B is the number of calendar months in the pe riod that begins with May 1995 and ends with the calendar month that includes the time of the disposition; and
	C is the number of calendar months in the pe riod that begins with the calendar month in which the person last acquired the property and ends with the calendar month that in cludes the time of the disposition.
	(8) Subject to section 156, subsections (1), (2), (6) and (7) apply to dispositions of property that occur after April 26, 1995.
	(9) Subsection (3) applies after February 21, 1994, except that subsection 40(3.1) of the Act, as enacted by subsection (3), does not apply to a member of a partnership before the end of the partnership's fifth fiscal period that ends after 1994 where the following conditions are met:
	(a) the member acquired the partnership interest before 1995;
	(b) all or substantially all of the property (other than money) of the partnership is a film production or an interest in one or more partnerships all or substantially all of the property of which is a film produc tion;
	(c) the principal photography of the production (or, in the case of a production that is a television series, an episode of the series) began before 1995;
	(d) the funds used to produce the film production were raised before 1995 and the principal photography of the produc tion was completed, and the funds were expended, before 1995 (or, in the case of a film production prescribed for the purpose of subparagraph 96(2.2)(d)(ii) of the Act, the principal photography of the production was completed, and the funds were expended, before March 2, 1995); and
	(e) one of the following conditions is met:
	(i) the producer of the production
	(A) had, before February 22, 1994, entered into a written agreement for the pre-production, distribution, broadcasting, financing or acquisi tion of the production or the acquisi tion of the screenplay for the produc tion, or
	(B) had entered into a written con tract before February 22, 1994 with a screenwriter to write the screen play for the production,
	(ii) the producer of the production received before 1995 a commitment for funding or government assistance (or an advance ruling or active status letter in respect of eligibility for such funding or other government assis tance) for the production from a feder al or provincial government agency the mandate of which is related to the provision of assistance to film produc tions in Canada, or
	(iii) the production is a continuation of a television series an episode of which satisfies the requirements of this para graph.
	(10) Subsection (4) applies after April 26, 1995.
	(11) Subsection (5) applies to fiscal peri ods that end after November 1994.
	20. (1) The portion of subsection 44(1) of the Act after paragraph (d) and before paragraph (e) is replaced by the following:
	acquired a capital property that is a replace ment property for the taxpayer's former prop erty and the replacement property has not been disposed of by the taxpayer before the time the taxpayer disposed of the taxpayer's former property, notwithstanding subsection 40(1), if the taxpayer so elects under this subsection in the taxpayer's return of income for the year in which the taxpayer acquired the replacement property,
	(2) Paragraph 44(5)(a) of the Act is replaced by the following:
	(a) it is reasonable to conclude that the property was acquired by the taxpayer to replace the former property;
	(a.1) it was acquired by the taxpayer and used by the taxpayer or a person related to the taxpayer for the same or a similar use as the use to which the taxpayer or a person related to the taxpayer put the former property;
	(3) Subsections (1) and (2) apply to dispositions of former properties that occur after the 1993 taxation year.
	21. (1) Subparagraph 48.1(1)(a)(ii) of the Act is replaced by the following:
	(ii) immediately after that time, ceases to be a small business corporation because a class of its shares is listed on a prescribed stock exchange, and
	(2) Subsection (1) applies to a corpora tion that ceases to be a small business corporation after 1995.
	(3) An election under subsection 48.1(1) of the Act, as amended by subsection (1), that is made by an individual for the 1995 taxation year is deemed to have been made on time, where
	(a) a class of the shares of the capital stock of the corporation in respect of which the election is made was, on January 1, 1996, listed on a stock exchange listed in section 3201 of the Income Tax Regulations;
	(b) the corporation was a small business corporation on December 31, 1995; and
	(c) the election is made before the end of the third month after the month in which this Act is assented to.
	22. (1) The portion of subsection 51(1) of the Act before paragraph (a) is replaced by the following:
Convertible property	51. (1) Where a share of the capital stock of a corporation is acquired by a taxpayer from the corporation in exchange for
	(2) Subsection (1) applies to exchanges that occur after June 20, 1996, other than exchanges that occur before 1997 pursuant to agreements in writing made on or before June 20, 1996.
