(4) Subsection 88(1) of the Act is amended by adding the following after paragraph (c.2):
	(c.3) for the purpose of clause (c)(vi)(B), property acquired by any person in substitu tion for particular property or properties distributed to the parent on the winding-up includes
	(i) property the fair market value of which is wholly or partly attributable to the particular property or properties, other than shares of the capital stock of the parent that were issued by the parent as consideration for the acquisition of the shares of the capital stock of the subsid iary by the parent, and
	(ii) property the fair market value of which is determinable primarily by refer ence to the fair market value of, or to any proceeds from a disposition of, the par ticular property or properties
	but does not include money;
	(c.4) for the purpose of subparagraph (c)(iii), a leasehold interest in a depreciable property and an option to acquire a depre ciable property are depreciable properties;
	(5) The portion of paragraph 88(1)(d) of the Act after subparagraph (iii) is repealed.
	(6) Paragraph 88(1)(d.1) of the Act is replaced by the following:
	(d.1) subsection 84(2) and section 21 of the Income Tax Application Rules do not apply to the winding-up of the subsidiary, and subsections 13(21.2) and 14(12) do not apply to the winding-up of the subsidiary with respect to property acquired by the parent on the winding-up ;
	(7) Paragraph 88(1)(d.2) of the Act is replaced by the following:
	(d.2) in determining, for the purposes of this paragraph and paragraphs (c) and (d), the time at which a person or group of persons (in this paragraph and paragraph (d.3) referred to as the ``acquirer'') last acquired control of the subsidiary, where control of the subsidiary was acquired from another person or group of persons (in this para graph referred to as the ``vendor'') with whom the acquirer was not (otherwise than solely because of a right referred to in paragraph 251(5)(b)) dealing at arm's length, the acquirer is deemed to have last acquired control of the subsidiary at the earlier of
	(i) the time at which the vendor last acquired control (within the meaning that would be assigned by subsection 186(2) if the reference in that subsection to ``another corporation'' were read as ``a person'' and the references in that sub section to ``the other corporation'' were read as ``the person'') of the subsidiary, and
	(ii) the time at which the vendor was deemed for the purpose of this paragraph to have last acquired control of the subsidiary ;
	(d.3) for the purposes of paragraphs (c), (d) and (d.2), where at any time control of a corporation is last acquired by an acquirer because of an acquisition of shares of the capital stock of the corporation as a conse quence of the death of an individual, the acquirer is deemed to have last acquired control of the corporation immediately after the death from a person who dealt at arm's length with the acquirer;
	(8) The portion of paragraph 88(1)(e.2) of the Act before subparagraph (i) is replaced by the following:
	(e.2) paragraphs 87(2)(c), (d.1), (e.1), (e.3), (g) to (l), (l.3) to (u), (x), (z.1), (z.2), (aa), (cc), (ll), (nn), (pp), (rr), (tt) and (uu), subsection 87(6) and, subject to section 78, subsection 87(7) apply to the winding-up as if the references therein to
	(9) Subparagraphs 88(1)(e.2)(xiv) and (xv) of the Act are repealed.
	(10) Section 88 of the Act is amended by adding the following after subsection (1.6):
Interpreta- tion	(1.7) For the purposes of paragraphs (1)(c) and (d), where a parent of a subsidiary did not deal at arm's length with another person (other than a corporation the control of which was acquired by the parent from a person with whom the parent dealt at arm's length) at any time before the winding-up of the subsidiary, the parent and the other person are deemed never to have dealt with each other at arm's length whether or not the parent and the other person coexisted.
	(11) Subsection (1) applies to windings-up that begin after June 20, 1996, other than windings-up that are part of an arrange ment that was substantially advanced, as evidenced in writing, before June 21, 1996.
	(12) Subsections (2) and (3) apply to windings-up that begin after November 1994.
	(13) Paragraph 88(1)(c.3) of the Act, as enacted by subsection (4), applies to wind ings-up that begin after February 21, 1994, except that, in its application to windings- up that began before June 21, 1996 and to windings-up that begin after June 20, 1996 that are part of an arrangement that was substantially advanced, as evidenced in writing, before June 21, 1996, paragraph 88(1)(c.3) of the Act, as enacted by subsec tion (4), shall be read as follows:
	(c.3) for the purpose of clause (c)(vi)(B), property acquired by any person in substitu tion for particular property or properties
	(i) includes property the fair market value of which is determinable primarily by reference to the fair market value of the particular property or properties or by reference to any proceeds from a disposi tion of the particular property or proper ties, but
	(ii) does not include property that is money received as consideration for a disposition of the particular property or properties;
	(14) Paragraph 88(1)(c.4) of the Act, as enacted by subsection (4), applies to wind ings-up that begin after June 20, 1996.
	(15) Subsections (5) and (10) apply to windings-up that begin after February 21, 1994.
