The taxpayer’s election pursuant to s. 110.6(19) understated the ACB of the subject shares. Could the ACB on the election now be amended to reflect the increased ACB (thereby increasing the taxpayer’s deduction room under s. 110.6(2.1)), notwithstanding that the time for amending the election pursuant to s. 110.6(27) had expired? The Directorate responded:
[T]he correction of the ACB of a property subject to the election does not constitute an amended election pursuant to subsection 110.6(27) since the taxpayer is not requesting a change to the amount shown as proceeds of disposition of those shares in the original election. Consequently, a request to change the ACB can be granted even if it is made after 1997 as long as you ensure that the ACB is accurate. Since the requested change is not an amended election under subsection 110.6(27) of the Act, nor a late election under subsection 110.6(26), the penalty under subsection 110.6(29) cannot be applied.
Furthermore ... this change to the ACB will have the effect of increasing the balance of the capital gains deduction available for subsequent years, since the taxpayer could not deduct a capital gains deduction in 1994 that exceeded the capital gain actually realized.