After retaining a new accountant, an estate sent a letter in November 1994 amending its returns for 1992 and 1993 to make designations under s. 104(13.1), with the intended effect that amounts distributed to the taxpayer (a beneficiary) which had been included in her income by reassessment under s. 104(13) should now be excluded. Archambault J noted testimony that the previous accountant apparently had failed to have the designation made due to a misunderstanding of s. 104(13.1), and stated (at paras. 25, 26 and 34):
[A]lthough there is no general provision in the Act authorizing Canadian taxpayers to amend tax returns already filed, there is nothing to prevent them from doing so…[and] it is in the interest of tax administration to allow such amendments. …
…[T]he letter…was an amendment to the estate's tax return and its effect was to amend the initial return.
Since subsection 104(13.1) says nothing about the existence of a time limit, it is not essential that the designation be made within a specific time. All that matters is that it be made in the tax return, which is the case here given the fact that the return was amended.
After noting that, in order to be able to carryback a subsequently realized loss (which the Explanatory Notes contemplated was something which could be done), it would be necessary to make a late designation under s. 104(13.1) for the year to which the loss was carried back, Archambault J stated (at para. 47):
In my opinion, there is no reason to draw a distinction between a late-filed designation made to take advantage of a loss carryback under section 111 and a late-filed designation that makes it possible to minimize the beneficiary’s tax by means of income splitting.