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: Is there any authority under the Act for the Minister to accept late filed or amended elections under subsection 142.7(3) of the Act?
Position: No
Reasons: There are no specific provisions giving the circumstances for the acceptance of a late filed or amended election contained in section 142.7 as there is for several other provisions such as sections 85, 93, 96 and 104. Additionally, the more general rule giving the Minister the discretion to accept late or amended elections in certain circumstances is found in subsection 220(3.2) and is limited in its application to those specific provisions of the Act and Regulations listed in section 600 of the Regulations. While section 600 was amended in the same NWMM that introduced new section 142.7, section 600 makes no reference to section 142.7 which indicates an intention on parliament's behalf to not provide for the acceptance of late or amended elections under subsection 142.7(3).
November 21, 2002
TORONTO NORTH TSO HEADQUARTERS Angelo Bertolas Alison Campbell Banking Specialist Financial Institutions Industry Specialist Services Section (613)957-3496
2002-016918
Late Filed or Amended Elections Under Subsection 142.7(3) of the Act
This is in reply to your inquiry of October 18, 2002, wherein you were seeking our views on whether there is any authority in the Income Tax Act (the "Act"), to allow an authorized foreign bank to make a late election under subsection 142.7(3) of the Act. In addition you wanted to know whether the Act provides any authority to accept an amended election once the time limit in subsection 142.8(11) of the Act has expired, where the original election under subsection 142.7(3) of the Act, was filed on a timely basis.
Several provisions in the Act, provide special rules for the acceptance of late or amended elections that are required to be filed for that particular section to apply. For example, subsections 85(7) through subsection 85(9) of the Act, provide the conditions under which the Minister is obligated to accept a late or amended elections under section 85 of the Act, and those conditions under which the Minister has discretion to accept a late or amended elections under section 85 of the Act. Sections 93, 96, and 104 of the Act, also provide special rules for late and/or amended elections required to be filed pursuant to those sections. We note that there are no provisions for the acceptance of late filed or amended elections contained in section 142.7 of the Act, even though section 142.7 of the Act would seem to have been significantly modelled based on section 85 of the Act..
Subsection 220(3.2) of the Act also deals with late, amended and revoked elections.
It provides that the Minister may, on application by the taxpayer, extend the time for making the election under a provision of the Act, or a regulation, that is a prescribed provision. It also provides that the Minister may grant permission to amend or revoke an election that the taxpayer has made under a provision of the Act, or a regulation, that is a prescribed provision.
Section 600 of the Regulations to the Income Tax Act ("Regulations"), contains the prescribed provisions for the purposes of subsection 220(3.2) of the Act. Section 600 of the Regulations does not make any reference to elections under section 142.7 of the Act.
It may be of note that the most recent amendment to section 600 of the Regulations was contained in the same March 16, 2001 Notice of Ways and Means Motion that contained the draft legislation for new section 142.7 of the Act, but the amendment to section 600 of the Regulations did not add any reference to with respect to the election under section 142.7 of the Act.
Conclusion
Based on the above analysis of the legislation, it is our view that there is no legislative authority in the Act, for the Minister to accept late filed or amended elections required under section 142.7(3) of the Act. XXXXXXXXXX.
For your information a copy of this memorandum will be severed using the Access to Information Act criteria and placed in the Canada Customs and Revenue Agency's electronic library. A severed copy will also be distributed to the commercial tax publishers for inclusion in their databases. The severing process will remove all material that is not subject to disclosure, including information that could disclose the identity of the taxpayer. Should your client request a copy of this memorandum, they can be provided with the electronic library version, or they may request a severed copy using the Privacy Act criteria, which does not remove client identity. Requests for this latter version should be made by you to Mrs. Jackie Page at (819) 994-2898. A copy will be sent to you for delivery to the client.
F. Lee Workman
Section Manager
Financial Institutions Section
Financial Industries Division
Income Tax Rulings Directorate
Policy and Legislation Branch