7 February 2003 Internal T.I. 2002-0172287
A taxpayer emigrated from Canada in 1999, i.e., prior to the retroactive amendment of s. 128.1 to subject a property owned by the taxpayer to a deemed disposition in 1999. The taxpayer did not make an election, or provide adequate security, in accordance with s. 220(4.5) of the Act. The taxpayer's 1999 return was reassessed in July 2001 to include the deemed disposition. Is the applicable interest calculated from April 30, 2000? The Directorate responded:
If a late subsection 220(4.5) election is not or cannot be made, we agree that arrears interest should apply from the balance-due day for the taxation year in which the individual emigrated from Canada. As you have pointed out, section 221.1 of the Act confirms that the fact a particular legislative amendment is retroactive does not prevent interest from being calculated as otherwise provided in the Act.