(b) where paragraph (2.21)(b) does not apply, the portion of the excess identified in the document, and

    (c) in any other case, nil.

(3) Section 163 of the Act is amended by adding the following after subsection (2.3):

False statement or omission

(2.4) Every person or partnership who, knowingly or under circumstances amounting to gross negligence, makes or participates in, assents to or acquiesces in, the making of a false statement or omission in a return is liable to a penalty of

    (a) where the return is required to be filed under section 233.1, $24,000;

    (b) where the return is required to be filed under section 233.2, the greater of

      (i) $24,000, and

      (ii) 5% of the total of all amounts each of which is the fair market value of property transferred or loaned (determined as of the time of the transfer or loan) because of which there would, if no other transfer or loan were taken into account, be an obligation to file the return;

    (c) where the return is required to be filed under section 233.3 for a taxation year or fiscal period, the greater of

      (i) $24,000, and

      (ii) 5% of the greatest of all amounts each of which is the total of the cost amounts to the person or partnership at any time in the year or period of a specified foreign property (as defined by subsection 233.3(1)(a) of the person or partnership in respect of which the false statement or omission is made;

    (d) where the return is required to be filed under section 233.4 for a taxation year or fiscal period, the greater of

      (i) $24,000, and

      (ii) 5% of the greatest of all amounts each of which is the total of the cost amounts to the person or partnership at any time in the year or period of a property of the person or partnership that is a share of the capital stock or indebtedness of the foreign affiliate in respect of which the return is being filed; and

    (e) where the return is required to be filed under section 233.6 for a taxation year or fiscal period, the greater of

      (i) $2,500, and

      (ii) 5% of the total of

        (A) all amounts each of which is the fair market value of a property that is distributed to the person or partnership in the year or period by the trust and in respect of which the false statement or omission is made, and

        (B) all amounts each of which is the greatest unpaid principal amount of a debt that is owing to the trust by the person or partnership in the year or period and in respect of which the false statement or omission is made.

Shares or debt owned by controlled foreign affiliate

(2.5) For the purpose of paragraph (2.4)(d),

    (a) shares or indebtedness owned by a controlled foreign affiliate of a person or partnership are deemed to be owned by the person or partnership; and

    (b) the cost amount at any time of such shares or indebtedness to the person or partnership is deemed to be equal to 20% of the cost amount at that time to the controlled foreign affiliate of the shares or indebtedness.

Application to partnerships

(2.6) For the purposes of paragraph (2.4)(d) and subsection (2.5), in determining whether a non-resident corporation or trust is a foreign affiliate or a controlled foreign affiliate of a partnership

    (a) the definitions ``direct equity percentage'' and ``equity percentage'' in subsection 95(4) shall be read as if a partnership were a person; and

    (b) the definitions ``controlled foreign affiliate'' and ``foreign affiliate'' in subsection 95(1) shall be read as if a partnership were a taxpayer resident in Canada.

Application to partnerships

(2.7) For the purpose of subsection (2.4), each act or omission of a member of a partnership in respect of an information return required to be filed by the partnership under section 233.3, 233.4 or 233.6 is deemed to be an act or omission of the partnership in respect of the return.

Application to members of partnerships

(2.8) For the purposes of this subsection and subsection (2.7), a person who is a member of a partnership that is a member of another partnership is deemed to be a member of the other partnership.

Where partnership liable to penalty

(2.9) Where a partnership is liable to a penalty under subsection (2.4), sections 152, 158 to 160.1, 161 and 164 to 167 and Division J apply, with any modifications that the circumstances require, to the penalty as if the partnership were a corporation.

Application to non-resident trusts

(2.91) For the purposes of this subsection, paragraph (2.4)(d) and subsection (2.5),

    (a) a non-resident trust is deemed to be a controlled foreign affiliate of each beneficiary of which the trust is a controlled foreign affiliate for the purpose of section 233.4;

    (b) the trust is deemed to be a non-resident corporation having a capital stock of a single class divided into 100 issued shares;

    (c) each beneficiary under the trust is deemed to own at any time the number of the issued shares of the corporation that is equal to the proportion of 100 that

      (i) the fair market value at that time of the beneficiary's beneficial interest in the trust

    is of

      (ii) the fair market value at that time of all beneficial interests in the trust; and

    (d) the cost amount to a beneficiary at any time of a share of the corporation is deemed to be equal to the amount determined by the formula

A/B

    where

    A is the fair market value at that time of the beneficiary's beneficial interest in the trust, and

    B is the number of shares deemed under paragraph (c) to be owned at that time by the beneficiary in respect of the corporation.

(4) Subsection (1) applies to acts and omissions that occur after the day on which this Act is assented to except that, in connection with purported renunciations made before 1999, the expression ``(12.601) and (12.62)'' in subsection 163(2.2) of the Act, as amended by subsection (1), shall be read as ``(12.601), (12.62) and (12.64)''.

(5) Subsection (3) applies to returns required to be filed on or before a day that is after April 29, 1998.

53. (1) The description of C in subsection 190.1(1.1) of the Act is replaced by the following:

C is the number of days in the year that are after February 25, 1992 and before 1999.

(2) The description of C in subsection 190.1(1.2) of the Act is replaced by the following:

C is the number of days in the year that are after February 27, 1995 and before November 1997.

(3) Subsection (1) applies after February 25, 1992.

(4) Subsection (2) applies to taxation years that end after February 27, 1995.

