On May 15, 20-A, Corporation A, a Canadian-controlled private corporation (a "CCPC"), acquired all the shares of Corporation B, a public corporation. Corporation B thereby had a deemed taxation year end of May 14, 20-A, and adopted May 14, 20-B as its next year end. Pursuant to s. (c)(i) of "public corporation," s. 89(1), Corporation B elected to no longer be a public corporation from June 1, 20-A onwards, thereby becoming a CCPC which, in turn, resulted in a deemed taxation year end on May 31, 20-A by virtue of s. 249(3.1).
However, Corporation B elected pursuant to s 89(11) on November 14, 20-B for its taxation year beginning on May 15, 20-A to not be a CCPC. Does this mean that Corporation B never became a CCPC, and did not have a deemed taxation year end on May 31, 20-A by virtue of s. 249(3.1)?
After noting that in the absence of an s. 89(11) election, Corporation B became a CCPC on June 1, 20-A, CRA stated:
[As] Corporation B did not make an election under subsection 89(11) to not be a CCPC until November 14, 20-B … the exception in paragraph (d) of the definition of CCPC in subsection 125(7) could only apply to Corporation B for the taxation year beginning on June 1, 20-A and ending on May 14, 20-B, and thereafter.
..[I]f Corporation B had made the election under subsection 89(11) at any time during the period beginning on May 15 and ending on November 30, 20-A, rather than on November 14, 20-B, subsection 249(3.1) would not apply to cause a deemed taxation year end on May 31, 20-A, because of the application of the exception in paragraph (d) of the definition of CCPC in subsection 125(7) during that period.