2015-0573861C6 2015 CLHIA Roundtable-Regulation 2411(3)(a)election

Principal Issues: Can an insurer elect under paragraph 2411(3)(a) of the Regulations subsequent to filing its income tax return and if not, why not?

Position: No

Reasons: There is no provision in the Act to allow for a late election under paragraph 2411(3)(a) of the Regulations.

Author: Johnstone, Alexander
Section: ITA 220(3.2), ITR 600, 2411(3)(a)

CLHIA Roundtable - May 14, 2015

Question 3

Regulation 2411(3)(a) election

Can an insurer elect under paragraph 2411(3)(a) of the Regulations subsequent to filing its income tax return and if not, why not ?

Based on various court cases such as Nassau Walnut Investments Inc. v. R., 97 D.T.C. 5051, VIH Logging Ltd. v. R., 2005 D.T.C. 5095, and Lussier v. R., 2000 D.T.C. 1677 and Rulings opinions as expressed in 2012-0434501E5 and 2000-EM20425 in other similar situations, it would be appropriate to allow an insurer to so elect.

CRA Response

The election under paragraph 2411(3)(a) of the Regulations is made in the insurer’s return of income under Part I of the Act. There is no specific provision for the acceptance of a late filed election under paragraph 2411(3)(a) of the Regulations, such as the one that is found, for example, in subsection 85(7) of the Act in respect of late elections for section 85 rollovers. 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) of the Act and is limited in its application to those specific provisions of the Act and Regulations listed in section 600 of the Regulations.

The court cases and the Rulings opinions cited above relate to late filed designations under paragraph 55(5)(f) or subsection 104(13.1) of the Act. A designation can be distinguished from an election under the Act. Information Circular 07-01, Taxpayer Relief Provisions, sets out the CRA administrative guidelines for accepting late, amended or revoked elections. Paragraph 47 of that circular provides that the elections for which a request can be made under the taxpayer relief provisions are found in section 600 of the Regulations. Administratively, there is no requirement that the CRA extend the taxpayer relief provisions to elections other than those listed in section 600 of the Regulations.

Alex Johnstone
2015-057386

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