Here’s a good reason to file an election on time: if you don’t, and one of the parties to the election disappears (dies or is dissolved, for example), the CRA will likely take the position that a late-filed election isn’t possible because the parties to it can’t make the election anymore.
In S. Cunard & Company Limited v. Canada (Attorney General), 2012 FC 683, one party sold shares to another, and, it appears, they intended to file an election under section 85. By the time they got around to filing the election, however, one of the parties, a New Brunswick corporation, had voluntarily dissolved. Under New Brunswick law, a voluntarily dissolved corporation cannot be revived. (An Ontario Business Corporations Act corporation that has dissolved voluntarily can be revived only by a special act of the legislature.) The CRA concluded that a section 85 election could not be late-filed because one of the parties (the dissolved corporation) no longer had the capacity to make the election.
