In the year of disposition of the eligible small business corporation shares, the taxpayer filed an income tax return but failed to include the designation under s. 44.1.
After stating that Nassau Walnut created only a rebuttable inference that Parliament did not intend to grant the right to make a late designation, the Directorate stated:
Generally, the inference will be rebutted if allowing such a designation would defeat neither the purpose of the provision in question nor the intention of Parliament. In the present case … [it] may be permitted in the context of a reassessment. However, the CRA should not accept this late designation if the desire to make the designation under section 44.1 represents retroactive tax planning and if the failure to make the designation on the original return of income is the result of an error other than a bona fide error by the taxpayer.