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(I) its taxable income for that last
year (determined before applying
this paragraph to the winding-up
and before taking into consideration
the specified future tax
consequences for that last year), and
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(II) the total of the subsidiary's
taxable incomes for its taxation
years that ended in that preceding
calendar year (determined without
reference to subparagraph (iii) and
before taking into consideration the
specified future tax consequences
for those years), and
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(B) the parent's business limit for that
last year is deemed to be the total of
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(I) its business limit (determined
before applying this paragraph to
the winding-up) for that last year,
and
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(II) the total of the subsidiary's
business limits (determined without
reference to subparagraph (iii)) for
its taxation years that ended in that
preceding calendar year,
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(ii) where the parent received an asset of
the subsidiary on the winding-up before
the current year and subparagraph (i)
does not apply,
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(A) the parent's taxable income for its
immediately preceding taxation year
(determined before taking into
consideration the specified future tax
consequences for that preceding year)
is deemed to be the total of
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(I) its taxable income for that
preceding taxation year
(determined before applying this
paragraph to the winding-up and
before taking into consideration the
specified future tax consequences
for that preceding taxation year),
and
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(II) the total of the subsidiary's
taxable incomes for the subsidiary's
taxation years that end in the
calendar year in which that
preceding taxation year ended
(determined before taking into
consideration the specified future
tax consequences for those years),
and
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(B) the parent's business limit for that
preceding taxation year is deemed to
be the total of
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(I) its business limit (determined
before applying this paragraph to
the winding-up) for that preceding
taxation year, and
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(II) the total of the subsidiary's
business limits (determined without
reference to subparagraph (iii)) for
the subsidiary's taxation years that
end in the calendar year in which
that preceding taxation year ended,
and
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(iii) where the parent and the subsidiary
are associated with each other in the
current year, the subsidiary's taxable
income and the subsidiary's business
limit for each taxation year that ends after
the first time that the parent receives an
asset of the subsidiary on the winding-up
are deemed to be nil;
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(3) Subparagraph 88(1)(g)(i) of the Act is
replaced by the following:
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(i) for the purposes of paragraphs
12(1)(d), (e), (e.1) , (i) and (s) and
20(1)(l), (l.1), (p) and (jj) and 20(7)(c),
subsection 20(22) , sections 138, 138.1,
140, 142 and 148 and Part XII.3, the
parent is deemed to be the same
corporation as, and a continuation of, the
subsidiary, and
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(4) Subsection (1) applies for the purpose
of applying subsections 127(10.1) and (10.2)
of the Act to taxation years that begin after
1995, except that, for taxation years that
begin in 1996, the expression ``any
corporation (other than the subsidiary)'' in
paragraph 88(1)(e.8) of the Act, as enacted
by subsection (1), shall be read as ``the
parent''.
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(5) For windings-up that begin after May
23, 1985, paragraph 88(1)(e.8) of the Act
shall be read without reference to the
expression ``the definition ``qualifying
corporation'' in subsection 127.1(2) and
subparagraph 157(1)(b)(i)''.
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(6) Subsection (2) applies to windings-up
that begin after May 23, 1985, except that
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(a) the expression ``any corporation
(other than the subsidiary)'' in
paragraph 88(1)(e.9) of the Act, as
enacted by subsection (2), shall be read as
``the parent'' with respect to windings-up
that begin before 1997;
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(b) for the purpose of applying that
paragraph for the purpose of the
definition ``qualifying corporation'' in
subsection 127.1(2) of the Act, the
business limits referred to in that
paragraph, for taxation years that ended
after June 1994 and began before 1996,
shall be determined under section 125 of
the Act as that section read in its
application to taxation years that ended
before July 1994; and
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(c) subparagraph 88(1)(e.9)(i) of the Act,
as enacted by subsection (2), does not
apply
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(i) for the purpose of applying the
definition ``qualifying corporation'' in
subsection 127.1(2) of the Act to
taxation years that ended before July
1994, and
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(ii) for the purpose of applying
subparagraph 157(1)(b)(i) of the Act to
taxation years that end before 1998.
