7 July 2005 External T.I. 2005-0122191E5 F - Erroneous Elections in Statute-barred Years -- summary under Subsection 110.6(19)

An individual (X) transferred all the shares of Bco to Aco in exchange for a note and common shares, electing under s. 85(1) at an amount thought to be the transferred shares’ ACB – but it later emerged that this amount was their PUC, and their ACB was higher (but still less than their FMV). CRA noted that s. “85(1)(c.1) results in an automatic adjustment to the agreed amount in respect of the transferred property and, as a result, the affected taxpayers do not have to file an amended election in that regard.”