the amount by which the principal amount of the obligation exceeds the amount for which the obligation was issued shall be included in computing the income of the first owner of the obligation
	(c) who is resident in Canada,
	(d) who is not a government nor a person exempt, because of section 149, from tax under this Part on all or part of the person's taxable income, and
	(e) of whom the obligation is a capital property,
	for the taxation year in which the owner acquired the obligation.
	(2) Subsection (1) applies to the 1990 and subsequent taxation years.
	11. (1) The portion of paragraph 18(3.1)(a) of the Act before subparagraph (i) is replaced by the following:
	(a) no deduction shall be made in respect of any outlay or expense made or incurred by the taxpayer (other than an amount deductible under paragraph 20(1)(a), (aa) or(qq) or subsection 20(29)) that can reasonably be regarded as a cost attributable to the period of the construction, renovation or alteration of a building by or on behalf of the taxpayer, a person with whom the taxpayer does not deal at arm's length, a corporation of which the taxpayer is a specified shareholder or a partnership of which the taxpayer's share of any income or loss is 10% or more and relating to the construction, renovation or alteration, or a cost attributable to that period and relating to the ownership during that period of land
	(2) Subsection 18(10) of the Act is amended by striking out the word ``or'' at the end of paragraph (a) and by replacing paragraph (b) with the following:
	(b) the custodian of which is non-resident, to the extent that the contribution
	(i) is in respect of an employee who is non-resident at the time the contribution is made, and
	(ii) cannot reasonably be regarded as having been made in respect of services performed or to be performed during a period when the employee is resident in Canada; or
	(c) the custodian of which is non-resident, to the extent that the contribution can reasonably be regarded as having been made in respect of services performed by an employee in a particular calendar month where
	(i) the employee was resident in Canada throughout no more than 60 of the 72 calendar months ending with the particular month, and
	(ii) the employee became a member of the plan before the end of the month following the month in which the employee became resident in Canada,
	and, for the purpose of this paragraph, where benefits provided to an employee under a particular employee benefit plan are replaced by benefits provided under another employee benefit plan, the other plan shall be deemed, in respect of the employee, to be the same plan as the particular plan.
	(3) Subsection 18(11) of the Act is amended by striking out the word ``or'' at the end of paragraph (e), by adding the word ``or'' at the end of paragraph (f) and by adding the following after paragraph (f):
	(g) making a contribution to any account under a provincial pension plan prescribed for the purpose of paragraph 60(v),
	(4) Subsection (1) applies after 1990 except that, in its application to buildings acquired before 1990, the reference in paragraph 18(3.1)(a) of the Act, as amended by subsection (1), to ``or subsection 20(29)'' shall be read as ``, subsection 20(29) or section 37 or 37.1''.
	(5) Subsection (2) applies to contributions made after 1992.
	(6) Subsection (3) applies to the 1993 and subsequent taxation years.
	12. (1) Paragraph 20(1)(e) of the Act is amended by striking out the word ``or'' at the end of subparagraph (i) and by replacing the portion after subparagraph (ii) and before subparagraph (iii) with the following:
	(ii.1) in the course of incurring indebtedness that is an amount payable for property acquired for the purpose of gaining or producing income therefrom or for the purpose of gaining or producing income from a business (other than property the income from which would be exempt or property that is an interest in a life insurance policy), or
	(ii.2) in the course of a rescheduling or restructuring of a debt obligation of the taxpayer or an assumption of a debt obligation by the taxpayer, where the debt obligation is
	(A) in respect of a borrowing described in subparagraph (ii), or
	(B) in respect of an amount payable described in subparagraph (ii.1),
	and, in the case of a rescheduling or restructuring, the rescheduling or restructuring, as the case may be, provides for the modification of the terms or conditions of the debt obligation or the conversion or substitution of the debt obligation to or with a share or another debt obligation,
	(including a commission, fee or other amount paid or payable for or on account of services rendered by a person as a salesperson, agent or dealer in securities in the course of the issuance, sale or borrowing, but not including any amount that is a payment described in paragraph 18(9.1)(c) or (d) nor any amount paid or payable as or on account of the principal amount of the indebtedness or as or on account of interest) that is the lesser of
	(2) Subparagraph 20(1)(e)(v) of the Act is replaced by the following:
	(v) where in a taxation year all debt obligations in respect of a borrowing described in subparagraph (ii) or in respect of indebtedness described in subparagraph (ii.1) are settled or extinguished (otherwise than in a transaction made as part of a series of borrowings or other transactions and repayments), by the taxpayer for consideration that does not include any unit, interest, share or debt obligation of the taxpayer or any person with whom the taxpayer does not deal at arm's length or any partnership or trust of which the taxpayer or any person with whom the taxpayer does not deal at arm's length is a member or beneficiary, this paragraph shall be read without reference to the words ``the lesser of'' and to subparagraph (iii), and
