77. (1) Section 127.55 of the Act is amended by striking out the word ``and'' at the end of paragraph (d), by adding the word ``and'' at the end of paragraph (e) and by adding the following after paragraph (e):
	(f) a taxation year of a trust throughout which the trust is
	(i) a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)),
	(ii) a mutual fund trust, or
	(iii) a trust prescribed to be a master trust.
	(2) Subsection (1) applies to the 1992 and subsequent taxation years.
	78. (1) The portion of paragraph 128(2)(e) of the Act after subparagraph (i) is replaced by the following:
	(ii) in computing the individual's taxable income for that taxation year, no deduc tion were permitted by Division C, other than
	(A) an amount under paragraph 110(1)(d), (d.1), (d.2) or (d.3) or section 110.6 to the extent that the amount is in respect of an amount included in income under subpara graph (i) for that taxation year, and
	(B) an amount under section 111 to the extent that the amount was in respect of a loss of the individual for any taxation year that ended before the individual was discharged absolutely from bankruptcy, and
	(iii) in computing the tax payable under this Part by the individual for that taxation year, no deduction were allowed
	(A) under section 118, 118.2, 118.3, 118.5, 118.6, 118.8 or 118.9,
	(B) under section 118.1 with respect to a gift made by the individual on or after the day the individual became bank rupt, and
	(C) under subsection 127(5) with re spect to an expenditure incurred or property acquired by the individual in any taxation year that ends after the individual was discharged absolutely from bankruptcy,
	and the trustee is liable to pay any tax so determined for that taxation year;
	(2) Paragraph 128(2)(f) of the Act is amended by striking out the word ``and'' at the end of subparagraph (ii) and by replac ing the portion of that paragraph after subparagraph (ii) with the following:
	(iii) in computing taxable income of the individual for the year, no amount were deductible under paragraph 110(1)(d), (d.1), (d.2) or (d.3) or section 110.6 in respect of an amount included in income under subparagraph (e)(i), and no amount were deductible under section 111, and
	(iv) in computing the tax payable under this Part by the individual for the year, no amount were deductible under section 118.1 or 120.2 or subsection 127(5),
	and the individual is liable to pay any tax so determined for that taxation year;
	(3) Paragraph 128(2)(g) of the Act is replaced by the following:
	(g) notwithstanding subparagraphs (e)(ii) and (iii) and (f)(iii) and (iv), where an individual was discharged absolutely from bankruptcy,
	(i) in computing the taxable income of the individual for any taxation year that ends after the individual was so dis charged, no amount shall be deducted under section 111 in respect of losses for taxation years preceding that in which the individual was so discharged, and
	(ii) in computing the tax payable under this Part by the individual for any taxa tion year that ends after the individual was so discharged,
	(A) no amount shall be deducted under section 120.2 in respect of an amount for any taxation year preceding that in which the individual was so dis charged,
	(B) no amount shall be deducted under section 118.1 in respect of a gift made by the individual in any taxation year preceding that in which the individual was so discharged, and
	(C) no amount shall be deducted under subsection 127(5) in respect of an expenditure incurred or a property acquired by the individual in any taxation year preceding that in which the individual was so discharged;
	(4) Subsection 128(3) of the Act is re pealed.
	(5) Subsections (1) to (4) apply to bank ruptcies that occur after April 26, 1995.
	79. (1) Paragraph (c) of the description of C in subsection 128.1(2) of the Act is replaced by the following:
	(c) any amount claimed under paragraph 219(1)(j) by the corporation for its last taxation year that began before the particular time; and
	(2) Subsection (1) applies to taxation years that begin after 1995, except that, in its application to taxation years that begin in 1996, the reference in paragraph (c) of the description of C in subsection 128.1(2) of the Act, as enacted by subsection (1), to ``paragraph 219(1)(j)'' shall be read as a reference to ``paragraph 219(1)(h) as it read in its application to the 1995 taxation year or paragraph 219(1)(j)''.
	80. (1) Paragraph 129(1)(b) of the Act is replaced by the following:
	(b) shall, with all due dispatch, make the dividend refund after mailing the notice of assessment if an application for it has been made in writing by the corporation within the period within which the Minister would be allowed under subsection 152(4) to assess tax payable under this Part by the corporation for the year if that subsection were read without reference to paragraph 152(4)(a) .
