Subject: Subsection 93(1) Election
This is in response to your memorandum of May 10, 1990 wherein you requested our opinion whether a taxpayer may make more than one election under subsection 93(1) in respect of the same gain.
In our view only one election may be made in respect of a particular disposition of shares in a foreign affiliate. While the Act does not specifically prohibit a taxpayer from making more than one election, the words of subsection 93(1) clearly contemplate only one election. Furthermore, subsection 93(5.1) of the Act permits the Minister to accept an amended election if in the opinion of the Minister, the circumstances are such that it would be just and equitable to do so. If more than one election was permitted in respect of a single disposition, the references in subsection 93(5.1) to an amended election would be meaningless. Where more than one election has been filed in respect of a single disposition in the prescribed manner within the prescribed time, it would seem that the Minister could choose to have either one but not both of such elections apply.
This position is not inconsistent with our view on subsection 93(1) elections available to corporations where subsection 93(1.1) of the Act would otherwise automatically apply. In such cases, it is our view only one election will have been made. The 93(1.1) election merely provides a minimum election amount that is required to prevent duplication of surplus which might otherwise occur. By electing a larger amount under subsection 93(1), a corporation eliminates any deemed election under subsection 93(1.1) of the Act because after accounting for the effects of the 93(1) election, the amount determined in subsection 5902(6) of the Regulations for the purposes of subsection 93(1.1) of the Act, will be nil.
for DirectorReorganizations and Non-Resident DivisionRulings DirectorateLegislative and Intergovernmental Affairs Branch