	23. (1) Subsection 52(7) of the Act is replaced by the following:
Cost of shares of subsidiary	(7) Notwithstanding any other provision of this Act, where a corporation disposes of property to another corporation in a transac tion to which paragraph 219(1)(l) applies, the cost to it of any share of a particular class of the capital stock of the other corporation received by it as consideration for the property is deemed to be the lesser of the cost of the share to the corporation otherwise determined immediately after the disposition and the amount by which the paid-up capital in respect of that class increases because of the issuance of the share.
	(2) Subsection (1) applies to taxation years that begin after 1995.
	24. (1) Paragraphs 53(1)(f.1) and (f.11) of the Act are replaced by the following:
	(f.1) where the taxpayer is a taxable Cana dian corporation and the property was disposed of by another taxable Canadian corporation to the taxpayer in circum stances such that
	(i) paragraph (f.2) does not apply to increase the adjusted cost base to the other corporation of shares of the capital stock of the taxpayer, and
	(ii) the capital loss from the disposition was deemed by paragraph 40(2)(e.1) (or, where the property was acquired by the taxpayer before 1996, by paragraph 40(2)(e) or 85(4)(a) as those paragraphs read in their application to property acquired before April 26, 1995) to be nil,
	the amount that would otherwise have been the capital loss from the disposition;
	(f.11) where the property was disposed of by a person (other than a non-resident person or a person exempt from tax under this Part on the person's taxable income) or by an eligible Canadian partnership (as defined in subsection 80(1)) to the taxpayer in circum stances such that
	(i) paragraph (f.1) does not apply to increase the adjusted cost base to the taxpayer of the property,
	(ii) paragraph (f.2) does not apply to increase the adjusted cost base to that person of shares of the capital stock of the taxpayer, and
	(iii) the capital loss from the disposition was deemed by paragraph 40(2)(e.1) (or, where the property was acquired by the taxpayer before 1996, by paragraph 85(4)(a) as it read in its application to property acquired before April 26, 1995) to be nil,
	the amount that would otherwise be the capital loss from the disposition;
	(2) Paragraph 53(1)(f.2) of the Act is replaced by the following:
	(f.2) where the property is a share, any amount required by paragraph 40(3.6)(b) (or, where the property was acquired by the taxpayer before 1996, by paragraph 85(4)(b) as it read in its application to property disposed of before April 26, 1995 ) to be added in computing the adjusted cost base to the taxpayer of the share;
	(3) Subsection 53(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (p), by adding the word ``and'' at the end of paragraph (q) and by adding the following after paragraph (q):
	(r) where the time is before 2005, the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs (a) to (f) of the definition ``flow-through entity'' in subsection 39.1(1) and immediately after that time the taxpayer disposed of all of the taxpayer's interests in, and shares of the capital stock of, the entity, the amount determined by the formula
	A x B/C
	where
	A is the amount, if any, by which the taxpayer's exempt capital gains balance (as defined in subsection 39.1(1)) in respect of the entity for the taxpayer's taxation year that includes that time exceeds the total of all amounts each of which is
	(i) the amount by which a capital gain is reduced under section 39.1 for the year because of the taxpayer's exempt capital gains balance in respect of the entity, or
	(ii) 4/3 of an amount by which a taxable capital gain, or the income from a business, is reduced under section 39.1 for the year because of the taxpayer's exempt capital gains bal ance in respect of the entity,
	B is the fair market value at that time of the property, and
	C is the fair market value at that time of all the taxpayer's interests in, and shares of the capital stock of, the entity.
