29 September 2000 External T.I. 2000-0000385 - 104(13.1) Designations

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.

Principal Issues:

Can a designation under subsection 104(13.1) or subsection 14(13.2) be amended, late-filed or revoked?

Position: Yes

Reasons:

As a result of the Tax Court of Canada decision in Jeannette Lussier v. The Queen, 99 DTC 1029, [1999], the CCRA has taken the view that a designation under subsection 104(13.1) or (13.2) may be amended, late-filed or revoked in certain circumstances.

							2000-000038
XXXXXXXXXX 						G.W. Keable
(613) 957-2046
Attention:  XXXXXXXXXX 

September 29, 2000

Dear Sirs:

Re: Amended and Late-filed Designations Under Subsections 104(13.1) and (13.2)

This is in reply to your letter of December 30, 1999 concerning designations under subsections 104(13.1) and (13.2) of the Income Tax Act (the "Act"). We apologize for the delay in responding.

In your letter you have referred to the Tax Court of Canada decision in Jeannette Lussier v. The Queen, 99 DTC 1029, [1999], which dealt with the issue of a late-filed designation under subsection 104(13.1) of the Act. In light of this decision, you have asked whether the Canada Customs and Revenue Agency (CCRA) will revise its position as set out in the 1999 T3 Guide with respect to designations under subsection 104(13.1) and subsection 104(13.2)

Our Comments

As a result of the decision in Jeannette Lussier v. The Queen, the CCRA has taken the view that a designation under subsection 104(13.1) or subsection 104(13.2) of the Act may be amended, late-filed or revoked where the trustee can establish that an honest mistake was made. For example, an honest mistake could include a situation where a taxpayer was not aware of the designation, or where the designation results in unintended tax consequences, and there is evidence that the taxpayer took reasonable steps to comply with the law and undertook remedial action as quickly as possible.

All requests to amend, late-file or revoke such a designation must be sent to the Estate Returns Processing Section at the Ottawa Technology Centre. As these requests will be reviewed on a case by case basis, each request has to include the name and account number of the trust, the names and addresses of the trustee(s) and beneficiary(s) and a full explanation of why the designation is being amended, late-filed or revoked.

With regard to the T3 Guide, it is our understanding that the comments contained therein concerning when these designations can be made, changed or revoked will be withdrawn when the guide is next revised.

The above comments represent our view of the law as it generally applies. While we hope that it is of assistance to you, please note that it is not an advance income tax ruling and, accordingly, it is not binding on the CCRA.

Yours truly,

for Director
Resources, Partnerships and Trusts Division
Income Tax Rulings Directorate
Policy and Legislation Branch

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