	(2) Subsection (1) applies after April 27, 1989.
	81. (1) The portion of subsection 130(2) of the Act before paragraph (a) is replaced by the following:
Application of ss. 131(1) to (3.2) and (6)	(2) Where a corporation was an investment corporation throughout a taxation year (other than a corporation that was a mutual fund corporation throughout the year ), subsections 131(1) to (3.2) and (6) apply in respect of the corporation for the year
	(2) Subparagraph 130(3)(a)(vii) of the Act is replaced by the following:
	(vii) no person would be a specified shareholder of the corporation in the year if the references in the definition ``speci fied shareholder'' in subsection 248(1) to ``not less than 10%'' were read as references to ``more than 25%'', and
	(3) Subsection (1) applies to the 1993 and subsequent taxation years.
	(4) Subsection (2) applies to taxation years that begin after June 20, 1996, except that, where
	(a) a corporation was an investment corporation on June 20, 1996, and
	(b) a particular person would have been a specified shareholder of the corpora tion on June 20, 1996 if the references in the definition ``specified shareholder'' in subsection 248(1) of the Act to ``not less than 10%'' were read as references to ``more than 25%'',
	subparagraph 130(3)(a)(vii) of the Act, as enacted by subsection (2), applies with re spect to the particular person and the cor poration in the manner described in subsec tions (5) to (7).
	(5) Where, after June 20, 1996 and before the end of a taxation year of a corporation described in paragraph (4)(a), a particular person described in paragraph (4)(b) has neither contributed capital to nor acquired a share of the capital stock of the corpora tion, subsection (2) does not apply with respect to the particular person and the corporation for the year.
	(6) Where, after June 20, 1996 and before the end of a taxation year of a corporation described in paragraph (4)(a), a particular person described in paragraph (4)(b) has acquired one or more shares of the capital stock of the corporation, and each such share was
	(a) a share that was held, at each particu lar time after June 20, 1996 and before the time (in this subsection referred to as the ``acquisition time'') at which the particular person acquired it, by the particular person or by a person who was related to the particular person from June 20, 1996 to the particular time,
	(b) a share that was issued by the corpora tion as a stock dividend to the particular person, or
	(c) a share that was issued by the corpora tion as a stock dividend to a person who was related to the particular person from June 20, 1996 to the time at which the share was issued and that was held, at each particular time from the time the share was issued to the acquisition time, by the particular person or by a person who was related to the particular person from June 20, 1996 to the particular time,
	subparagraph 130(3)(a)(vii) of the Act, as enacted by subsection (2), shall be read as follows with respect to the particular per son and the corporation for the year:
	(vii) no person would be a specified shareholder of the corporation in the year if the references in the definition ``speci fied shareholder'' in subsection 248(1) to ``not less than 10%'' were read as references to ``more than the greatest percentage that is the total percentage of the shares of a class of the capital stock of the corporation held at the end of June 20, 1996 by the person and other persons with whom the person did not deal at arm's length'', and
	(7) Where, after June 20, 1996 and before the end of a taxation year of a corporation described in paragraph (4)(a), a particular person described in paragraph (4)(b) has acquired a share of the capital stock of the corporation other than a share described in paragraph (6)(a), (b) or (c), subsection (2) applies with respect to the particular per son and the corporation for the year.
	(8) For the purposes of subsections (6) and (7),
	(a) where at a particular time
	(i) a trust that existed on June 20, 1996 distributes a share of the capital stock of a corporation to a person who was a beneficiary under the trust throughout the period from June 20, 1996 to the particular time in satisfaction of all or any part of the beneficiary's capital interest in the trust, or
	(ii) a partnership that existed on June 20, 1996 distributes, on ceasing to exist, a share of the capital stock of a corporation or an interest in a share to a person who was a member of the partnership throughout the period from June 20, 1996 to the particular time,
	the share is deemed to have been owned by the beneficiary or member from the later of June 20, 1996 and the time the share was last acquired by the trust or partnership until the particular time; and
	(b) where a person who is a beneficiary of a trust or a member of a partnership is deemed by paragraph (b), (c) or (e) of the definition ``specified shareholder'' in subsection 248(1) of the Act to own a share owned by the partnership or trust, the person is deemed to have acquired the share at the later of the time the share was acquired by the trust or partnership and the time the person last became a benefi ciary of the trust or a member of the partnership.
