(A) before the end of the year,
	(B) at a time at which the taxpayer was resident in Canada, and
	(C) where the taxpayer became resident in Canada before the end of the year, after the last time (before the end of the year) that the taxpayer became resident in Canada ,
	(2) The portion of paragraph 66(4)(b) of the Act before subparagraph (ii) is replaced by the following:
	(b) of that total, the greater of
	(i) the amount, if any, claimed by the taxpayer not exceeding 10% of the amount determined under paragraph (a) in respect of the taxpayer for the year, and
	(3) Subparagraph 66(4)(b)(ii) of the Act is replaced by the following:
	(ii) the total of
	(A) the part of the taxpayer's income for the year, determined without reference to this subsection and subsection 66.21(4), that can reasonably be regarded as attributable to
	(I) the production of petroleum or natural gas from natural accumulations outside Canada or from oil or gas wells outside Canada, or
	(II) the production of minerals from mines outside Canada,
	(B) the taxpayer's income for the year from royalties in respect of a natural accumulation of petroleum or natural gas outside Canada, an oil or gas well outside Canada or a mine outside Canada, determined without reference to this subsection and subsection 66.21(4) , and
	(C) all amounts each of which is an amount, in respect of a foreign resource property that has been disposed of by the taxpayer, equal to the amount, if any, by which
	(I) the amount included in computing the taxpayer's income for the year by reason of subsection 59(1) in respect of the disposition
	exceeds
	(II) the total of all amounts each of which is that portion of an amount deducted under subsection 66.7(2) in computing the taxpayer's income for the year that
	1. can reasonably be considered to be in respect of the foreign resource property, and
	2. cannot reasonably be considered to have reduced the amount otherwise determined under clause (A) or (B) in respect of the taxpayer for the year.
	(4) Section 66 of the Act is amended by adding the following after subsection (4):
Country-by-c ountry FEDE allocations	(4.1) For greater certainty, the portion of an amount deducted under subsection (4) in computing a taxpayer's income for a taxation year that can reasonably be considered to be in respect of specified foreign exploration and development expenses of the taxpayer in respect of a country is considered to apply to a source in that country.
Method of allocation	(4.2) For the purpose of subsection (4.1), where a taxpayer has incurred specified foreign exploration and development expenses in respect of two or more countries, an allocation to each of those countries for a taxation year shall be determined in a manner that is
	(a) reasonable having regard to all the circumstances, including the level and timing of
	(i) the taxpayer's specified foreign exploration and development expenses in respect of the country, and
	(ii) the profits or gains to which those expenses relate; and
	(b) not inconsistent with the allocation made under subsection (4.1) for the preceding taxation year.
FEDE deductions where change of individual's residence	(4.3) Where at any time in a taxation year an individual becomes or ceases to be resident in Canada,
	(a) subsection (4) applies to the individual as if the year were the period or periods in the year throughout which the individual was resident in Canada; and
	(b) for the purpose of applying subsection (4), subsection (13.1) does not apply to the individual for the year.
	(5) Subsection 66(5) of the Act is replaced by the following:
Dealers	(5) Subsections (3) and (4) and sections 59, 64, 66.1, 66.2, 66.21 , 66.4 and 66.7 do not apply in computing the income for a taxation year of a taxpayer (other than a principal-business corporation) whose business includes trading or dealing in rights, licences or privileges to explore for, drill for or take minerals, petroleum, natural gas or other related hydrocarbons.
	(6) The portion of subsection 66(11.4) of the Act after paragraph (c) is replaced by the following:
	for the purposes of subsection (4) and sections 66.2, 66.21 and 66.4, except as those provisions apply for the purposes of section 66.7, the property is deemed not to have been acquired by the corporation or partnership before that time and is deemed to have been acquired by it at that time, except that, where the property has been disposed of by it before that time and not reacquired by it before that time, the property is deemed to have been acquired by the corporation or partnership immediately before it disposed of the property.