	(3) Paragraph 20(1)(e.1) of the Act is replaced by the following:
Annual fees, etc.	(e.1) an amount payable by the taxpayer (other than a payment that is contingent or dependent on the use of, or production from, property or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation) as a standby charge, guarantee fee, registrar fee, transfer agent fee, filing fee, service fee or any similar fee, that can reasonably be considered to relate solely to the year and that is incurred by the taxpayer
	(i) for the purpose of borrowing money to be used by the taxpayer for the purpose of earning income from a business or property (other than borrowed money used by the taxpayer for the purpose of acquiring property the income from which would be exempt income),
	(ii) in the course of incurring indebtedness that is an amount payable for property acquired for the purpose of gaining or producing income therefrom or for the purpose of gaining or producing income from a business (other than property the income from which would be exempt or property that is an interest in a life insurance policy), or
	(iii) for the purpose of rescheduling or restructuring a debt obligation of the taxpayer or an assumption of a debt obligation by the taxpayer, where the debt obligation is
	(A) in respect of a borrowing described in subparagraph (i), or
	(B) in respect of an amount payable described in subparagraph (ii),
	and, in the case of a rescheduling or restructuring, the rescheduling or restructuring, as the case may be, provides for the modification of the terms or conditions of the debt obligation or the conversion or substitution of the debt obligation to or with a share or another debt obligation.
	(4) Paragraph 20(1)(ll) of the Act is replaced by the following:
Repayment of interest	(ll) such part of any amount payable by the taxpayer because of a provision of this Act, or of an Act of a province that imposes a tax similar to the tax imposed under this Act, as was paid in the year and as can reasonably be considered to be a repayment of interest that was included in computing the taxpayer's income for the year or a preceding taxation year;
	(5) Paragraph 20(1)(rr) of the Act is replaced by the following:
Disability-rela ted equipment	(rr) an amount paid by the taxpayer in the year for any prescribed disability-specific device or equipment.
	(6) The portion of subsection 20(3) of the Act after paragraph (b) is replaced by the following:
	subject to subsection 20.1(6), the borrowed money shall, for the purposes of paragraphs (1)(c), (e) and (e.1), subsections 20.1(1) and (2) and section 21, and for the purpose of paragraph 20(1)(k) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, be deemed to have been used for the purpose for which the money previously borrowed was used or was deemed by this subsection to have been used, or to acquire the property in respect of which the amount was payable, as the case may be.
	(7) Subsections (1) to (3) and (6) apply to expenses incurred after 1987 except that, in its application to such expenses incurred before 1994, the portion of subsection 20(3) of the Act after paragraph (b), as enacted by subsection (6), shall be read without reference to the expressions ``subject to subsection 20.1(6)'' and ``subsections 20.1(1) and (2)''.
	(8) Subsection (4) applies to taxation years that begin after 1991.
	(9) Subsection (5) applies to amounts paid after February 25, 1992.
	13. (1) The Act is amended by adding the following after section 20:
Borrowed money used to earn income from property	20.1 (1) Where
	(a) at any time after 1993 borrowed money ceases to be used by a taxpayer for the purpose of earning income from a capital property (other than real property or depreciable property), and
	(b) the amount of the borrowed money that was so used by the taxpayer immediately before that time exceeds the total of
	(i) where the taxpayer disposed of the property at that time for an amount of consideration that is not less than the fair market value of the property at that time, the amount of the borrowed money used to acquire the consideration,
	(ii) where the taxpayer disposed of the property at that time and subparagraph (i) does not apply, the amount of the borrowed money that, if the taxpayer had received as consideration an amount of money equal to the amount by which the fair market value of the property at that time exceeds the amount included in the total by reason of subparagraph (iii), would be considered to be used to acquire the consideration,
	(iii) where the taxpayer disposed of the property at that time for consideration that includes a reduction in the amount of the borrowed money, the amount of the reduction, and
	(iv) where the taxpayer did not dispose of the property at that time, the amount of the borrowed money that, if the taxpayer had disposed of the property at that time and received as consideration an amount of money equal to the fair market value of the property at that time, would be considered to be used to acquire the consideration,
	an amount of the borrowed money equal to the excess shall, to the extent that the amount is outstanding after that time, be deemed to be used by the taxpayer for the purpose of earning income from the property.