	82. (1) Subparagraph 130.1(6)(f)(i) of the Act is replaced by the following:
	(i) debts owing to the corporation that were secured, whether by mortgages or in any other manner, on houses (as defined in section 2 of the National Housing Act) or on property included within a housing project (as defined in that section) , and
	(2) Subsection (1) is deemed to have come into force on June 23, 1993.
	83. (1) Paragraph 131(2)(b) of the Act is replaced by the following:
	(b) shall, with all due dispatch, make that capital gains refund after mailing the notice of assessment if an application for it has been made in writing by the corporation within the period within which the Minister would be allowed under subsection 152(4) to assess tax payable under this Part by the corporation for the year if that subsection were read without reference to paragraph 152(4)(a) .
	(2) Subsection 131(5) of the Act is re placed by the following:
Dividend refund to mutual fund corporation	(5) A corporation that was a mutual fund corporation throughout a taxation year
	(a) is deemed for the purposes of paragraph 87(2)(aa) and section 129 to have been a private corporation throughout the year, except that its refundable dividend tax on hand at the end of the year (within the meaning assigned by subsection 129(3)) shall be determined without reference to paragraph 129(3)(a); and
	(b) where it was not an investment corpora tion throughout the year, is deemed for the purposes of Part IV to have been a private corporation throughout the year, except that, in applying subsection 186(1) to the corporation in respect of the year, that subsection shall be read without reference to paragraph 186(1)(b).
	(3) Subparagraphs 131(8)(b)(i) and (ii) of the Act are replaced by the following:
	(i) the investing of its funds in property (other than real property or an interest in real property ),
	(ii) the acquiring, holding, maintaining, improving, leasing or managing of any real property (or interest in real property) that is capital property of the corporation, or
	(4) Subsection (1) applies after April 27, 1989.
	(5) Subsection (2) applies to the 1993 and subsequent taxation years.
	(6) Subsection (3) applies to the 1994 and subsequent taxation years.
	84. (1) Paragraph 132(1)(b) of the Act is replaced by the following:
	(b) shall, with all due dispatch, make that capital gains refund after mailing the notice of assessment if an application for it has been made in writing by the trust within the period within which the Minister would be allowed under subsection 152(4) to assess tax payable under this Part by the trust for the year if that subsection were read without reference to paragraph 152(4)(a) .
	(2) Subparagraphs 132(6)(b)(i) and (ii) of the Act are replaced by the following:
	(i) the investing of its funds in property (other than real property or an interest in real property ),
	(ii) the acquiring, holding, maintaining, improving, leasing or managing of any real property (or interest in real property) that is capital property of the trust, or
	(3) The portion of subsection 132(6) of the Act after paragraph (c) is repealed.
	(4) Section 132 of the Act is amended by adding the following after subsection (6):
Election to be mutual fund	(6.1) Where a trust becomes a mutual fund trust at any particular time before the 91st day after the end of the calendar year in which its first taxation year began, and the trust so elects in its return of income under this Part for that first year, the trust is deemed to have been a mutual fund trust from the beginning of that first year until the particular time.
	(5) Subsection (1) applies after April 27, 1989.
	(6) Subsections (2) to (4) apply to the 1994 and subsequent taxation years.
	85. (1) The portion of paragraph 132.2(1)(h) of the Act before subparagraph (i) is replaced by the following:
	(h) except as provided in paragraph (p), the transferor's cost of any particular property received by the transferor from the transfer ee as consideration for the disposition of the property is deemed to be
	(2) Paragraphs 132.2(1)(o) and (p) of the Act are replaced by the following:
	(o) where the transferor is a mutual fund corporation,
	(i) for the purposes of subsection 131(4), the transferor is deemed in respect of any share disposed of in accordance with paragraph (j) to be a mutual fund corpo ration at the time of the disposition, and
	(ii) for the purposes of Part I.3, the transferor's taxation year that, but for this paragraph, would have included the transfer time is deemed to have ended immediately before the transfer time (except that, for greater certainty, noth ing in this paragraph shall affect the computation of any amount determined under this Part);