-barred

Where a late-filed PLOI election is made prior to the three-year limitation period referred to in s. 15(2.12) or 212.3(12), CRA confirmed that the interest deemed to thereby arise under s. 17.1(1) not having been reassessed would not preclude the election from being valid. However, s. 152(4)(b)(iii)(A) would extend the normal reassessment period for assessing such interest given that the joint PLOI election filing by a CRIC and its non-resident parent would be an “arrangement or event” and, thus, a “transaction,” as defined in s. 247(1), involving a taxpayer and a non-resident person with which it did not deal at arm’s length.

Where the CRIC and each "non-resident parent" (defined in s. 212.3(1)(b) as a member of a group of non-resident persons not dealing with each other at arm’s length) are not related, they nonetheless will not be dealing at arm’s length as a factual matter, so that CRA would be able to reassess the relevant taxation years beyond the normal reassessment period to include additional interest income for the CRIC.

Neal Armstrong. Summary of 15 May 2024 IFA Roundtable, Q.5 under s. 152(4)(b)(iii)(A).