	(16) Subsection (6) applies to windings- up that begin after April 26, 1995, except that, in its application to windings-up that began before 1996, the reference in para graph 88(1)(d.1) of the Act, as enacted by subsection (6), to ``subsections 13(21.2) and 14(12)'' shall be read as a reference to ``subsections 13(21.2), 14(12) and 85(5.1)''.
	(17) Subsection (7) applies to windings- up that begin after December 20, 1991.
	(18) Subsections (8) and (9) apply to windings-up that begin after June 1995.
	44. (1) Paragraph (d) of the definition ``société canadienne'' in subsection 89(1) of the French version of the Act is replaced by the following:
	d) d'autre part, chacune des sociétés était une société canadienne immédiatement avant le moment quelconque .
	(2) Subsection (1) applies after June 14, 1994.
	45. (1) The portion of subsection 93(4) of the Act before paragraph (a) is replaced by the following:
Loss on disposition of shares of foreign affiliate	(4) Where a taxpayer resident in Canada or a foreign affiliate of the taxpayer (in this subsection referred to as the ``vendor'') has acquired shares of a foreign affiliate of the taxpayer (in this subsection referred to as the ``acquired affiliate'') on the disposition of shares of any other foreign affiliate of the taxpayer (other than a disposition to which subsection 40(3.4) applies),
	(2) Subject to section 156, subsection (1) applies to dispositions of property that occur after April 26, 1995.
	46. (1) The description of A in the definition ``designated cost'' in subsection 94.1(2) of the Act is replaced by the follow ing:
	A is the cost amount to the taxpayer of the property at that time (determined with out reference to paragraphs 53(1)(m) and (q), subparagraph 53(2)(c)(i.3), paragraphs 53(2)(g) and (g.1) and sec tion 143.2) ,
	(2) The description of D in the definition ``designated cost'' in subsection 94.1(2) of the Act is replaced by the following:
	D is
	(a) where the taxpayer has held or has had the interest in the property since the end of 1984, the amount, if any, by which the fair market value of the property at the end of 1984 exceeds the cost amount to the taxpayer of the property at the end of 1984, or
	(b) in any other case, the total of
	(i) the amount, if any, by which the fair market value of the property at the particular time the taxpayer acquired the property exceeds the cost amount to the taxpayer of the property at the particular time, and
	(ii) the amount, if any, by which
	(A) the total of all amounts each of which is an amount that would have been included in respect of the property because of this sec tion in computing the taxpayer's income for a taxation year that began before June 20, 1996 if the cost to the taxpayer of the proper ty were equal to the fair market value of the property at the partic ular time
	exceeds
	(B) the total of all amounts each of which is an amount that was included in respect of the proper ty because of this section in computing the taxpayer's income for a taxation year that began before June 20, 1996,
	(3) Subsection (1) applies after Septem ber 26, 1994, except that the description of A in the definition ``designated cost'' in subsection 94.1(2) of the Act, as enacted by subsection (1), as it applies to taxation years that end on or before April 26, 1995, shall be read as follows:
	A is the cost amount to the taxpayer of the property at that time (determined with out reference to paragraph 53(1)(m), subparagraph 53(2)(c)(i.3) and section 143.2),
	(4) Subsection (2) applies to taxation years that begin after June 20, 1996.
	47. (1) Paragraph (a) of the definition ``bien exclu'' in subsection 95(1) of the French version of the Act is replaced by the following:
	a) soit qu'elle utilise ou détient princi palement en vue de tirer un revenu provenant d'une entreprise exploitée activement;
	(2) The description of C in the definition ``foreign accrual property income'' in sub section 95(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (a) and by adding the following after paragraph (b):
	(c) the words ``other than a controlled foreign affiliate of the taxpayer or a prescribed non-resident entity'' in paragraph 94.1(1)(a) were replaced by the words ``other than a prescribed non-resident entity or a controlled foreign affiliate of a person resident in Canada of whom the taxpayer is a controlled foreign affiliate'', and
	(d) the words ``other than a capital gain'' in paragraph 94.1(1)(g) were replaced by the words ``other than any income that would not be included in the taxpayer's foreign accrual property income for the year if the value of C in the definition ``foreign accrual proper ty income'' in subsection 95(1) were nil and other than a capital gain'',
	(3) The definition ``lending of money'' in subsection 95(1) of the Act is amended by adding the following after paragraph (d):
	and for the purpose of this definition, the definition ``lending asset'' in subsection 248(1) shall be read without the words ``but does not include a prescribed security'';
	(4) Subsection 95(1) of the Act is amended by adding the following in alphabetical order:
``trust company'' « société de fiducie »	``trust company'' includes a corporation that is resident in Canada and that is a loan com pany as defined in subsection 2(1) of the Canadian Payments Association Act.
