(3) Subsections 69(11) to (12.2) of the Act are replaced by the following:
Deemed proceeds of disposition	(11) Where, at any particular time as part of a series of transactions or events , a taxpayer disposes of property for proceeds of disposi tion that are less than its fair market value and it can reasonably be considered that one of the main purposes of the series is
	(a) to obtain the benefit of
	(i) any deduction in computing income, taxable income, taxable income earned in Canada or tax payable under this Act, or
	(ii) any balance of undeducted outlays, expenses or other amounts
	available to a person (other than a person that would be affiliated with the taxpayer immediately before the series began, if section 251.1 were read without reference to the definition ``controlled'' in subsection 251.1(3)) in respect of a subsequent dis position of the property or property substi tuted for the property, or
	(b) to obtain the benefit of an exemption available to any person from tax payable under this Act on any income arising on a subsequent disposition of the property or property substituted for the property,
	notwithstanding any other provision of this Act, where arrangements for the subsequent disposition are made before the day that is 3 years after the particular time, the taxpayer is deemed to have disposed of the property at the particular time for proceeds of disposition equal to its fair market value at the particular time.
Reassess- ments	(12) Notwithstanding subsections 152(4) to (5), the Minister may at any time make such assessments or reassessments of the tax, interest and penalties payable by the taxpayer as are necessary to give effect to subsection (11).
	(4) Subsection 69(13) of the Act is re placed by the following:
Amalgamatio n or merger	(13) Where there is an amalgamation or merger of a corporation with one or more other corporations to form one corporate entity (in this subsection referred to as the ``new corpo ration''), each property of the corporation that becomes property of the new corporation as a result of the amalgamation or merger is deemed, for the purpose of determining whether subsection (11) applies to the amal gamation or merger, to have been disposed of by the corporation immediately before the amalgamation or merger for proceeds equal to
	(a) in the case of a Canadian resource property or a foreign resource property, nil; and
	(b) in the case of any other property, the cost amount to the corporation of the property immediately before the amalgamation or merger.
	(5) Subsection (1) applies to windings-up that begin after 1995.
	(6) Subsection (2) applies to windings-up that begin after April 26, 1995, except that, in its application to windings-up that began before 1996, paragraph 69(5)(d) of the Act, as enacted by subsection (2), shall be read as follows:
	(d) subsections 13(21.2), 14(12), 18(15), 40(3.4) and (3.6) and 85(4) and (5.1) do not apply to the winding-up; and
	(e) paragraph 40(2)(e) does not apply in computing the loss, if any, of the sharehold er from the disposition of a share of the capital stock of the corporation to the corporation on the winding-up.
	(7) Subsection (3) applies to a disposition that is part of a series of transactions or events that begins after April 26, 1995, other than a disposition that occurred before 1996 to a person that was obliged on that day to acquire the property pursuant to the terms of an agreement in writing entered into on or before that day, and for the purpose of this subsection, a person is considered not to be obliged to acquire property where the person can be excused from the obligation if there is a change to the Act or if there is an adverse assessment under the Act.
	(8) Subsection (4) applies to amalgam ations and mergers that occur after April 26, 1995.
	35. (1) Paragraph 70(3)(b) of the English version of the Act is replaced by the following:
	(b) an amount received by one of the beneficiaries or persons on the realization or disposition of the right or thing shall be included in computing the income of the beneficiary or person for the taxation year in which the beneficiary or person received it.
	(2) Subparagraph (a)(i) of the definition ``share of the capital stock of a family farm corporation'' in subsection 70(10) of the Act is replaced by the following:
	(i) the corporation or a corporation related to it ,
	(3) Subsection (1) applies to taxation years that end after November 1991.
	(4) Subsection (2) applies to the 1994 and subsequent taxation years.
	35.1 (1) The definition ``créancier'' in subsection 79(1) of the French version of the Act is replaced by the following:
« créancier » ``creditor''	« créancier » Comprend une personne envers laquelle une personne donnée a l'obligation de payer un montant en vertu d'une hy pothèque ou d'un droit semblable. Par ail leurs, lorsqu'un bien est vendu à la personne donnée dans le cadre d'une vente condition nelle, le vendeur du bien, ou tout cessionn aire par rapport à la vente, est réputé être un créancier de la personne donnée pour ce qui est du bien.
	(2) Subsection (1) applies to property acquired or reacquired after February 21, 1994, other than property acquired or reacquired pursuant to a court order made before February 22, 1994.
