54. (1) Subsection 107(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (b) and by replacing paragraph (c) with the following:
	(c) where the taxpayer is not a mutual fund trust, the taxpayer's capital loss from the disposition is deemed to be the amount, if any, by which the amount of that loss otherwise determined exceeds the amount, if any, by which
	(i) the total of all amounts each of which was received or would, but for subsection 104(19), have been received by the trust on a share of the capital stock of a corporation before the disposition (and, where the trust is a unit trust, after 1987) and
	(A) where the taxpayer is a corpora tion,
	(I) was a taxable dividend desig nated under subsection 104(19) by the trust in respect of the taxpayer, to the extent of the amount of the dividend that was deductible under section 112 or subsection 115(1) or 138(6) in computing the taxpayer's taxable income or taxable income earned in Canada for any taxation year, or
	(II) was an amount designated under subsection 104(20) by the trust in respect of the taxpayer,
	(B) where the taxpayer is another trust, was an amount designated under sub section 104(19) or (20) by the trust in respect of the taxpayer, and
	(C) where the taxpayer is not a corpo ration, trust or partnership, was an amount designated under subsection 104(20) by the trust in respect of the taxpayer
	exceeds
	(ii) the portion of the total determined under subparagraph (i) that can reason ably be considered to have resulted in a reduction, under this paragraph, of the taxpayer's capital loss otherwise deter mined from a previous disposition of an interest in the trust, and
	(d) where the taxpayer is a partnership and a person (other than a partnership or a mutual fund trust) is a member of the partnership, the amount of the person's share of any loss of the partnership from the disposition is deemed to be the amount, if any, by which that loss otherwise deter mined exceeds the amount, if any, by which
	(i) the total of all amounts each of which is a dividend that was received or would, but for subsection 104(19), have been received by the trust on a share of the capital stock of a corporation before the disposition (and, where the trust is a unit trust, after 1987) and
	(A) where the person is a corporation,
	(I) was a taxable dividend that was designated under subsection 104(19) by the trust in respect of the taxpayer, to the extent of the amount of the dividend that was deductible under section 112 or subsection 115(1) or 138(6) in computing the person's taxable income or taxable income earned in Canada for any taxation year, or
	(II) was a dividend designated under subsection 104(20) by the trust in respect of the taxpayer and was an amount received by the person,
	(B) where the person is an individual other than a trust, was a dividend designated under subsection 104(20) by the trust in respect of the taxpayer and was an amount received by the person, and
	(C) where the person is another trust, was a dividend designated under sub section 104(19) or (20) by the trust in respect of the taxpayer and was an amount received by the person (or that would have been received by the person if this Act were read without reference to subsection 104(19)),
	exceeds
	(ii) the portion of the total determined under subparagraph (i) that can reason ably be considered to have resulted in a reduction, under this paragraph, of the person's capital loss otherwise deter mined from a previous disposition of an interest in the trust,
	(2) Subsection 107(1.1) of the Act is replaced by the following:
Cost of capital interest in a trust	(1.1) For the purpose of subsection (1) and notwithstanding paragraph 69(1)(c), the cost to a taxpayer of a capital interest in a trust, other than an interest acquired by the taxpayer from a person who was the beneficiary in respect of the interest immediately before its acquisition by the taxpayer or an interest issued to the taxpayer for consideration paid by the taxpayer that is equal to the fair market value of the interest at the time of issuance, is deemed to be
	(a) where the taxpayer elects under subsec tion 110.6(19) in respect of the interest and the trust does not elect under that subsection in respect of any property of the trust, the taxpayer's cost of the interest determined under paragraph 110.6(19)(a); and
	(b) in any other case, nil.
