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(a) paragraph 55(3.1)(b) of the Act, as
enacted by subsection (4), shall be read as
follows:
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(b) the dividend was received as part of a
series of transactions or events in which
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(i) a person or partnership (referred to in
this subparagraph as the ``vendor'')
disposed of property and
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(I) a share of the capital stock of a
distributing corporation that made a
distribution as part of the series or of
a transferee corporation in relation
to the distributing corporation, or
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(II) property 10% or more of the fair
market value of which was, at any
time during the course of the series,
derived from one or more shares
described in subclause (I),
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(B) the property or any other property
(other than property received by the
transferee corporation on the
distribution) acquired by any person or
partnership in substitution therefor
was acquired (otherwise than on a
permitted acquisition, permitted
exchange or permitted redemption in
relation to the distribution) by a person
(other than the vendor) who was not
related to the vendor or, as part of the
series, ceased to be related to the
vendor or by a partnership, and
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(I) control of the distributing
corporation or of a transferee
corporation in relation to the
distributing corporation was
acquired (otherwise than as a result
of a permitted acquisition,
permitted exchange or permitted
redemption in relation to the
distribution) by any person or group
of persons, or
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(II) the vendor was, at any time
during the course of the series, a
specified shareholder of the
distributing corporation or a
transferee corporation in relation to
the distributing corporation, or
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(ii) a share of the capital stock of a
distributing corporation was acquired
(otherwise than on a permitted
acquisition or permitted exchange in
relation to a distribution by the
distributing corporation or on an
amalgamation of 2 or more predecessor
corporations of the distributing
corporation), in contemplation of a
distribution by the distributing
corporation, by
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(A) a transferee corporation in relation
to the distributing corporation, or by
any person or partnership with whom
the transferee corporation did not deal
at arm's length from a person to whom
the acquiror was not related,
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(B) a person or any member of a group
of persons who acquired control of the
distributing corporation as part of the
series,
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(C) a particular partnership any
interest in which is held, directly or
indirectly through one or more
partnerships, by a person referred to in
clause (B), or
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(D) a person or partnership with whom
a person referred to in clause (B) or a
particular partnership referred to in
clause (C) did not deal at arm's length,
or
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and
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(b) the Act shall be read without
reference to paragraphs 55(3.1)(c) and
(d) and (3.2)(c) and (e), as enacted by
subsection (4).
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(8) Subsections (2), (5) and (6) apply to
dividends received after February 21, 1994,
other than dividends received as part of a
transaction or event or a series of
transactions or events that was required on
February 22, 1994 to be carried out
pursuant to a written agreement entered
into before February 22, 1994.
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17. (1) Subsection 67.1(1) of the Act is
amended by replacing the reference to
``80%'' with a reference to ``50%''.
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(2) Subsection (1) applies to expenses
incurred after February 21, 1994 in respect
of food and beverages consumed and
entertainment enjoyed after February
1994.
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18. (1) Subparagraph 70(5.1)(d)(ii) of the
Act is replaced by the following:
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(ii) the amount to be included under
subparagraph 14(1)(a)(v) or paragraph
14(1)(b) in computing the beneficiary's
income
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(2) Subsection (1) applies to dispositions
and acquisitions that occur after February
22, 1994.
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19. (1) Subparagraph 73(3)(d.2)(ii) of the
Act is replaced by the following:
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(ii) the amount to be included under
subparagraph 14(1)(a)(v) or paragraph
14(1)(b) in computing the child's income
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(2) Subsection (1) applies to transfers that
occur after February 22, 1994.
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20. (1) Paragraph 74.2(2)(b) of the Act is
replaced by the following:
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(b) for the purposes of section 110.6, that
property shall be deemed to have been
disposed of by the individual on the day on
which it was disposed of by the other
person.
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(2) Subsection (1) applies to the 1994 and
subsequent taxation years.
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21. (1) Subsection 75(3) of the Act is
amended by striking out the word ``or'' at
the end of paragraph (c) and by adding the
following after paragraph (c):
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(c.1) by a mining reclamation trust; or
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(2) Subsection (1) applies to taxation
years that end after February 22, 1994.