	36. (1) The portion of the definition ``unrecognized loss'' in subsection 80(1) of the Act before paragraph (a) is replaced by the following:
``unrecognize d loss'' « perte non constatée »	``unrecognized loss'' at a particular time, in respect of an obligation issued by a debtor, from the disposition of a property means the amount that would, but for subparagraph 40(2)(g)(ii), be a capital loss from the dis position by the debtor at or before the par ticular time of a debt or other right to re ceive an amount, except that where the debtor is a corporation the control of which was acquired before the particular time and after the time of the disposition by a person or group of persons, the unrecognized loss at the particular time in respect of the ob ligation is deemed to be nil unless
	(2) Paragraph 80(2)(g) of the Act is replaced by the following:
	(g) where a corporation issues a share (other than an excluded security) to a person as consideration for the settlement of a debt issued by the corporation and payable to the person, the amount paid in satisfaction of the debt because of the issue of the share is deemed to be equal to the fair market value of the share at the time it was issued;
	(g.1) where a debt issued by a corporation and payable to a person is settled at any time, the amount, if any, that can reasonably be considered to be the increase, as a consequence of the settlement of the debt, in the fair market value of shares of the capital stock of the corporation owned by the person (other than any shares acquired by the person as consideration for the settlement of the debt) is deemed to be an amount paid at that time in satisfaction of the debt;
	(3) Paragraph (b) of the description of B in subsection 80(13) of the Act is replaced by the following:
	(b) the residual balance at that time in respect of the settlement of the obliga tion,
	(4) Subsection 80(14) of the Act is re placed by the following:
Residual balance	(14) For the purpose of subsection (13), the residual balance at any time in a taxation year in respect of the settlement of a particular commercial obligation issued by a debtor is the amount, if any, by which
	(a) the gross tax attributes of directed persons at that time in respect of the debtor
	exceeds the total of
	(b) the value of A in subsection (13) in respect of the settlement of the particular obligation at that time,
	(c) all amounts each of which is
	(i) the amount, if any, by which the value of A in subsection (13) in respect of a settlement before that time and in the year of a commercial obligation issued by the debtor exceeds the value of C in that subsection in respect of the settle ment,
	(ii) the value of A in subsection (13) in respect of a settlement of a commercial obligation that is deemed by paragraph 80.04(4)(e) to have been issued by a directed person in respect of the debtor because of the filing of an agreement under section 80.04 in respect of a settlement before that time and in the year of a commercial obligation issued by the debtor, or
	(iii) the amount specified in an agree ment (other than an agreement with a directed person in respect of the debtor) filed under section 80.04 in respect of the settlement before that time and in the year of a commercial obligation issued by the debtor, and
	(d) all amounts each of which is an amount in respect of a settlement at a particular time before that time and in the year of a commercial obligation issued by the debtor equal to the least of
	(i) the total of all amounts designated under subsection (11) in respect of the settlement,
	(ii) the residual balance of the debtor at the particular time, and
	(iii) the amount, if any, by which the sum of the values of A and B in subsection (13) in respect of the settlement exceeds the value of C in that subsection in respect of the settlement.
Gross tax attributes	(14.1) The gross tax attributes of directed persons at any time in respect of a debtor means the total of all amounts each of which is an amount that would be applied under any of subsections (3) to (10) and (12) in respect of a settlement of a separate commercial obliga tion (in this subsection referred to as a ``notional obligation'') issued by directed persons at that time in respect of the debtor if the following assumptions were made:
	(a) a notional obligation was issued im mediately before that time by each of those directed persons and was settled at that time;
	(b) the forgiven amount at that time in respect of each of those notional obligations was equal to the total of all amounts each of which is a forgiven amount at or before that time and in the year in respect of a commercial obligation issued by the debtor;
	(c) amounts were designated under subsec tions (5), (7), (8), (9) and (10) by each of those directed persons to the maximum extent permitted in respect of the settlement of each of those notional obligations; and
	(d) no amounts were designated under subsection (11) by any of those directed persons in respect of the settlement of any of the notional obligations.
	(5) Subsection 80(17) of the Act is re pealed.
	(6) Subsections (1) to (5) apply to taxation years that end after February 21, 1994.
	37. (1) Subsection 80.03(1) of the Act is replaced by the following:
Definitions	80.03 (1) In this section, ``commercial debt obligation'', ``commercial obligation'', ``dis tress preferred share'', ``forgiven amount'' and ``person'' have the meanings assigned by subsection 80(1).