Borrowed money used to earn income from business	(2) Where at any particular time after 1993 a taxpayer ceases to carry on a business and, as a consequence, borrowed money ceases to be used by the taxpayer for the purpose of earning income from the business, the following rules apply:
	(a) where, at any time (in this paragraph referred to as the ``time of disposition'') at or after the particular time, the taxpayer disposes of property that was last used by the taxpayer in the business, an amount of the borrowed money equal to the lesser of
	(i) the fair market value of the property at the time of disposition, and
	(ii) the amount of the borrowed money outstanding at the time of disposition that is not deemed by this paragraph to have been used before the time of disposition to acquire any other property
	shall be deemed to have been used by the taxpayer immediately before the time of disposition to acquire the property;
	(b) subject to paragraph (a), the borrowed money shall, after the particular time, be deemed not to have been used to acquire property that was used by the taxpayer in the business;
	(c) the portion of the borrowed money outstanding at any time after the particular time that is not deemed by paragraph (a) to have been used before that subsequent time to acquire property shall be deemed to be used by the taxpayer at that subsequent time for the purpose of earning income from the business; and
	(d) the business shall be deemed to have fiscal periods after the particular time that coincide with the taxation years of the taxpayer, except that the first such fiscal period shall be deemed to begin at the end of the business's last fiscal period that began before the particular time.
Deemed dispositions	(3) For the purpose of paragraph (2)(a),
	(a) where a property was used by a taxpayer in a business that the taxpayer has ceased to carry on, the taxpayer shall be deemed to dispose of the property at the time at which the taxpayer begins to use the property in another business or for any other purpose;
	(b) where a taxpayer, who has at any time ceased to carry on a business, regularly used a property in part in the business and in part for some other purpose,
	(i) the taxpayer shall be deemed to have disposed of the property at that time, and
	(ii) the fair market value of the property at that time shall be deemed to equal the proportion of the fair market value of the property at that time that the use regularly made of the property in the business was of the whole use regularly made of the property; and
	(c) where the taxpayer is a trust, subsections 104(4) to (5.2) do not apply.
Amount payable for property	(4) Where an amount is payable by a taxpayer for property, the amount shall be deemed, for the purposes of this section and, where subsection (2) applies with respect to the amount, for the purposes of this Act, to be payable in respect of borrowed money used by the taxpayer to acquire the property.
Interest in partnership	(5) For the purposes of this section, where borrowed money that has been used to acquire an interest in a partnership is, as a consequence, considered to be used at any time for the purpose of earning income from a business or property of the partnership, the borrowed money shall be deemed to be used at that time for the purpose of earning income from property that is the interest in the partnership and not to be used for the purpose of earning income from the business or property of the partnership.
Refinancings	(6) Where at any time a taxpayer uses borrowed money to repay money previously borrowed that was deemed by paragraph (2)(c) immediately before that time to be used for the purpose of earning income from a business,
	(a) paragraphs (2)(a) to (c) apply with respect to the borrowed money; and
	(b) subsection 20(3) does not apply with respect to the borrowed money.
	(2) Subsection (1) applies after 1993.
	14. (1) Paragraph 39(9)(b) of the Act is amended by adding the following after subparagraph (ii):
	except that, where a particular amount was included under subparagraph 14(1)(a)(v) in the taxpayer's income for a taxation year that ended after 1987 and before 1990, the reference in subparagraph (i.1) to ``3/2'' shall, in respect of that portion of any amount deducted under section 110.6 in respect of the particular amount, be read as ``4/3''.
	(2) Paragraph 39(10)(b) of the Act is amended by adding the following after subparagraph (ii):
	except that, where a particular amount was included under subparagraph 14(1)(a)(v) in the trust's income for a taxation year that ended after 1987 and before 1990, the reference in subparagraph (i.1) to ``3/2'' shall, in respect of that portion of any amount deducted under section 110.6 in respect of the particular amount, be read as ``4/3''.
	(3) Subsections (1) and (2) apply to the 1988 and subsequent taxation years.
	15. (1) Subparagraph 40(2)(i)(ii) of the Act is replaced by the following: