(III) an amount on which it was required to pay, or would but for subsection 219(5.2) have been re quired to pay, tax under subsection 219(5.1) for the year because of the transfer of an insurance business to which subsection 138(11.5) or (11.92) has applied, and

        (B) its attributed surplus for the year,

(2) Subsection (1) applies to the 1994 and subsequent taxation years.

125. (1) The portion of subsection 190.15(6) of the Act after paragraph (b) is replaced by the following:

are , for the purposes of this section and section 190.14, deemed not to be related to each other except that, where at any time a taxpayer has a right referred to in paragraph 251(5)(b) with respect to shares and it can reasonably be con sidered that one of the main purposes for the acquisition of the right was to avoid any li mitation on the amount of a corporation's cap ital deduction for a taxation year, for the pur pose of determining whether a corporation is related to any other corporation, the corpora tions are, for the purpose of this section, deemed to be in the same position in relation to each other as if the right were immediate and absolute and as if the taxpayer had exer cised the right at that time .

(2) Subsection (1) applies after April 26, 1995.

126. (1) The Act is amended by adding the following after section 190.21:

Provisions applicable - Crown corporations

190.211 Section 27 applies to this Part with any modifications that the circumstances require.

(2) Subsection (1) applies after May 23, 1985.

127. Where an amount in respect of deferred realized gains or losses of a life insurance corporation is added or de ducted, as the case may be, in computing its taxable capital employed in Canada or capital under Part VI of the Act for a taxation year that ends after February 25, 1992 and began before 1996, the amount determined by the formula 

          (A - B) x C/D

shall be deducted, or, where the amount is negative, the absolute value of the amount shall be added, in computing the corpora tion's taxable capital employed in Canada under Part VI of the Act for the year, where

A is the corporation's taxable capital employed in Canada for the year under Part VI of the Act (determined without reference to this section);

B is the amount that would be the value of A if no amount were added or deducted in computing the corporation's taxable cap ital employed in Canada or capital for the year under Part VI of the Act in respect of its deferred realized gains or losses, as the case may be;

C is the number of days in the year that are after February 25, 1992 and before 1996; and

D is the number of days in the year.

128. (1) The portion of subsection 191.3(1) of the Act before paragraph (a) and paragraphs 191.3(1)(a) and (b) of the Act are replaced by the following:

Agreement respecting liability for tax

191.3 (1) Where a corporation (in this section referred to as the ``transferor corpora tion'') and a taxable Canadian corporation (in this section referred to as the ``transferee corporation'') that was related (otherwise than because of a right referred to in paragraph 251(5)(b) or because of the control of any corporation by Her Majesty in right of Canada or a province ) to the transferor corporation

    (a) throughout a particular taxation year of the transferor corporation (or, where the transferee corporation came into existence in that year, throughout the part of that year in which the transferee corporation was in existence) , and

    (b) throughout the last taxation year of the transferee corporation ending at or before the end of the particular taxation year (or, where the transferor corporation came into existence in that last taxation year of the transferee corporation, throughout that part of that last year in which the transferor corporation was in existence)

(2) Subsection (1) applies to taxation years of a transferor corporation that begin after 1994, except that the amendment to the portion of subsection 191.3(1) of the Act before paragraph (a), as enacted by subsec tion (1), applies only to taxation years of the transferor corporation that end after April 26, 1995.

(3) Where an agreement under subsec tion 191.3(2) of the Act can be made between a transferor corporation and a transferee corporation solely because of the amendment to paragraph 191.3(1)(a) or (b) of the Act, as enacted by subsection (1), the agreement is deemed to have been filed on time if it is filed with the Minister of National Revenue before the end of the third month after the month in which this Act is assented to.

129. (1) Section 191.4 of the Act is amended by adding the following after subsection (2):

Provisions applicable - Crown corporations

(3) Section 27 applies to this Part with any modifications that the circumstances require.

(2) Subsection (1) applies after 1987.