	(2) Subsections 80.03(4) to (6) of the Act are repealed.
	(3) The portion of subsection 80.03(7) of the Act before paragraph (a) is replaced by the following:
Alternative treatment	(7) Where at any time in a taxation year a person disposes of a property, for the purposes of subsection (2) and section 80
	(4) Subparagraph 80.03(7)(b)(ii) of the Act is replaced by the following:
	(ii) the lesser of the amount so designated and the amount that would, but for this subsection, be a capital gain determined in respect of the disposition because of subsection (2) shall be treated as if it were the forgiven amount at the time of the settlement in respect of the obligation referred to in subparagraph (i),
	(5) Subsections (1) to (4) apply to taxation years that end after February 21, 1994.
	38. (1) Subsection 80.04(5) of the Act is amended by adding the word ``and'' at the end of paragraph (b), by striking out the word ``and'' at the end of paragraph (c) and by repealing paragraph (d).
	(2) Section 80.04 of the Act is amended by adding the following after subsection (5):
No benefit conferred	(5.1) For the purposes of this Part, where a debtor and an eligible transferee enter into an agreement that is filed under this section, no benefit shall be considered to have been conferred on the debtor as a consequence of the agreement.
	(3) Paragraph 80.04(10)(a) of the Act is replaced by the following:
	(a) where the transferee is a corporation, all taxes payable under this Act by it for taxation years that end in the period that begins at that time and ends 4 calendar years after that time;
	(4) Subsections (1) to (3) apply to taxation years that end after February 21, 1994.
	39. (1) Paragraph 82(1)(a) of the Act is amended by striking out the word ``and'' at the end of subparagraph (i) and by adding the following after subparagraph (i):
	(i.1) where the taxpayer is a trust, all amounts each of which is all or part of a taxable dividend (other than a taxable dividend described in subparagraph (i)) that was received by the trust in the year on a share of the capital stock of a taxable Canadian corporation and that can rea sonably be considered as having been included in computing the income of a beneficiary under the trust who was non-resident at the end of the year, and
	(2) Clause 82(1)(a)(ii)(A) of the Act is replaced by the following:
	(A) the total of all amounts received by the taxpayer in the year from corpora tions resident in Canada as, on account of, in lieu of payment of or in satisfac tion of, taxable dividends, other than an amount included in computing the income of the taxpayer because of subparagraph (i) or (i.1)
	(3) Subsections (1) and (2) apply to taxation years that end after April 26, 1995.
	40. (1) Paragraph 84.1(2)(a.2) of the Act is repealed.
	(2) Subsection 84.1(2) of the Act is amended by adding the word ``and'' at the end of paragraph (b) and by repealing paragraph (c).
	(3) Subsection 84.1(2) of the Act is amended by striking out the word ``and'' at the end of paragraph (d) and by repealing paragraph (e).
	(4) Section 84.1 of the Act is amended by adding the following after subsection (2):
Rules for par. 84.1(2)(a.1)	(2.01) For the purpose of paragraph (2)(a.1),
	(a) where at any time a corporation issues a share of its capital stock to a taxpayer, the taxpayer and the corporation are deemed not to be dealing with each other at arm's length at that time;
	(b) where a taxpayer is deemed by para graph 110.6(19)(a) to have reacquired a share, the taxpayer is deemed to have acquired the share at the beginning of February 23, 1994 from a person with whom the taxpayer was not dealing at arm's length; and
	(c) where a share owned by a particular person, or a share substituted for that share, has by one or more transactions or events between persons not dealing at arm's length become vested in another person, the par ticular person and the other person are deemed at all times not to be dealing at arm's length with each other whether or not the particular person and the other person coexisted.
	(5) Section 84.1 of the Act is amended by adding the following after subsection (2.1):
Rules for par. 84.1(2)(b)	(2.2) For the purpose of paragraph (2)(b),
	(a) in determining whether or not a taxpayer referred to in that paragraph was a member of a group of fewer than 6 persons that controlled a corporation at any time, any shares of the capital stock of that corpora tion owned at that time by
	(i) the taxpayer's child (as defined in subsection 70(10)), who is under 18 years of age, or the taxpayer's spouse,
	(ii) a trust of which the taxpayer, a person described in subparagraph (i) or a corpo ration described in subparagraph (iii), is a beneficiary, or
	(iii) a corporation controlled by the taxpayer, by a person described in sub paragraph (i) or (ii) or by any combina tion of those persons or trusts