(ii) all amounts, if any, claimed under this subsection by the individual for the year in respect of other businesses of the partnership, and
	(b) the amount determined by the formula
	A x B/C
	where
	A is the amount included under subparagraph 14(1)(a)(v) in computing the income of the partnership from the business for the fiscal period,
	B is the amount that would otherwise be the individual's share of the partnership's income from the business for the fiscal period, and
	C is the partnership's income from the business for the fiscal period.
Reduction of capital gains	(6) The total capital gains otherwise determined under subsection 130.1(4) or 131(1), subsections 138.1(3) and (4) or subsection 144(4), as the case may be, of an individual for a taxation year as a result of one or more elections, allocations or designations made after February 22, 1994 by a flow-through entity shall be reduced by such amount as the individual claims, not exceeding the individual's exempt capital gains balance for the year in respect of the entity.
Nil exempt capital gains balance	(7) Notwithstanding subsection (1), where at any time an individual ceases to be a member or shareholder of, or a beneficiary under, a flow-through entity, the exempt capital gains balance of the individual in respect of the entity for each taxation year that begins after that time is deemed to be nil.
	(2) Subsection (1) applies to the 1994 and subsequent taxation years.
	12. (1) Paragraph 40(2)(b) of the Act is replaced by the following:
	(b) where the taxpayer is an individual, the taxpayer's gain for a taxation year from the disposition of a property that was the taxpayer's principal residence at any time after the date (in this section referred to as the ``acquisition date'') that is the later of December 31, 1971 and the day on which the taxpayer last acquired or reacquired it, as the case may be, is the amount determined by the formula
	A - (A x B/C) - D
	where
	A is the amount that would, if this Act were read without reference to this paragraph and subsections 110.6(19) and (21), be the taxpayer's gain therefrom for the year,
	B is one plus the number of taxation years that end after the acquisition date for which the property was the taxpayer's principal residence and during which the taxpayer was resident in Canada,
	C is the number of taxation years that end after the acquisition date during which the taxpayer owned the property whether jointly with another person or otherwise, and
	D is
	(i) where the acquisition date is before February 23, 1994 and the taxpayer or a spouse of the taxpayer elected under subsection 110.6(19) in respect of the property or an interest therein that was owned, immediately before the disposition, by the taxpayer, 4/3 of the lesser of
	(A) the total of all amounts each of which is the taxable capital gain of the taxpayer or of a spouse of the taxpayer that would have resulted from an election by the taxpayer or spouse under subsection 110.6(19) in respect of the property or interest if
	(I) this Act were read without reference to subsection 110.6(20), and
	(II) the amount designated in the election were equal to the amount, if any, by which the fair market value of the property or interest at the end of February 22, 1994 exceeds the amount determined by the formula
	E - 1.1F
	where
	E is the amount designated in the election that was made in respect of the property or interest, and
	F is the fair market value of the property or interest at the end of February 22, 1994, and
	(B) the total of all amounts each of which is the taxable capital gain of the taxpayer or of a spouse of the taxpayer that would have resulted from an election that was made under subsection 110.6(19) in respect of the property or interest if the property were the principal residence of neither the taxpayer nor the spouse for each particular taxation year unless the property was designated, in a return of income for the taxation year that includes February 22, 1994 or for a preceding taxation year, to be the principal residence of either of them for the particular taxation year, and
	(ii) in any other case, zero;
	(2) Section 40 of the Act is amended by adding the following after subsection (3):
Deemed gain for certain partners	(3.1) Where, at the end of a fiscal period of a partnership, a member of the partnership is a limited partner of the partnership or is a member of the partnership who was a specified member of the partnership at all times since becoming a member (except where the member's partnership interest was held by the member on February 22, 1994 and is an excluded interest at the end of the fiscal period), the amount determined under subsection (3.11) shall be deemed to be a gain from the disposition, at the end of the fiscal period, of the member's interest in the partnership and, for the purpose of section 110.6, the interest shall be deemed to have been disposed of by the member at that time.
Amount of gain	(3.11) For the purpose of subsection (3.1), the amount determined at any time under this subsection in respect of a member's interest in a partnership is the amount determined by the formula
	A - B
	where
	A is the total of all amounts required by subsection 53(2) to be deducted in computing the adjusted cost base to the member of the interest in the partnership at that time, and
	B is the total of
	(a) the cost to the member of the interest determined for the purpose of computing the adjusted cost base to the member of the interest at that time, and
	(b) all amounts required by subsection 53(1) to be added to the cost to the member of the interest in computing the adjusted cost base to the member of the interest at that time.
Deemed loss for certain partners	(3.12) Where a corporation, an individual (other than a trust) or a testamentary trust (each of which is referred to in this subsection as the ``taxpayer'') is a member of a partnership at the end of a fiscal period of the partnership, the taxpayer shall be deemed to have a loss from the disposition at that time of the member's interest in the partnership equal to the amount that the taxpayer elects in the taxpayer's return of income under this Part for the taxation year that includes that time, not exceeding the lesser of
	(a) the amount, if any, by which
	(i) the total of all amounts each of which was an amount deemed by subsection (3.1) to be a gain of the taxpayer from a disposition of the interest before that time
	exceeds
	(ii) the total of all amounts each of which was an amount deemed by this subsection to be a loss of the taxpayer from a disposition of the interest before that time, and
	(b) the adjusted cost base to the taxpayer of the interest at that time.