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(7) Subsection (3) applies to windings-up
that begin after 1995.
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20. (1) The portion of subparagraph
94(1)(c)(i) of the Act before clause (A) is
replaced by the following:
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(i) the trust is deemed for the purposes of
this Part and sections 233.3 and 233.4 to
be a person resident in Canada no part of
whose taxable income is exempt because
of section 149 from Part I tax and whose
taxable income for the taxation year is
the total of
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(2) The portion of paragraph 94(1)(d) of
the Act before subparagraph (i) is replaced
by the following:
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(d) in any other case, for the purposes of
subsections 91(1) to (4) and sections 95 and
233.4 ,
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(3) Subsections (1) and (2) apply after
1995.
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21. (1) Paragraph 96(1)(d) of the Act is
replaced by the following:
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(d) each income or loss of the partnership
for a taxation year were computed as if this
Act were read without reference to
paragraphs 12(1)(z.5) and 20(1)(v.1),
section 34.1 and subsections 66.1(1),
66.2(1) and 66.4(1) and as if no deduction
were permitted under any of section 29 of
the Income Tax Application Rules,
subsections 34.2(4) and 65(1) and sections
66, 66.1, 66.2 and 66.4;
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(2) Subsection (1) applies to fiscal periods
that begin after 1996.
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22. (1) The portion of paragraph
110.1(1)(a) of the Act after subparagraph
(vii) is replaced by the following:
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not exceeding the amount determined by
the formula
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0.5(A + B)
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A is its income for the year computed
without reference to subsection 137(2),
and
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B is the total of all amounts each of which
is the amount of a taxable capital gain
from a gift of property made by it in the
year to a donee described in this
paragraph;
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(2) Subsection (1) applies to the 1996 and
subsequent taxation years.
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23. (1) Subparagraph 115(1)(b)(ii.1) of
the Act is replaced by the following:
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(ii.1) where the non-resident person is an
insurer, any capital property that is its
designated insurance property for the
year ,
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(2) Subsection (1) applies to the 1996 and
subsequent taxation years.
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24. (1) Paragraph 117.1(1)(a) of the
English version of the Act is amended by
replacing the reference to ``paragraphs
118(1)(a) and (b)'' with ``paragraphs (a)
and (b) of the description of B in subsection
118(1)''.
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(2) The portion of subsection 117.1(1) of
the Act after paragraph (b) and before
paragraph (c) is replaced by the following:
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shall be adjusted, for each taxation year after
1996 for amounts referred to in paragraph (d)
of the description of B in subsection 118(1),
for each taxation year after 1990 for amounts
referred to in subsection 122.5(3) and for each
taxation year after 1988 in any other case, so
that the amount to be used under those
provisions for the year is an amount equal to
the total of
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(3) Subsection 117.1(2) of the English
version of the Act is amended by replacing
the reference to ``subparagraphs
118(1)(a)(ii) and (b)(iv)'' with
``subparagraphs (a)(ii) and (b)(iv) of the
description of B in subsection 118(1)''.
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(4) Subsection (2) applies to the 1996 and
subsequent taxation years.
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25. (1) The portion of subsection 118(1) of
the French version of the Act before
paragraph (a) is replaced by the following:
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| Crédits
d'impôt
personnels
|
118. (1) Le produit de la multiplication du
total des montants visés aux alinéas a) à e) par
le taux de base pour l'année est déductible
dans le calcul de l'impôt payable par un
particulier en vertu de la présente partie pour
une année d'imposition :
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(2) The portion of paragraph (a) of the
description of B in subsection 118(1) of the
Act before subparagraph (i) is replaced by
the following:
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| Married status
|
(a) in the case of an individual who at any
time in the year is a married person who
supports the individual's spouse and is not
living separate and apart from the spouse by
reason of a breakdown of their marriage , an
amount equal to the total of
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(3) The portion of paragraph (b) of the
description of B in subsection 118(1) of the
Act before subparagraph (i) is replaced by
the following:
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| Wholly
dependent
person
|
(b) in the case of an individual who does not
claim a deduction for the year because of
paragraph (a) and who, at any time in the
year,
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(4) Subsection 118(1) of the English
version of the Act is amended by striking
out the word ``and'' at the end of paragraph
(c) of the description of B.
