A is the individual's income for the year,
	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
	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'',
	(2) Subsection (1) applies to the 1996 and subsequent taxation years and, where an individual dies in 1996, to the individual's 1995 taxation year.
	27. Subparagraphs 118.3(2)(a)(i) and (ii) of the English version of the Act are replaced by the following:
	(i) paragraph (b) of the description of B in subsection 118(1),or
	(ii) paragraph (d) of the description of B in subsection 118(1) where that person is the individual's child or grandchild,
	28. (1) The formula in subsection 118.6(2) of the Act is replaced by the following:
	A x $100 x B
	(2) Subsection (1) applies to the 1996 and subsequent taxation years.
	29. (1) The descriptions of A, B and C in section 118.8 of the Act are replaced by the following:
	A is the lesser of $850 and the total of all amounts each of which is deductible under section 118.5 or 118.6 in computing the spouse's tax payable under this Part for the year;
	B is the total of all amounts each of which is deductible under subsection 118(2) or (3) or 118.3(1) in computing the spouse's tax payable under this Part for the year; and
	C is the spouse's tax payable under this Part for the year computed before any deductions under this Division (other than a deduction under subsection 118(1) because of paragraph (c) of the description of B in that subsection or under section 118.7).
	(2) Subsection (1) applies to the 1996 and subsequent taxation years.
	30. (1) The description of A in subsection 118.9(1) of the Act is replaced by the following:
	A is the lesser of $850 and the total of all amounts each of which is deductible under section 118.5 or 118.6 in computing the individual's tax payable under this Part for the year; and
	(2) Subsection (1) applies to the 1996 and subsequent taxation years.
	31. (1) Section 122.3 of the Act is amended by adding the following after subsection (1):
Excluded Income	(1.1) No amount may be included under paragraph (1)(d) in respect of an individual's income for a taxation year from the individual's employment by an employer where
	(a) the employer carries on a business of providing services and does not employ in the business throughout the year more than 5 full-time employees;
	(b) the individual
	(i) does not deal at arm's length with the employer, or is a specified shareholder of the employer, or
	(ii) where the employer is a partnership, does not deal at arm's length with a member of the partnership, or is a specified shareholder of a member of the partnership; and
	(c) but for the existence of the employer, the individual would reasonably be regarded as an employee of a person or partnership that is not a specified employer.
	(2) Subsection (1) applies to the 1997 and subsequent taxation years.
	32. (1) Paragraph 122.5(3)(c) of the English version of the Act is amended by replacing the reference to ``by reason of paragraph 118(1)(b)'' with ``because of paragraph (b) of the description of B in subsection 118(1)''.
	(2) Clause 122.5(3)(e)(ii)(B) of the English version of the Act is amended by replacing the reference to ``paragraph 118(1)(c)'' with ``paragraph (c) of the description of B in subsection 118(1)''.
	33. (1) Paragraphs (d) to (k) of the definition ``manufacturing or processing'' in subsection 125.1(3) of the Act are replaced by the following:
	(d) operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas,
	(e) extracting minerals from a mineral resource,
	(f) processing
	(i) ore (other than iron ore or tar sands ore) from a mineral resource located in Canada to any stage that is not beyond the prime metal stage or its equivalent,
	(ii) iron ore from a mineral resource located in Canada to any stage that is not beyond the pellet stage or its equivalent, or
	(iii) tar sands ore from a mineral resource located in Canada to any stage that is not beyond the crude oil stage or its equivalent,
	(g) producing industrial minerals,
	(h) producing or processing electrical energy or steam, for sale,
	(i) processing natural gas as part of the business of selling or distributing gas in the course of operating a public utility,
	(j) processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent,
	(k) Canadian field processing, or
	(2) Subsection (1) applies to taxation years that begin after 1996.
	34. (1) The portion of subsection 125.4(3) of the Act after paragraph (b) is replaced by the following:
	the corporation is deemed to have paid on its balance-due day for the year an amount on account of its tax payable under this Part for the year equal to 25% of its qualified labour expenditure for the year in respect of the production.
	(2) Subsection (1) applies to the 1996 and subsequent taxation years.