	(5) Subparagraph 95(2)(g.1)(ii) of the Act is replaced by the following:
	(ii) without reference to subsections 80(3) to (12) and (15) and 80.01(5) to (11) and sections 80.02 to 80.04;
	(6) Subsection (2) applies to taxation years that end after November 1991, except that paragraph (d) of the description of C in the definition ``foreign accrual property income'' in subsection 95(1) of the Act, as enacted by subsection (2), does not apply to taxation years that began before June 20, 1996.
	(7) Subsections (3) and (4) apply to taxation years of foreign affiliates of tax payers that begin after 1994, except that, where there was a change in the taxation year of a foreign affiliate of a taxpayer in 1994 and after February 22, 1994, subsec tions (3) and (4) apply to taxation years of the foreign affiliate that end after 1994 unless
	(a) the foreign affiliate had requested the change in writing before February 22, 1994 from the income taxation authority of the country in which the foreign affiliate was resident and subject to income taxation; or
	(b) the foreign affiliate's first taxation year that began after 1994 began at a time in 1995 that is earlier than the time at which that taxation year would have begun if the change had not occurred.
	(8) Subsection (5) applies to taxation years that end after February 21, 1994.
	48. (1) Paragraph 96(2.2)(c) of the Act is replaced by the following:
	(c) all amounts each of which is an amount owing at that time to the partnership, or to a person or partnership not dealing at arm's length with the partnership, by the taxpayer or by a person or partnership not dealing at arm's length with the taxpayer, other than any amount deducted under subparagraph 53(2)(c)(i.3) in computing the adjusted cost base, or under section 143.2 in computing the cost, to the taxpayer of the taxpayer's partnership interest at that time, and
	(2) The portion of paragraph 96(2.2)(d) of the Act before subparagraph (i) is replaced by the following:
	(d) any amount or benefit that the taxpayer or a person not dealing at arm's length with the taxpayer is entitled, either immediately or in the future and either absolutely or contingently, to receive or to obtain, wheth er by way of reimbursement, compensation, revenue guarantee, proceeds of disposition, loan or any other form of indebtedness or in any other form or manner whatever, granted or to be granted for the purpose of reducing the impact, in whole or in part, of any loss that the taxpayer may sustain because the taxpayer is a member of the partnership or holds or disposes of an interest in the partnership, except to the extent that the amount or benefit is included in the deter mination of the value of J in the definition ``cumulative Canadian exploration ex pense'' in subsection 66.1(6), of M in the definition ``cumulative Canadian develop ment expense'' in subsection 66.2(5) or of I in the definition ``cumulative Canadian oil and gas property expense'' in subsection 66.4(5) in respect of the taxpayer, or the entitlement arises
	(3) Subparagraphs 96(2.2)(d)(iv) and (v) of the Act are repealed.
	(4) The portion of subsection 96(2.2) of the Act after paragraph (d) is replaced by the following:
	and, for the purposes of this subsection,
	(e) where the amount or benefit to which the taxpayer or the person is entitled at any time is provided by way of an agreement or other arrangement under which the taxpayer or the person has a right, either immediately or in the future and either absolutely or contingently (otherwise than as a conse quence of the death of the taxpayer), to acquire other property in exchange for all or any part of the partnership interest, for greater certainty the amount or benefit to which the taxpayer or the person is entitled under the agreement or arrangement is considered to be not less than the fair market value of the other property at that time, and
	(f) where the amount or benefit to which the taxpayer or the person is entitled at any time is provided by way of a guarantee, security or similar indemnity or covenant in respect of any loan or other obligation of the taxpayer or the person , for greater certainty the amount or benefit to which the taxpayer or the person is entitled under the guarantee or indemnity at any particular time is considered to be not less than the total of the unpaid amount of the loan or obligation at that time and all other amounts outstanding in respect of the loan or obligation at that time.
	(5) Subsection 96(2.4) of the Act is re placed by the following:
Limited partner	(2.4) For the purposes of this section and sections 111 and 127, a taxpayer who is a member of a partnership at a particular time is a limited partner of that partnership at that time if the member's partnership interest is not an exempt interest (within the meaning assigned by subsection (2.5)) at that time and if, at that time or within 3 years after that time,
	(a) by operation of any law governing the partnership arrangement, the liability of the member as a member of the partnership is limited;
	(b) the member or a person not dealing at arm's length with the member is entitled, either immediately or in the future and either absolutely or contingently, to receive an amount or to obtain a benefit that would be described in paragraph (2.2)(d) if that paragraph were read without reference to subparagraphs (ii) and (vi);
	(c) one of the reasons for the existence of the member who owns the interest
	(i) can reasonably be considered to be to limit the liability of any person with respect to that interest, and
	(ii) cannot reasonably be considered to be to permit any person who has an interest in the member to carry on that person's business (other than an invest ment business) in the most effective manner; or
	(d) there is an agreement or other arrange ment for the disposition of an interest in the partnership and one of the main reasons for the agreement or arrangement can reason ably be considered to be to attempt to avoid the application of this subsection to the member .