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(5) The portion of paragraph (d) of the
description of B in subsection 118(1) of the
Act after subparagraph (ii) is replaced by
the following:
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the amount determined by the formula
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$6,456 - E
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E is the greater of $4,103 and the income
for the year of the dependant, and
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(6) The description of B in subsection
118(1) of the Act is amended by adding the
following after paragraph (d):
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| Infirm
dependant
|
(e) in the case of an individual entitled to a
deduction in respect of a person because of
paragraph (b) and who would also be
entitled, but for paragraph (4)(c), to a
deduction because of paragraph (d) in
respect of the same person, the amount by
which the amount that would be determined
under paragraph (d) in respect of the person
exceeds the amount determined under
paragraph (b) in respect of the person.
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(7) Subsection 118(4) of the English
version of the Act is amended by
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(a) replacing the reference in paragraph
(a) to ``by reason of paragraphs (1)(a) and
(b)'' with ``because of paragraphs (a) and
(b) of the description of B in subsection
(1)'';
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(b) replacing the references in
paragraphs (b) and (c) to ``by reason of
paragraph (1)(b)'' with ``because of
paragraph (b) of the description of B in
subsection (1)''; and
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(c) replacing the reference in paragraph
(e) to ``by reason of paragraph (1)(d)''
with ``because of paragraph (d) of the
description of B in subsection (1)''.
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(8) Subsection 118(5) of the Act is
replaced by the following:
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| Support
|
(5) No amount may be deducted under
subsection (1) in computing an individual's
tax payable under this Part for a taxation year
in respect of a person where the individual is
required to pay a support amount (as defined
in subsection 56.1(4)) to the individual's
spouse or former spouse in respect of the
person and the individual
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(a) lives separate and apart from the spouse
or former spouse throughout the year
because of the breakdown of their marriage;
or
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(b) claims a deduction for the year because
of section 60 in respect of a support amount
paid to the spouse or former spouse.
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(9) The portion of subsection 118(6) of the
Act before paragraph (a) is replaced by the
following:
|
|
| Definition of
dependant
|
(6) For the purposes of paragraphs (d) and
(e) of the description of B in subsection (1)
and paragraph (4)(e), ``dependant'' of an
individual for a taxation year means a person
who at any time in the year is dependent on the
individual for support and is
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(10) Subsections (1), (4), (5), (6) and (9)
apply to the 1996 and subsequent taxation
years.
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(11) Subsections (2), (3) and (8) apply to
the 1997 and subsequent taxation years.
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26. (1) Paragraph (a) of the definition
``total gifts'' in subsection 118.1(1) of the
Act is replaced by the following:
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(i) the individual's total charitable
gifts for the year,
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(ii) the individual's income for the year
where the individual dies in the year or
in the following taxation year, and
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(iii) in any other case, the amount
determined by the formula
|
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0.5(A + B - C)
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A is the individual's income for the
year,
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B is the total of all amounts each of
which is the amount of a taxable
capital gain from a gift of property
made by the individual in the year to
a donee described in the definition
``total charitable gifts'', and
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C is the total of all amounts each of
which is the portion of an amount
deducted under section 110.6 in
computing the individual's taxable
income for the year that can
reasonably be considered to be in
respect of a gift of capital property
made by the individual in the year to
a donee described in the definition
``total charitable gifts'',
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