Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.
Principal Issues: Will CCRA grant extensions of time for filing the foreign spin-off election?
Position: no
Reasons: New section 86.1 of the Act has not been added to the list of 86.1prescribed elections under Regulation 600.
2001-009710
September 19, 2001
XXXXXXXXXX
Dear XXXXXXXXXX:
The Honourable Martin Cauchon, Minister of National Revenue, has asked me to reply to your correspondence addressed to the Honourable David Anderson, Minister of the Environment, concerning the granting of extensions of time to file the foreign spin-off election. Mr. Anderson sent Mr. Cauchon a copy of your correspondence on July 18, 2001.
The income tax provision dealing with distributions received after 1997 states that the spin-off election for each of the 1998, 1999, and 2000 taxation years is deemed to be filed on time if filed before the 90th day following the date of Royal Assent. As this time limit is now in force, officials of the Canada Customs and Revenue Agency (CCRA) do not have the discretion to extend it, particularly since the election has not been added to the list of prescribed elections under Regulation 600. Therefore a late-filed election cannot be accepted under subsection 220(3.2) of the Income Tax Act.
I understand that some taxpayers may not be aware of the time period to file such elections. However, the rules were first announced by the Department of Finance in the Economic Statement and Budget Update 2000 on October 18, 2000, and later released as legislative proposals on December 21, 2000, and March 19, 2001, before becoming law on June 14, 2001. The proposals are available on the Department of Finance's Web site on the Internet at www.fin.gc.ca. In this regard, taxpayers should have had sufficient time to gather the necessary information. The CCRA also provides information on foreign spin-offs on its Web site at www.ccra-adrc.gc.ca/tax/business/taxtopics/foreign-e.html. To date, CCRA officials report that the time limit for filing the election has not been identified as a problem
I appreciate the opportunity to address your concerns.
Yours sincerely,
Bill McCloskey Assistant Commissioner Policy and Legislation Branch
C.C. The Honourable David Anderson, P.C., M.P.
Minister of the Environment
Johanne Desparois
957-8982
August 23, 2001