	(7) The portion of subsection 66(12.4) of the Act before paragraph (a) is replaced by the following:
Limitation of FEDE	(12.4) Where, as a result of a transaction that occurs after May 6, 1974, an amount becomes receivable by a taxpayer at a particular time in a taxation year and the consideration given by the taxpayer for the amount receivable is property (other than a foreign resource property) or services, the original cost of which to the taxpayer can reasonably be regarded as having been primarily foreign exploration and development expenses of the taxpayer (or would have been so regarded if they had been incurred by the taxpayer after 1971 and the definition ``foreign exploration and development expenses'' in subsection (15) were read without reference to paragraph (k) of that definition ), the following rules apply:
	(8) Paragraph 66(12.4)(b) of the Act is replaced by the following:
	(b) where the amount receivable exceeds the total of the taxpayer's foreign exploration and development expenses incurred before that time to the extent that those expenses were not deducted or deductible, as the case may be, in computing the taxpayer's income for a preceding taxation year, there shall be included in the amount referred to in paragraph 59(3.2)(a) the amount, if any , by which the amount receivable exceeds the total of
	(i) the taxpayer's foreign exploration and development expenses incurred before that time to the extent that those expenses were not deducted or deductible, as the case may be, in computing the taxpayer's income for a preceding taxation year, and
	(ii) the amount, designated by the taxpayer in prescribed form filed with the taxpayer's return of income for the year, not exceeding the portion of the amount receivable for which the consideration given by the taxpayer was property (other than a foreign resource property) or services, the original cost of which to the taxpayer can reasonably be regarded as having been primarily
	(A) specified foreign exploration and development expenses in respect of a country, or
	(B) foreign resource expenses in respect of a country; and
	(9) Section 66 of the Act is amended by adding the following after subsection (12.4):
Limitations of foreign resource expenses	(12.41) Where a particular amount described in subsection (12.4) becomes receivable by a taxpayer at a particular time, there shall at that time be included in the value determined for G in the definition ``cumulative foreign resource expense'' in subsection 66.21(1) in respect of the taxpayer and a country the amount designated under subparagraph (12.4)(b)(ii) by the taxpayer in respect of the particular amount and the country.
Partnerships	(12.42) For the purposes of subsections (12.4) and (12.41), where a person or partnership is a member of a particular partnership and a particular amount described in subsection (12.4) becomes receivable by the particular partnership in a fiscal period of the particular partnership,
	(a) the member's share of the particular amount is deemed to be an amount that became receivable by the member at the end of the fiscal period; and
	(b) the amount deemed by paragraph (a) to be an amount receivable by the member is deemed to be an amount
	(i) that is described in subsection (12.4) in respect of the member, and
	(ii) that has the same attributes for the member as it did for the particular partnership.
	(10) Subsection 66(13.1) of the Act is replaced by the following:
Short taxation year	(13.1) Where a taxpayer has a taxation year that is less than 51 weeks, the amount determined in respect of the year under each of subparagraph (4)(b)(i), paragraph 66.2(2)(c), subparagraph (b)(i) of the definition ``global foreign resource limit'' in subsection 66.21(1), subparagraph 66.21(4)(a)(i), clause 66.21(4)(a)(ii)(B) and paragraphs 66.4(2)(b) and 66.7(2.3)(a) , (4)(a) and (5)(a) shall not exceed that proportion of the amount otherwise determined that the number of days in the year is of 365.
	(11) The definitions ``original owner'' and ``predecessor owner'' in subsection 66(15) of the Act are replaced by the following:
``original owner'' « propriétaire obligé »	``original owner'' of a Canadian resource property or a foreign resource property means a person
	(a) who owned the property and disposed of it to a corporation that acquired it in circumstances in which subsection 29(25) of the Income Tax Application Rules or subsection 66.7(1), (2), (2.3) , (3), (4) or (5) applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property, and
	(b) who would, but for subsection 66.7(12), (13), (13.1) or (17), as the case may be, be entitled in computing that person's income for a taxation year that ends after that person disposed of the property to a deduction under section 29 of the Income Tax Application Rules or subsection (2), (3) or (4), 66.1(2) or (3), 66.2(2), 66.21(4) or 66.4(2) of this Act in respect of expenses described in subparagraph 29(25)(c)(i) or (ii) of that Act, Canadian exploration and development expenses, foreign resource pool expenses, Canadian exploration expenses, Canadian development expenses or Canadian oil and gas property expenses incurred by the person before the person disposed of the property;
``predecessor owner'' « propriétaire antérieur »	``predecessor owner'' of a Canadian resource property or a foreign resource property means a corporation