	35. (1) Subparagraphs (c)(ii) to (xii) of the definition ``qualified property'' in subsection 127(9) of the Act are replaced by the following:
	(ii) farming or fishing,
	(iii) logging,
	(iv) operating an oil or gas well or extracting petroleum or natural gas from a natural accumulation of petroleum or natural gas,
	(v) extracting minerals from a mineral resource,
	(vi) processing
	(A) ore (other than iron ore or tar sands ore) from a mineral resource to any stage that is not beyond the prime metal stage or its equivalent,
	(B) iron ore from a mineral resource to any stage that is not beyond the pellet stage or its equivalent, or
	(C) tar sands ore from a mineral resource to any stage that is not beyond the crude oil stage or its equivalent,
	(vii) producing industrial minerals,
	(viii) processing heavy crude oil recovered from a natural reservoir in Canada to a stage that is not beyond the crude oil stage or its equivalent,
	(ix) Canadian field processing,
	(x) exploring or drilling for petroleum or natural gas,
	(xi) prospecting or exploring for or developing a mineral resource,
	(xii) storing grain, or
	(2) The description of A in subsection 127(10.2) of the Act is replaced by the following:
	A is the greater of $200,000 and either
	(a) where the corporation is associated with one or more other corporations in the particular year and the particular year ends in a calendar year, the total of all amounts each of which is the taxable income of the corporation or such an associated corporation for its last taxation year that ended in the preceding calendar year (determined before taking into consideration the specified future tax consequences for that last year), or
	(b) where paragraph (a) does not apply, the corporation's taxable income for its immediately preceding taxation year (determined before taking into consideration the specified future tax consequences for that preceding year), and
	(3) Subparagraphs 127(11)(a)(i) and (ii) of the Act are replaced by the following:
	(i) referred to in any of paragraphs (a) to (e) and (g) to (i) of the definition ``manufacturing or processing'' in subsection 125.1(3),
	(ii) that would be referred to in paragraph (f) of that definition if that paragraph were read without reference to the expression ``located in Canada'',
	(iii) that would be referred to in paragraph (j) of that definition if that paragraph were read without reference to the expression ``in Canada'', or
	(iv) that would be referred to in paragraph (k) of that definition if the definition ``Canadian field processing'' in subsection 248(1) were read without reference to the expression ``in Canada''; and
	(4) Subsections (1) and (3) apply to taxation years that begin after 1996.
	(5) Subsection (2) applies to taxation years that begin after 1995.
	36. (1) The portion of subsection 127.1(1) of the Act after paragraph (b) and before paragraph (c) is replaced by the following:
	a prescribed form containing prescribed information, the taxpayer is deemed to have paid on the taxpayer's balance-due day for the year an amount on account of the taxpayer's tax payable under this Part for the year equal to the lesser of
	(2) The definition ``qualifying corporation'' in subsection 127.1(2) of the Act is replaced by the following:
``qualifying corporation'' « société admissible »	``qualifying corporation'' for a particular taxation year that ends in a calendar year means
	(a) a corporation that is a Canadian-controlled private corporation throughout the particular year (other than a corporation associated with another corporation in the particular year) the taxable income of which for its immediately preceding taxation year (determined before taking into consideration the specified future tax consequences for that preceding year) does not exceed its business limit for that preceding year, or
	(b) a corporation that is a Canadian-controlled private corporation throughout the particular year and associated with another corporation in the particular year, where the total of all amounts each of which is the taxable income of the corporation or such an associated corporation for its last taxation year that ended in the preceding calendar year (determined before taking into consideration the specified future tax consequences for that last year) does not exceed the total of all amounts each of which is the business limit of the corporation or such an associated corporation for that last year;
	(3) Subsection (1) applies to taxation years that end after February 22, 1994.
	(4) Subsection (2) applies to taxation years that begin after 1995.
	37. (1) The definition ``approved share'' in subsection 127.4(1) of the Act is replaced by the following:
``approved share'' « action approuvée »	``approved share'' means a share of the capital stock of a prescribed labour-sponsored venture capital corporation;
	(2) The definition ``labour-sponsored funds tax credit'' in subsection 127.4(1) of the Act is repealed.
	(3) Subsection 127.4(1) of the Act is amended by adding the following in alphabetical order:
``original acquisition'' « acquisition initiale »	``original acquisition'' of a share means the first acquisition of the share, except that
	(a) where the share is irrevocably subscribed and paid for before its first acquisition, subject to paragraphs (b) and (c), the original acquisition of the share is the first transaction whereby the share is irrevocably subscribed and paid for,
	(b) a share is deemed never to have been acquired and never to have been irrevocably subscribed and paid for unless the first registered holder of the share is, subject to paragraph (c), the first person to either acquire or irrevocably subscribe and pay for the share, and
	(c) for the purpose of this definition, a broker or dealer in securities acting in that capacity is deemed never to acquire or subscribe and pay for the share and never to be the registered holder of the share;
	(4) Subsections 127.4(2) to (4) of the Act are replaced by the following:
Deduction of labour- sponsored funds tax credit	(2) Subject to subsections (3) and (4), there may be deducted from the tax otherwise payable by an individual (other than a trust) for a taxation year such amount as the individual claims not exceeding the individual's labour-sponsored funds tax credit limit for the year.
3-year cooling-off period	(3) Subject to subsection (4), no amount may be deducted under subsection (2) from an individual's tax otherwise payable for a taxation year that ends after 1996 where
	(a) an approved share of the capital stock of a corporation is redeemed, acquired or cancelled by the corporation
	(i) after March 5, 1996 (otherwise than pursuant to a request in writing made to the corporation before March 6, 1996), and
	(ii) in the year or in either of the 2 preceding taxation years; and
	(b) the original acquisition of the share was by the individual or by a qualifying trust for the individual in respect of the share.
Exceptions to cooling-off period	(4) Subsection (3) does not apply to an individual for a taxation year as a consequence of the redemption, acquisition or cancellation of a share where
	(a) the individual dies in the year and before the redemption, acquisition or cancellation;