I forgot to file the section 156 election on time — can CRA still let it apply?
A section 156 election generally has to be filed by a specific deadline to take effect for the period intended, and missing that deadline doesn't automatically mean the election is lost, the CRA has discretion in some circumstances to accept a late-filed election, but that relief isn't guaranteed and isn't something you can simply assume will be granted just by asking after the fact.
Where the CRA does exercise that discretion, it typically looks at factors like whether the corporations otherwise genuinely qualified as closely related throughout the period, whether they've generally been compliant, and why the election was filed late in the first place, a genuine oversight is treated differently than a pattern of missed filings. Even where relief is available, it's a case-by-case decision, not an entitlement, and the CRA can refuse or grant it only partially.
Because relying on discretionary relief is inherently uncertain, and because the underlying HST exposure on intercompany transactions during the gap period is real until the late election is actually accepted, this should be raised with the corporations' tax advisor as soon as the missed filing is discovered, so a request for relief, and any necessary corrective filings, can be made promptly rather than left to be discovered during a CRA review.
Key takeaways
- A late section 156 election isn't automatically lost, but CRA relief is discretionary, not guaranteed.
- The CRA considers factors like ongoing eligibility and the reason for the late filing.
- Relief can be refused or only partially granted, so don't assume it will be approved.
- Raise a missed filing with a tax advisor promptly to request relief and address any exposure.