Where, at the moment of a winding-up described in s. 88(2), the corporation holds portfolio investments or other assets whose fair market value (“FMV”) fluctuates, it is not possible to determine in advance the capital gain that is deemed to arise on the winding-up, so that it is not possible to make an election within the time required under s. 83(2). Is relief available?
CRA responded:
In a context similar to that described ... the portion of the winding-up dividend, deemed to be the total amount of a separate dividend (the "Separate Dividend") for an election under subsection 83(2) (the “Election"), will always be equal to the CDA balance at the time of computation. Accordingly, the accuracy of the amount of the Separate Dividend depends on the final CDA balance, as determined by the CRA. ...
[W]hen the balance of the CDA, as determined by the CRA, differs from the balance calculated by the corporation at the time an election is to be made, the CRA will adjust the amount of the Separate Dividend as well as the Form T2054 ... .
...While under normal circumstance the CRA expects a resolution to refer to the total amount of a dividend subject to an election, which should be the same as that on the Form T2054, the CRA can accept, under these particular circumstances, such an amount not being specifically stated in that resolution.