Artificial transactions	(3.13) For the purpose of applying section 53 at any time to a member of a partnership who would be a member described in subsection (3.1) of the partnership if the fiscal period of the partnership that includes that time ended at that time, where at any time after February 21, 1994 the member of the partnership makes a contribution of capital to the partnership and
	(a) the partnership or a person or partnership with whom the partnership does not deal at arm's length
	(i) makes a loan to the member or to a person with whom the member does not deal at arm's length, or
	(ii) pays an amount as, on account of, in lieu of payment of or in satisfaction of, a distribution of the member's share of the partnership profits or partnership capital, or
	(b) the member or a person with whom the member does not deal at arm's length becomes indebted to the partnership or a person or partnership with whom the partnership does not deal at arm's length,
	and it is established, by subsequent events or otherwise, that the loan, payment or indebtedness, as the case may be, was made or arose as part of a series of contributions and such loans, payments or other transactions, the contribution of capital shall be deemed not to have been made.
Limited partner	(3.14) For the purpose of subsection (3.1), a member of a partnership at a particular time is a limited partner of the partnership at that time if, at that time or within 3 years after that time,
	(a) by operation of any law governing the partnership arrangement, the liability of the member as a member of the partnership is limited;
	(b) the member or a person with whom the member does not deal at arm's length is entitled to receive an amount or obtain a benefit that would be described in paragraph 96(2.2)(d) if it were read without reference to subparagraphs 96(2.2)(d)(ii) and (vi);
	(c) one of the reasons for the existence of the member who owns the interest
	(i) can reasonably be considered to be to limit the liability of any person with respect to that interest, and
	(ii) cannot reasonably be considered to be to permit any person who has an interest in the member to carry on the person's business (other than an investment business) in the most effective manner; or
	(d) there is an agreement or other arrangement for the disposition of an interest in the partnership and one of the main reasons for the agreement or arrangement can reasonably be considered to be to attempt to avoid the application of this subsection to the member.
Excluded interest	(3.15) For the purpose of subsection (3.1), an excluded interest in a partnership at any time means an interest in a partnership that actively carries on a business that was carried on by it throughout the period beginning February 22, 1994 and ending at that time, or that earns income from a property that was owned by it throughout that period, unless in that period there was a substantial contribution of capital to the partnership or a substantial increase in the indebtedness of the partnership.
Amounts considered not to be substantial	(3.16) For the purpose of subsection (3.15), an amount will be considered not to be substantial where
	(a) the amount
	(i) was raised pursuant to the terms of a written agreement entered into by a partnership before February 22, 1994 to issue an interest in the partnership and was expended on expenditures contemplated by the agreement before 1995 (or before March 2, 1995 in the case of amounts expended to acquire a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) the principal photography of which or, in the case of such a production that is a television series, one episode of the series, commences before 1995 and the production is completed before March 2, 1995, or an interest in one or more partnerships all or substantially all of the property of which is such a film production),
	(ii) was raised pursuant to the terms of a written agreement (other than an agreement referred to in subparagraph (i)) entered into by a partnership before February 22, 1994 and was expended on expenditures contemplated by the agreement before 1995 (or before March 2, 1995 in the case of amounts expended to acquire a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) the principal photography of which or, in the case of such a production that is a television series, one episode of the series, commences before 1995 and the production is completed before March 2, 1995, or an interest in one or more partnerships all or substantially all of the property of which is such a film production),
	(iii) was used by the partnership before 1995 (or before March 2, 1995 in the case of amounts expended to acquire a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) the principal photography of which or, in the case of such a production that is a television series, one episode of the series, commences before 1995 and the production is completed before March 2, 1995, or an interest in one or more partnerships all or substantially all of the property of which is such a film production) to make an expenditure required to be made pursuant to the terms of a written agreement entered into by the partnership before February 22, 1994, or
	(iv) was used to repay a loan, debt or contribution of capital that had been received or incurred in respect of any such expenditure;
	(b) the amount was raised before 1995 pursuant to the terms of a prospectus, preliminary prospectus, offering memorandum or registration statement filed before February 22, 1994 with a public authority in Canada pursuant to and in accordance with the securities legislation of Canada or of a province and, where required by law, accepted for filing by the public authority, and expended before 1995 (or before March 2, 1995 in the case of amounts expended to acquire a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii), or an interest in one or more partnerships all or substantially all of the property of which is such a film production) on expenditures contemplated by the document that was filed before February 22, 1994;
	(c) the amount was raised before 1995 pursuant to the terms of an offering memorandum distributed as part of an offering of securities where
	(i) the memorandum contained a complete or substantially complete description of the securities contemplated in the offering as well as the terms and conditions of the offering,
	(ii) the memorandum was distributed before February 22, 1994,
	(iii) solicitations in respect of the sale of the securities contemplated by the memorandum were made before February 22, 1994,
	(iv) the sale of the securities was substantially in accordance with the memorandum, and
	(v) the funds are expended in accordance with the memorandum before 1995 (except that the funds may be expended before March 2, 1995 in the case of a partnership all or substantially all of the property of which is a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) the principal photography of which or, in the case of such a production that is a television series, one episode of the series, commences before 1995 and the production is completed before March 2, 1995, or an interest in one or more partnerships all or substantially all of the property of which is such a film production); or
	(d) the amount was used for an activity that was carried on by the partnership on February 22, 1994 but not for a significant expansion of the activity nor for the acquisition or production of a film production.