	(4) Clause 53(2)(c)(i)(C) of the Act is replaced by the following:
	(C) subsections 100(4) and 112(3.1) and subsection 112(4.2) as it read in its application to dispositions of property that occurred before April 27, 1995 ,
	(5) Subparagraph 53(2)(c)(i.3) of the Act is replaced by the following:
	(i.3) if at that time the property is not a tax shelter investment as defined by section 143.2 and the taxpayer would be a member, described in subsection 40(3.1), of the partnership if the fiscal period of the partnership that includes that time ended at that time, the unpaid principal amount of any indebtedness of the taxpayer for which recourse is lim ited, either immediately or in the future and either absolutely or contingently, and that can reasonably be considered to have been used to acquire the property,
	(6) The portion of subsection 53(4) of the Act before paragraph (a) is replaced by the following:
Recomputa- tion of adjusted cost base on transfers and deemed dispositions	(4) Where at any time in a taxation year a person or partnership (in this subsection referred to as the ``vendor'') disposes of a specified property and the proceeds of dis position of the property are determined under paragraph 48.1(1)(c), section 70 or 73, subsec tion 85(1), paragraph 87(4)(a) or (c) or 88(1)(a), subsection 97(2) or 98(2), paragraph 98(3)(f) or (5)(f), subsection 104(4), para graph 107(2)(a), (2.1)(a), (4)(d) or (5)(a) or 111(4)(e) or section 128.1,
	(7) Subsection 53(5) of the Act is replaced by the following:
Recomputa- tion of adjusted cost base on other transfer	(5) Where
	(a) at any time in a taxation year a person or partnership (in this subsection referred to as the ``vendor'') disposes of a specified property to another person or partnership (in this subsection referred to as the ``trans feree''),
	(b) immediately before that time, the vendor and the transferee do not deal with each other at arm's length or would not deal with each other at arm's length if paragraph 80(2)(j) applied for the purpose of this subsection,
	(c) paragraph (b) would apply in respect of the disposition if each right referred to in paragraph 251(5)(b) that is a right of the transferee to acquire the specified property from the vendor or a right of the transferee to acquire other property as part of a transaction or event or series of transactions or events that includes the disposition were not taken into account, and
	(d) the proceeds of the disposition are not determined under any of the provisions referred to in subsection (4),
	the following rules apply:
	(e) there shall be deducted after that time in computing the adjusted cost base to the transferee of the property the amount, if any, by which
	(i) the total of all amounts deducted under paragraph (2)(g.1) in computing, im mediately before that time, the adjusted cost base to the vendor of the property
	exceeds
	(ii) the amount that would be the ven dor's capital gain for the year from that disposition if this Act were read without reference to subparagraph 40(1)(a)(iii) and subsection 100(2), and
	(f) the amount determined under paragraph (e) in respect of that disposition shall be added after that time in computing the adjusted cost base to the transferee of the property.
	(8) Subject to section 156, subsections (1) and (2) apply to dispositions of property that occur after April 26, 1995.
	(9) Subsection (3) applies to the 1994 and subsequent taxation years.
	(10) Subsection (4) applies after April 26, 1995.
	(11) Subsection (5) applies to indebted ness of a taxpayer arising after September 26, 1994, other than indebtedness arising pursuant to an agreement in writing en tered into by the taxpayer before Septem ber 27, 1994.
	(12) Subsections (6) and (7) apply to taxation years that end after February 21, 1994.
	25. (1) The definition ``superficial loss'' in section 54 of the Act is replaced by the following:
``superficial loss'' « perte apparente »	``superficial loss'' of a taxpayer means the tax payer's loss from the disposition of a partic ular property where
	(a) during the period that begins 30 days before and ends 30 days after the disposi tion, the taxpayer or a person affiliated with the taxpayer acquires a property (in this definition referred to as the ``substi tuted property'') that is, or is identical to, the particular property, and
	(b) at the end of that period, the taxpayer or a person affiliated with the taxpayer owns or had a right to acquire the substituted property,
	except where the disposition was
	(c) a disposition deemed by paragraph 33.1(11)(a), subsection 45(1), section 48 as it read in its application before 1993, section 50 or 70, subsection 104(4), section 128.1, paragraph 132.2(1)(f), subsection 138(11.3) or 142.5(2), para graph 142.6(1)(b) or subsection 144(4.1) or (4.2) or 149(10) to have been made,
	(d) the expiration of an option,
	(e) a disposition to which paragraph 40(2)(e.1) applies,
	(f) a disposition by a corporation the control of which was acquired by a person or group of persons within 30 days after the disposition,
	(g) a disposition by a person that, within 30 days after the disposition, became or ceased to be exempt from tax under this Part on its taxable income, or