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22. (1) Paragraph 85(1)(d.1) of the Act is
replaced by the following:
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(d.1) for the purpose of determining after
the time of the disposition the amount to be
included under paragraph 14(1)(b) in
computing the corporation's income, there
shall be added to the amount otherwise
determined for Q in the definition
``cumulative eligible capital'' in subsection
14(5) the amount determined by the
formula
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(A x B/C) - 2(D - E)
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A is the amount, if any, determined for Q in
that definition in respect of the
taxpayer's business immediately before
the time of the disposition,
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B is the fair market value immediately
before that time of the eligible capital
property disposed of to the corporation
by the taxpayer,
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C is the fair market value immediately
before that time of all eligible capital
property of the taxpayer in respect of the
business,
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D is the amount, if any, that would be
included under subsection 14(1) in
computing the taxpayer's income as a
result of the disposition if
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(i) the amounts determined for C and D
in subparagraph 14(1)(a)(v) were zero,
and
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(ii) paragraph 14(1)(b) were read as
follows:
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``(b) in any other case, the excess shall
be included in computing the
taxpayer's income from that
business for that year.'', and
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E is the amount, if any, that would be
included under subsection 14(1) in
computing the taxpayer's income as a
result of the disposition if the amount
determined for D in subparagraph
14(1)(a)(v) were zero;
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(2) Subsection (1) applies to dispositions
of property in respect of a business that
occur in a fiscal period of the business that
ends after February 22, 1994 otherwise
than because of an election under
subsection 25(1) of the Act.
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23. (1) Paragraph 87(2)(j.2) of the Act is
replaced by the following:
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| Prepaid
expenses
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(j.2) for the purposes of subsections 18(9)
and (9.01) and paragraph 20(1)(mm), the
new corporation shall be deemed to be the
same corporation as, and a continuation of,
each predecessor corporation;
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(2) Subsection 87(2) of the Act is amended
by adding the following after paragraph
(j.91):
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| Subsection
125(5.1)
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(j.92) for the purposes of subsection
125(5.1), the new corporation shall be
deemed to be the same corporation as, and
a continuation of, each predecessor
corporation;
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| Mining
reclamation
trusts
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(j.93) for the purposes of paragraphs
12(1)(z.1) and (z.2) and 20(1)(ss) and (tt)
and sections 107.3 and 127.41, the new
corporation shall be deemed to be the same
corporation as, and a continuation of, each
predecessor corporation;
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(3) Subsection (1) applies to the 1994 and
subsequent taxation years.
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(4) Paragraph 87(2)(j.92) of the Act, as
enacted by subsection (2), applies to
taxation years that end after June 1994.
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(5) Paragraph 87(2)(j.93) of the Act, as
enacted by subsection (2), applies to
amalgamations that occur and windings-up
that begin after February 22, 1994.
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24. (1) The portion of paragraph 88(1)(c)
of the Act after clause (ii)(B) is replaced by
the following:
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plus, where the property was a capital
property (other than an ineligible property)
of the subsidiary at the time that the parent
last acquired control of the subsidiary and
was owned by the subsidiary thereafter
without interruption until such time as it
was distributed to the parent on the
winding-up, the amount determined under
paragraph (d) in respect of the property and,
for the purposes of this paragraph,
``ineligible property'' means
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(iii) depreciable property,
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(iv) property transferred to the parent on
the winding-up where the transfer is part
of a distribution (within the meaning
assigned by subsection 55(1)) made in
the course of a reorganization in which a
dividend was received to which
subsection 55(2) would, but for
paragraph 55(3)(b), apply,
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(v) property transferred to the subsidiary
by the parent or by any person or
partnership that was not, otherwise than
because of a right referred to in paragraph
251(5)(b), dealing at arm's length with
the parent, and
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(vi) property disposed of by the parent as
part of the series of transactions or events
that includes the winding-up where, as
part of the series,
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(A) the parent acquired control of the
subsidiary, and
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(B) the property or any other property
acquired by any person in substitution
therefor is acquired by
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(I) a particular person (other than a
specified person) that, at any time
during the course of the series and
before control of the subsidiary was
last acquired by the parent, was a
specified shareholder of the
subsidiary,
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(II) 2 or more persons (other than
specified persons), if a particular
person would have been, at any time
during the course of the series and