	(a) that acquired the property in circumstances in which subsection 29(25) of the Income Tax Application Rules or subsection 66.7(1), (2), (2.3) , (3), (4) or (5) applies, or would apply if the corporation had continued to own the property, to the corporation in respect of the property,
	(b) that disposed of the property to another corporation that acquired it in circumstances in which subsection 29(25) of the Income Tax Application Rules or subsection 66.7(1), (2), (2.3) , (3), (4) or (5) applies, or would apply if the other corporation had continued to own the property, to the other corporation in respect of the property, and
	(c) that would, but for subsection 66.7(14), (15), (15.1) or (17), as the case may be, be entitled in computing its income for a taxation year ending after it disposed of the property to a deduction under subsection 29(25) of the Income Tax Application Rules or subsection 66.7(1), (2), (2.3) , (3), (4) or (5) in respect of expenses incurred by an original owner of the property;
	(12) Paragraph (c) of the definition ``Canadian resource property'' in subsection 66(15) of the Act is replaced by the following:
	(c) any oil or gas well in Canada or any real property in Canada the principal value of which depends on its petroleum or natural gas content (but not including any depreciable property),
	(13) Paragraph (f) of the definition ``Canadian resource property'' in subsection 66(15) of the Act is replaced by the following:
	(f) any real property in Canada the principal value of which depends on its mineral resource content (but not including any depreciable property), or
	(14) Paragraph (b) of the definition ``foreign exploration and development expenses'' in subsection 66(15) of the Act is replaced by the following:
	(b) any expense incurred by the taxpayer for the purpose of determining the existence, location, extent or quality of a mineral resource outside Canada, including any expense incurred in the course of
	(i) prospecting,
	(ii) carrying out geological, geophysical or geochemical surveys,
	(iii) drilling by rotary, diamond, percussion or other method, or
	(iv) trenching, digging test pits and preliminary sampling,
	(15) The definition ``foreign exploration and development expenses'' in subsection 66(15) of the Act is amended by striking out the word ``or'' at the end of paragraph (h) and by adding the following after paragraph (i):
	(j) an expenditure that is the cost, or any part of the cost, to the taxpayer of any depreciable property of a prescribed class that was acquired after December 21, 2000,
	(k) foreign resource expenses in respect of a country, or
	(l) an expenditure made after February 27, 2000 by the taxpayer unless the expenditure was made
	(i) pursuant to an agreement in writing made by the taxpayer before February 28, 2000,
	(ii) for the acquisition of foreign resource property by the taxpayer, or
	(iii) for the purpose of
	(A) enhancing the value of foreign resource property that the taxpayer owned at the time the expenditure was incurred or that the taxpayer had a reasonable expectation of owning after that time, or
	(B) assisting in evaluating whether a foreign resource property is to be acquired by the taxpayer;
	(16) Subsection 66(15) of the Act is amended by adding the following in alphabetical order:
``specified foreign exploration and development expense'' « frais d'exploration et d'aménageme nt à l'étranger déterminés »	``specified foreign exploration and development expense'' of a taxpayer in respect of a country (other than Canada) means an amount that is included in the taxpayer's foreign exploration and development expenses and that is
	(a) a drilling or exploration expense, including any general geological or geophysical expense, incurred by the taxpayer on or in respect of exploring or drilling for petroleum or natural gas in that country,
	(a.1) an expense incurred by the taxpayer after December 21, 2000 (otherwise than pursuant to an agreement in writing made before December 22, 2000) for the purpose of determining the existence, location, extent or quality of a mineral resource in that country, including any expense incurred in the course of
	(i) prospecting,
	(ii) carrying out geological, geophysical or geochemical surveys,
	(iii) drilling by rotary, diamond, percussion or other methods, or
	(iv) trenching, digging test pits and preliminary sampling,
	(b) a prospecting, exploration or development expense incurred by the taxpayer before December 22, 2000 (or after December 21, 2000 pursuant to an agreement in writing made before December 22, 2000) in searching for minerals in that country,
	(c) the cost to the taxpayer of the taxpayer's foreign resource property in respect of that country,
	(d) an annual payment made by the taxpayer in a taxation year of the taxpayer for the preservation of a foreign resource property in respect of that country,
	(e) an amount deemed by subsection 21(2) or (4) to be a foreign exploration and development expense incurred by the taxpayer, to the extent that it can reasonably be considered to relate to an amount that, without reference to this paragraph and paragraph (f), would be a specified foreign exploration and development expense in respect of that country, or