Elected amount (Form T2057)

Buyers and sellers meet this when assets or shares are transferred to a corporation in a restructuring before or at a sale. The CRA’s Form T2057 is for use by a taxpayer and a Canadian corporation to jointly elect under subsection 85(1). Where the property is eligible property and the consideration includes shares of the corporation, the amount they agree on in the election is deemed to be the taxpayer’s proceeds of disposition and the corporation’s cost of the property.

Limits and checks

The agreed amount is not always the amount that applies. Section 85 contains rules that deem the elected amount to be a different figure in some cases, for example where paragraph 85(1)(e) or (c.1) applies. Read the whole subsection and its paragraphs before relying on a figure.

What to ask

• Who are the parties to the election, and is the corporation a taxable Canadian corporation?
• What amount was agreed, and was any limit in section 85(1) applied to it?
• Has Form T2057 been filed, and by when?

For how the election works in an asset sale, see can a section 85 rollover defer tax on an asset sale. Late or amended section 85 elections are dealt with in subsections 85(7) and 85(7.1); see also the taxpayer relief provisions.