before control of the subsidiary was
last acquired by the parent, a
specified shareholder of the
subsidiary if all the shares that were
then owned by those 2 or more
persons were owned at that time by
the particular person, or
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(III) a corporation (other than a
specified person)
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1. of which a particular person
referred to in subclause (I) is, at
any time during the course of the
series and after control of the
subsidiary was last acquired by
the parent, a specified
shareholder, or
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2. of which a particular person
would be, at any time during the
course of the series and after
control of the subsidiary was last
acquired by the parent, a
specified shareholder if all the
shares then owned by persons
(other than specified persons)
referred to in subclause (II) were
owned at that time by the
particular person;
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(2) Subsection 88(1) of the Act is amended
by adding the following after
paragraph (c.1):
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(c.2) for the purposes of this paragraph and
subparagraph (c)(vi),
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(i) ``specified person'' at any time means
the parent and each person that would, if
this Act were read without reference to
paragraph 251(5)(b), be related to the
parent at that time and, for this purpose,
a person shall be deemed not to be related
to the parent where it can reasonably be
considered that one of the main purposes
of one or more transactions or events was
to cause the person to be related to the
parent so as to prevent a property that was
distributed to the parent on the
winding-up from being an ineligible
property for the purpose of paragraph (c),
and
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(ii) where at any time a property is owned
or acquired by a partnership or a trust,
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(A) the partnership or the trust, as the
case may be, shall be deemed to be a
person that is a corporation having one
class of issued shares, which shares
have full voting rights under all
circumstances,
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(B) each member of the partnership or
beneficiary under the trust, as the case
may be, shall be deemed to own at that
time the proportion of the number of
issued shares of the capital stock of the
corporation that
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(I) the fair market value at that time
of that member's interest in the
partnership or that beneficiary's
interest in the trust, as the case may
be,
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(II) the fair market value at that time
of all the members' interests in the
partnership or beneficiaries'
interests in the trust, as the case may
be, and
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(C) the property shall be deemed to
have been owned or acquired at that
time by the corporation;
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(3) The portion of paragraph 88(1)(d) of
the Act before subparagraph (i) is replaced
by the following:
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(d) the amount determined under this
paragraph in respect of each property of the
subsidiary distributed to the parent on the
winding-up is such portion of the amount, if
any, by which the total determined under
subparagraph (b)(ii) exceeds the total of
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(4) Subsections (1) to (3) apply to
windings-up that begin after February 21,
1994 except that, in its application to a
winding-up that begins after February 21,
1994 and before December 1994, clause
88(1)(c)(vi)(B) of the Act, as enacted by
subsection (1), shall be read as follows:
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(B) the property or any other property
acquired by any person in substitution
therefor is acquired by
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(I) a particular person (other than a
specified person) that, at any time
during the course of the series and
before control of the subsidiary was
last acquired by the parent, was a
specified shareholder of the
subsidiary, or
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(II) any person (other than a
specified person) that at any time
during the course of the series did
not deal at arm's length with a
particular person (other than a
specified person) referred to in
subclause (I);
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25. (1) Paragraph 96(2.2)(c) of the Act is
replaced by the following:
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(c) the total of all amounts each of which is
an amount owing at that time to the
partnership or to a person or partnership
with whom or which the partnership does
not deal at arm's length by the taxpayer or
by a person or partnership with whom or
which the taxpayer does not deal at arm's
length other than any such amount deducted
under subparagraph 53(2)(c)(i.3) in
computing the adjusted cost base to the
taxpayer of the taxpayer's partnership
interest at that time; and
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(2) Subsection (1) applies after
September 26, 1994.
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26. (1) The portion of paragraph 98(1)(c)
of the Act after subparagraph (ii) is
replaced by the following:
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the amount of the excess shall be deemed to
be a gain of the taxpayer for the taxpayer's
taxation year that includes that time from a
disposition at that time of that interest.
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(2) Clause 98(3)(g)(iii)(B) of the Act is
replaced by the following:
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(B) the amount to be included under
subparagraph 14(1)(a)(v) or paragraph
14(1)(b) in computing the person's
income
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(3) Clause 98(5)(h)(ii)(B) of the Act is
replaced by the following:
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(B) the amount to be included under
subparagraph 14(1)(a)(v) or paragraph
14(1)(b) in computing the proprietor's
income
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