Sechelt Holdings – Tax Court of Canada finds it lacks the jurisdiction to consider a CRA refusal to process a T2 adjustment request that turned on accepting a late election

On October 27, 2022, CRA assessed the taxpayer’s annual return for its most recent taxation year as filed so as to include $3.2 million in proceeds of disposition of a liquor licence. No objection was ever filed.

On January 20, 2023, the taxpayer submitted a T2 adjustment request to eliminate the gain on the licence sale and include a late election for purposes of accessing the s. 44(1) replacement property rollover. After correspondence and review, on August 28, 2024, CRA stated that it would disallow the removal of the taxable capital gain and (due to some confusion), stated that it would issue a reassessment, which it never did. Within 90 days, the taxpayer filed a notice of objection to this letter.

Clark J. found that the August 28, 2024 decision represented a conclusion not to allow a late election pursuant to s. 220(3.2) (a discretionary decision that was not subject to review by the Tax Court) and that, given that the October 27, 2022 assessment stood unchanged, the August 28, 2024 decision did not constitute a reassessment that could be objected to.

She also rejected a submission that it constituted a “determination” that could ground an objection pursuant to s. 165(1.1). She thus lacked jurisdiction.

Neal Armstrong. Summaries of Sechelt Holdings Inc. v. The King, 2026 TCC 43 under s. 171(1) and s. 165(1.1).