	(3) The portion of paragraph 107(2)(b) of the Act before subparagraph (i) is replaced by the following:
	(b) the taxpayer is, subject to subsection (2.2), deemed to have acquired the property at a cost equal to the total of its cost amount to the trust immediately before that time and the amount, if any, by which
	(4) The portion of subsection 107(2.1) of the Act before paragraph (a) is replaced by the following:
Other distributions	(2.1) Where at any time any property of a trust is distributed by the trust to a beneficiary under the trust in satisfaction of all or any part of the beneficiary's capital interest in the trust or in satisfaction of a right described in subsection 52(6), and subsection (2) does not apply in respect of the distribution, notwith standing any other provision of this Act other than section 132.2 ,
	(5) Section 107 of the Act is amended by adding the following after subsection (2.1):
Flow-through entity	(2.2) Where at any time before 2005 a beneficiary under a trust described in para graph (h), (i) or (j) of the definition ``flow- through entity'' in subsection 39.1(1) received a distribution of property from the trust in satisfaction of all or a portion of the beneficia ry's interests in the trust and the beneficiary files with the Minister on or before the beneficiary's filing-due date for the taxation year that includes that time an election in respect of the property in prescribed form, there shall be included in the cost to the beneficiary of a particular property (other than money) received by the beneficiary as part of the distribution of property the least of
	(a) the amount, if any, by which the beneficiary's exempt capital gains balance (as defined in subsection 39.1(1)) in respect of the trust for the beneficiary's taxation year that includes that time exceeds the total of all amounts each of which is
	(i) an amount by which a capital gain is reduced under section 39.1 in the year because of the beneficiary's exempt capital gains balance in respect of the trust,
	(ii) 4/3 of an amount by which a taxable capital gain is reduced under section 39.1 in the year because of the beneficiary's exempt capital gains balance in respect of the trust, or
	(iii) an amount included in the cost to the beneficiary of another property received by the beneficiary at or before that time in the year because of this subsection,
	(b) the amount by which the fair market value of the particular property at that time exceeds the adjusted cost base to the trust of the particular property immediately before that time, and
	(c) the amount designated in respect of the particular property in the election.
	(6) Paragraph 107(6)(b) of the Act is replaced by the following:
	(b) neither the vendor nor a person that would, if section 251.1 were read without reference to the definition ``controlled'' in subsection 251.1(3), be affiliated with the vendor had a capital interest in the trust.
	(7) Subsection (1) applies to dispositions that occur after April 26, 1995.
	(8) Subsection (2) applies to the 1994 and subsequent taxation years.
	(9) Subsections (3) and (5) apply to the 1994 and subsequent taxation years, and a prescribed form filed under subsection 107(2.2) of the Act, as enacted by subsection (5), before the end of the sixth month after the month in which this Act is assented to is deemed to be filed on time.
	(10) Subsection (4) applies after June 1994.
	(11) Subsection (6) applies after April 26, 1995.
	55. (1) The definition ``excluded proper ty'' in subsection 108(1) of the Act is replaced by the following:
``excluded property'' « bien exclu »	``excluded property'' means a share of the capital stock of a non-resident-owned in vestment corporation that is not taxable Ca nadian property ;
	(2) Paragraph (e.1) of the definition ``trust'' in subsection 108(1) of the Act is replaced by the following:
	(e.1) a cemetery care trust or a trust governed by an eligible funeral arrange ment,
	(3) Clauses 108(2)(b)(ii)(A) and (B) of the Act are replaced by the following:
	(A) the investing of its funds in property (other than real property or an interest in real property ),
	(B) the acquiring, holding, maintain ing, improving, leasing or managing of any real property, or interest in real property, that is capital property of the trust, or
	(4) Subparagraph 108(2)(b)(iii) of the Act is replaced by the following:
	(iii) at least 80% of its property consisted of any combination of shares, bonds, mortgages, marketable securities, cash, notes or other similar obligations, real property (or interests in real property) situated in Canada or rights to or interests in any rental or royalty computed by reference to the amount or value of production from a natural accumulation of petroleum or natural gas in Canada, from an oil or gas well in Canada or from a mineral resource in Canada,
	(5) The portion of paragraph 108(2)(b) of the Act after subparagraph (v) is replaced by the following:
	and, where the trust would not be a unit trust at the particular time if subparagraph (iii) were read without reference to the words ``real property (or interests in real property) situated in Canada'', the units of the trust are listed at any time in the year or in the following taxation year on a prescribed stock exchange in Canada, or
	(6) Subsection 108(2) of the Act is amended by striking out the word ``or'' at the end of paragraph (a), by adding the word ``or'' at the end of paragraph (b) and by adding the following after paragraph (b):
	(c) the fair market value of the property of the trust at the end of 1993 was primarily attributable to real property (or an interest in real property), the trust was a unit trust throughout any calendar year that ended before 1994 and the fair market value of the property of the trust at the particular time is primarily attributable to property described in paragraph (a) or (b) of the definition ``qualified investment'' in section 204, real property (or an interest in real property) or any combination of those properties.