130. (1) The definition ``specified active business'' in section 204.8 of the Act is replaced by the following:

``specified active business''
« entreprise déterminée exploitée activement »

``specified active business'', at any time, means an active business that is carried on in Canada where

      (a) at least 50% of the full-time em ployees employed at that time in respect of the business are employed in Canada, and

      (b) at least 50% of the salaries and wages paid to employees employed at that time in respect of the business are reasonably attributable to services rendered in Cana da by the employees;

(2) Subsection (1) applies after 1988.

131. (1) The portion of subsection 204.82(2) of the English version of the Act before paragraph (a) is replaced by the following:

Liability for tax

(2) Where, at any time in a month in a particular taxation year of a corporation that was registered under this Part that began after the end of the corporation's last taxation year referred to in paragraph 204.81(6)(g), 60% of the least of

(2) Subsection 204.82(2) of the Act is amended by striking out the word ``and'' at the end of paragraph (a) and by adding the following after that paragraph:

    (a.1) the amount of the shareholders' equity in the corporation determined at the end of the second taxation year before the particu lar taxation year, without taking into ac count any unrealized gains or losses in respect of eligible investments of the corpo ration, and

(3) Subsections (1) and (2) apply to taxation years that end after 1994 and before March 1997.

132. (1) Paragraphs (d.1) and (e) of the definition ``foreign property'' in subsection 206(1) of the Act are replaced by the following:

      (d.1) except as provided by subsection (1.1) , any share (other than an excluded share) of the capital stock of, or any debt obligation issued by, a corporation (other than an investment corporation, mutual fund corporation or registered invest ment) that is a Canadian corporation, where shares of the corporation can reasonably be considered to derive their value, directly or indirectly, primarily from foreign property,

      (e) except as prescribed, any share of the capital stock of a mutual fund corpora tion or investment corporation that is not a registered investment, other than a share of the capital stock of an invest ment corporation that was last acquired before October 14, 1971,

(2) Paragraph (g) of the definition ``for eign property'' in subsection 206(1) of the Act is amended by striking out the word ``or'' at the end of subparagraph (iv) and by adding the following after that subpara graph:

      (iv.1) the European Bank for Reconstruc tion and Development, or

(3) Subsection 206(1) of the Act is amended by adding the following in alpha betical order:

``affiliate''
« société affiliée »

``affiliate'' of a corporation (in this definition referred to as the ``parent corporation'') at any time is any other corporation where, at that time,

      (a) the parent corporation controls the other corporation,

      (b) the parent corporation or a corpora tion controlled by the parent corporation owns

        (i) shares of the capital stock of the other corporation that would give the parent corporation or the corporation controlled by the parent corporation 25% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of that other corporation, and

        (ii) shares of the capital stock of the other corporation having a fair market value of 25% or more of the fair market value of all the issued shares of the capital stock of that other corporation, or

      (c) the other corporation is controlled by a particular corporation and the parent corporation or a corporation controlled by the parent corporation owns

        (i) shares of the capital stock of the particular corporation that would give the parent corporation or the corpora tion controlled by the parent corpora tion 25% or more of the votes that could be cast under all circumstances at an annual meeting of shareholders of the particular corporation, and

        (ii) shares of the capital stock of the particular corporation having a fair market value of 25% or more of the fair market value of all the issued shares of the capital stock of the particular corporation;

``carrying value''
« valeur comptable »

``carrying value'' of a property of a corpora tion or partnership at any time means

      (a) where a balance sheet of the corpora tion or the partnership as of that time was presented to the shareholders of the corporation or the members of the part nership and the balance sheet was pre pared using generally accepted account ing principles and was not prepared using the equity or consolidation method of accounting, the amount in respect of the property reflected in the balance sheet, and

      (b) in any other case, the amount that would have been reflected in a balance sheet of the corporation or the partner ship as of that time if the balance sheet had been prepared in accordance with generally acceptable accounting prin ciples and neither the equity nor consoli dation method of accounting were used;

``designated value''
« valeur désignée »

``designated value'' of a property at any time means the greater of

      (a) the fair market value at that time of the property, and

      (b) the carrying value at that time of the property;

``excluded share''
« action exclue »