54. (1) Paragraph 198(6)(d) of the Act is replaced by the following:

    (d) the cash surrender value of the policy (exclusive of accumulated dividends) is or will be, at or before the end of the year in which the insured person attains 69 years of age, if all premiums under the policy are paid, not less than the maximum total amount (exclusive of accumulated dividends) payable by the insurer under the policy, and

(2) Subsection (1) applies after 1996, except that

    (a) it does not apply to a policy held by a trust where the trust acquired the policy before 1997;

    (b) it does not apply to a policy where the insured person attained 70 years of age before 1997; and

    (c) in applying paragraph 198(6)(d) of the Act, as enacted by subsection (1), to a policy where the insured person attained 69 years of age in 1996, the reference in that paragraph to ``69 years of age'' shall be read as ``70 years of age''.

55. (1) The definitions ``labour-sponsored funds tax credit'' and ``registered labour-sponsored venture capital corporation'' in section 204.8 of the Act are repealed.

(2) The definition ``original purchaser'' in section 204.8 of the Act is repealed.

(3) The definition ``specified individual'' in section 204.8 of the Act is replaced by the following:

``specified individual''
« particulier déterminé »

``specified individual'', in respect of a share, means an individual (other than a trust) whose labour-sponsored funds tax credit (as defined by subsection 127.4(6)) in respect of the original acquisition of the share is not nil or would not be nil if this Act were read without reference to paragraphs 127.4(6)(b) and (d).

(4) Section 204.8 of the Act is amended by adding the following in alphabetical order:

``original acquisition''
« acquisition initiale »

``original acquisition'' of a share has the meaning assigned by subsection 127.4(1);

(5) Subsections (1), (3) and (4) apply after 1995.

(6) Subsection (2) applies to corporations that are incorporated after March 5, 1996.

56. (1) Clause 204.81(1)(c)(ii)(B) of the Act is replaced by the following:

        (B) Class B shares that are issuable only to and may be held only by eligible labour bodies, that entitle each of those shareholders

          (I) to receive notice of and, subject to the Canada Business Corporations Act, to attend and vote at all meetings of the shareholders of the corporation, and

          (II) to receive, on dissolution of the corporation, an amount equal to the amount of the consideration received by the corporation on the issue of the Class B shares,

        but that do not entitle them to receive dividends, and

(2) Subparagraph 204.81(1)(c)(iii) of the Act is replaced by the following:

      (iii) the business and affairs of the corporation shall be managed by a board of directors, at least 1/2 of whom are appointed by the Class B shareholders,

(3) The portion of subparagraph 204.81(1)(c)(v) of the Act before clause (A) is replaced by the following:

      (v) the corporation shall not redeem a Class A share in respect of which an information return described in paragraph (6)(c) has been issued unless

(4) Subclauses 204.81(1)(c)(v)(A)(I) and (II) of the Act are replaced by the following:

          (I) a request in writing to redeem the share is made by the holder to the corporation and the information return referred to in paragraph (6)(c) has been returned to the corporation, or

(5) Clause 204.81(1)(c)(v)(C) of the Act is repealed.

(6) Clause 204.81(1)(c)(v)(E) of the Act is replaced by the following:

        (E) the redemption occurs more than 8 years after the day on which the share was issued, or

(7) Subparagraph 204.81(1)(c)(vi) of the Act is repealed.

(8) Clause 204.81(1)(c)(vii)(B) of the Act is repealed.

(9) Clauses 204.81(1)(c)(vii)(E) and (F) of the Act are replaced by the following:

        (E) the corporation is notified in writing that the transfer occurs after the specified individual dies,

(10) Paragraphs 204.81(6)(a) and (a.1) of the Act are replaced by the following:

    (a) the articles of the corporation do not comply with paragraph (1)(c) and would not comply with that paragraph if the corporation had been incorporated after December 5, 1996;

    (a.1) the corporation does not comply with any of the provisions of its articles described in paragraph (1)(c), except where there would be no failure to comply if the provisions of its articles were consistent with the articles of a corporation that would be permitted to be registered under this Part if it had been incorporated after December 5, 1996;

(11) Subsections (1) to (8) apply to corporations that are incorporated after March 5, 1996.

(12) Subsection (9) applies to corporations that are incorporated after December 5, 1996.

(13) Subsection (10) applies after March 5, 1996.

57. (1) Paragraphs (a) and (b) of the definition ``excess amount'' in subsection 204.9(1) of the Act are replaced by the following:

      (a) $2,000, and

      (b) the amount, if any, by which $42,000 exceeds the total of all payments made into registered education savings plans by or on behalf of all subscribers in respect of the beneficiary in all preceding years;

(2) Subsection (1) applies to months that end after 1995, except that, for payments made after 1989 and before 1996,

    (a) the reference to ``$2,000'' in paragraph (a) of the definition ``excess amount'' in subsection 204.9(1) of the Act, as enacted by subsection (1), shall be read as ``$1,500''; and

    (b) the reference to ``$42,000'' in paragraph (b) of that definition shall be read as ``$31,500''.

58. (1) Subsection 208(1.1) of the Act is replaced by the following:

Definition of ``specified stage''

(1.1) For the purpose of subsection (1), ``specified stage'' means, in respect of the production from a Canadian resource property of a substance,

    (a) where the substance is petroleum or related hydrocarbons (other than natural gas), the crude oil stage or its equivalent;

    (b) where the substance is natural gas, the stage of natural gas that is acceptable to a common carrier of natural gas;