	(7) Subsection (1) applies after April 26, 1995.
	(8) Subsection (2) applies to the 1993 and subsequent taxation years.
	(9) Subsections (3) to (6) apply to the 1994 and subsequent taxation years.
	56. (1) Paragraph 110.6(2.1)(d) of the Act is replaced by the following:
	(d) the amount that would be determined in respect of the individual for the year under paragraph 3(b) (other than an amount included in determining the amount in respect of the individual under paragraph (2)(d)) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified small busi ness corporation shares disposed of by the individual after June 17, 1987.
	(2) Paragraph 110.6(14)(f) of the Act is amended by striking out the word ``or'' at the end of subparagraph (i) and the word ``and'' at the end of subparagraph (ii), by adding the word ``or'' at the end of subpara graph (ii) and by adding the following after subparagraph (ii):
	(iii) as payment of a stock dividend; and
	(3) The portion of subsection 110.6(27) of the Act before paragraph (a) is replaced by the following:
Amended election	(27) Subject to subsection (28), an election under subsection (19) in respect of a property or a business is deemed to be amended and the election, as amended, is deemed for the purpose of this section (other than subsection (29)) to have been filed on the election filing date if
	(4) Subsection 110.6(28) of the Act is replaced by the following:
Election that cannot be revoked or amended	(28) An election under subsection (19) cannot be revoked or amended where the amount designated in the election exceeds 11/10 of
	(a) if the election is in respect of a property other than an interest in a partnership , the fair market value of the property at the end of February 22, 1994;
	(b) if the election is in respect of an interest in a partnership, the greater of $1 and the fair market value of the property at the end of February 22, 1994; and
	(c) if the election is in respect of a business, the greater of $1 and the fair market value at the end of February 22, 1994 of all the eligible capital property owned at that time by the elector in respect of the business.
	(5) Subsection (1) applies to the 1996 and subsequent taxation years.
	(6) Subsection (2) applies to dispositions of shares that occur after June 17, 1987.
	(7) Subsections (3) and (4) apply to the 1994 and subsequent taxation years.
	57. (1) Subsections 112(3) to (4.3) of the Act are replaced by the following:
Loss on share that is capital property	(3) Subject to subsections (5.5) and (5.6), the amount of any loss of a taxpayer (other than a trust) from the disposition of a share that is capital property of the taxpayer (other than a share that is property of a partnership) is deemed to be the amount of the loss deter mined without reference to this subsection minus,
	(a) where the taxpayer is an individual, the lesser of
	(i) the total of all amounts each of which is a dividend received by the taxpayer on the share in respect of which an election was made under subsection 83(2) where subsection 83(2.1) does not deem the dividend to be a taxable dividend, and
	(ii) the loss determined without reference to this subsection minus all taxable dividends received by the taxpayer on the share; and
	(b) where the taxpayer is a corporation, the total of all amounts received by the taxpay er on the share each of which is
	(i) a taxable dividend, to the extent of the amount of the dividend that was deduct ible under this section or subsection 115(1) or 138(6) in computing the tax payer's taxable income or taxable in come earned in Canada for any taxation year,
	(ii) a dividend in respect of which an election was made under subsection 83(2) where subsection 83(2.1) does not deem the dividend to be a taxable dividend, or
	(iii) a life insurance capital dividend.
Loss on share that is capital property - excluded dividends	(3.01) A dividend shall not be included in the total determined under subparagraph (3)(a)(i) or paragraph (3)(b) where the taxpay er establishes that
	(a) it was received when the taxpayer and persons with whom the taxpayer was not dealing at arm's length did not own in total more than 5% of the issued shares of any class of the capital stock of the corporation from which the dividend was received; and
	(b) it was received on a share that the taxpayer owned throughout the 365-day period that ended immediately before the disposition.
Loss on share held by partnership	(3.1) Subject to subsections (5.5) and (5.6), where a taxpayer (other than a partnership or a mutual fund trust) is a member of a partnership, the taxpayer's share of any loss of the partnership from the disposition of a share that is held by a particular partnership as capital property is deemed to be that share of the loss determined without reference to this subsection minus,