``excluded share'' means

      (a) a share that is of a class of shares listed on a prescribed stock exchange in Cana da, where no share of that class has been issued after December 4, 1985 (otherwise than pursuant to an agreement in writing entered into before 5:00 p.m. Eastern Standard Time on December 4, 1985),

      (b) a share last acquired after 1995 that is of a class of shares listed on a prescribed stock exchange in Canada, where

        (i) no share of that class has been issued after July 20, 1995 (otherwise than pursuant to an agreement in writing made before July 21, 1995), and

        (ii) the share would not be foreign property if the expression ``primarily from foreign property'' in paragraph (d.1) of the definition ``foreign proper ty'' in this subsection were read as ``primarily from portfolio investments in property that is foreign property'' and that paragraph were read without reference to ``(other than an excluded share)'', and

      (c) a share last acquired after 1995 as a consequence of the exercise of a right acquired before 1996 where the share would not be foreign property if the expression ``primarily from foreign property'' in paragraph (d.1) of the definition ``foreign property'' in this subsection were read as ``primarily from portfolio investments in property that is foreign property'' and that paragraph were read without reference to ``(other than an excluded share)'';

``investment activity''
« activité d'investisse-
ment »

``investment activity'' of a particular corpora tion means any business carried on by the corporation, or any holding of property by the corporation otherwise than as part of a business carried on by the corporation, the principal purpose of which is to derive in come from, or to derive profits from the dis position of,

      (a) shares (other than shares of the capital stock of another corporation in which the particular corporation has a significant interest, where the primary activity of the other corporation is not an investment activity),

      (b) interests in trusts,

      (c) indebtedness (other than indebtedness owing by another corporation in which the particular corporation has a signifi cant interest, where the primary activity of the other corporation is not an invest ment activity),

      (d) annuities,

      (e) commodities or commodities futures purchased or sold, directly or indirectly in any manner whatever, on a commodi ties or commodities futures exchange (except commodities manufactured, pro duced, grown, extracted or processed by the corporation),

      (f) currencies (other than currencies in the form of numismatic coins),

      (g) interests in funds or entities other than corporations, partnerships and trusts,

      (h) interests or options in respect of property described in any of paragraphs (a) to (g), or

      (i) any combination of properties de scribed in any of paragraphs (a) to (h);

``qualified property''
« bien admissible »

``qualified property'' of a corporation means a property (other than a debt obligation or share issued by an affiliate of the corpora tion or by any corporation related to the cor poration) owned by the corporation and used by it or an affiliate of the corporation in a specified active business carried on by it or the affiliate;

``significant interest''
« participa-
tion notable »

``significant interest'' has the meaning that would be assigned by section 142.2 if that section were read without reference to para graphs 142.2(3)(b) and (c);

``specified active business''
« entreprise déterminée exploitée activement »

``specified active business'' carried on by a corporation, at any time, means a particular business that is carried on by the corpora tion in Canada where

      (a) the corporation employs in the partic ular business at that time more than 5 full-time employees and at least

        (i) 50% of the full-time employees employed by the corporation at that time in the particular business are employed in Canada, and

        (ii) 50% of the salaries and wages paid to employees employed at that time in the particular business are reasonably attributable to services rendered in Canada by the employees, or

      (b) one or more other corporations associated with the corporation provide, in the course of carrying on one or more other active businesses, managerial, ad ministrative, financial, maintenance or other similar services to the corporation in respect of the particular business and

        (i) the corporation could reasonably be expected to require more than 5 full- time employees at that time in respect of the particular business if those services had not been provided,

        (ii) at least 50% of the full-time employees employed at that time by the corporation in the particular busi ness and by the other corporations in the other active businesses are employed in Canada, and

        (iii) at least 50% of the salaries and wages paid to employees employed at that time by the corporation in the particular business and by the other corporations in the other active busi nesses are reasonably attributable to services rendered in Canada by the employees,

    but does not include a business carried on by the corporation the principal purpose of which is to derive income from, or from the disposition of, shares and debt obligations the value of which can reasonably be considered to derive, directly or indirectly, primarily from foreign property;