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(iv) all amounts added by reason of
subsection 80(13) in computing the
amount determined under subparagraph
(i),
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and income in respect of which an amount is
designated under clause (b)(ii)(A) is, for the
purposes of clause 29(25)(d)(i)(B) of the
Income Tax Application Rules, clauses
(1)(b)(i)(C), (3)(b)(i)(C), (4)(b)(i)(B) and
(5)(b)(i)(B) and subparagraph (10)(g)(iii),
deemed not to be attributable to production
from a Canadian resource property.
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(3) The portion of subsection 66.7(8) of
the Act before paragraph (a) is replaced by
the following:
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| Application of
subsections
(2) and (2.3)
|
(8) Subsections (2) and (2.3) apply only to
a corporation that has acquired a particular
foreign resource property
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(4) The portion of subsection 66.7(10) of
the Act after paragraph (b) and before
paragraph (c) is replaced by the following:
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for the purposes of the provisions of the
Income Tax Application Rules and this Act
(other than subsections 66(12.6), (12.601),
(12.602), (12.62) and (12.71)) relating to
deductions in respect of drilling and
exploration expenses, prospecting,
exploration and development expenses,
Canadian exploration and development
expenses, foreign resource pool expenses,
Canadian exploration expenses, Canadian
development expenses and Canadian oil and
gas property expenses (in this subsection
referred to as ``resource expenses'') incurred
by the corporation before that time, the
following rules apply:
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(5) Subsection 66.7(10) of the Act is
amended by adding the following after
paragraph (e):
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(f) the original owner is deemed to have
been resident in Canada before that time
while the corporation was resident in
Canada ,
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(6) Subparagraphs 66.7(10)(h)(v) and (vi)
of the Act are replaced by the following:
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(v) for the purposes of determining the
amounts under paragraphs (2)(b) and
(2.3)(b) , to be income from the sources
described in subparagraph (iii) or (iv), as
the case may be, of the transferee for its
taxation year in which that taxation year
of the transferor ends, and
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(vi) for the purposes of determining the
amounts under paragraphs (2)(b) and
(2.3)(b) , not to be income from the
sources described in subparagraph (iii) or
(iv), as the case may be, of the transferor
for that year,
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(7) The portion of subparagraph
66.7(10)(j)(ii) of the Act before clause (A) is
replaced by the following:
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(ii) for the purposes of clause
29(25)(d)(i)(B) of the Income Tax
Application Rules, clauses (1)(b)(i)(C)
and (2)(b)(i)(B), subparagraph
(2.3)(b)(i) and clauses (3)(b)(i)(C),
(4)(b)(i)(B) and (5)(b)(i)(B) for a
taxation year ending after that time, the
lesser of
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(8) Section 66.7 of the Act is amended by
adding the following after subsection (13):
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| Reduction of
foreign
resource
expenses
|
(13.1) Where in a taxation year an original
owner of foreign resource properties in
respect of a country disposes of all or
substantially all of the original owner's
foreign resource properties in circumstances
to which subsection (2.3) applies,
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(a) in determining the cumulative foreign
resource expense of the original owner in
respect of the country at any time after the
time referred to in subparagraph (2.3)(a)(i),
there shall be deducted the amount of that
cumulative foreign resource expense
determined immediately after the
disposition; and
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(b) for the purpose of paragraph (2.3)(a),
the cumulative foreign resource expense of
the original owner in respect of the country
determined immediately after the
disposition that was deducted under
subsection 66.21(4) in computing the
original owner's income for the year is
deemed to be equal to the lesser of
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(i) the amount deducted under paragraph
(a) in respect of the disposition, and
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(ii) the amount, if any, by which
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(A) the specified amount determined
under subsection (13.2) in respect of
the original owner and the country for
the year
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(B) the total of all amounts determined
under this paragraph in respect of
another disposition of foreign resource
property in respect of the country
made by the original owner before the
disposition and in the year.
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| Specified
amount -
foreign
resource
expenses
|
(13.2) Where in a taxation year an original
owner of foreign resource properties in
respect of a country disposes of all or
substantially all of the original owner's
foreign resource properties in circumstances
to which subsection (2.3) applies, the
specified amount in respect of the country and
the original owner for the year for the purposes
of clause (13.1)(b)(ii)(A) and of determining
the value of D in the definition ``cumulative
foreign resource expense'' in subsection
66.21(1) is the lesser of
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(a) the total of all amounts each of which is
the amount, if any, by which
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(i) an amount deducted under paragraph
(13.1)(a) in respect of a disposition in the
year by the original owner of foreign
resource property in respect of the
country
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(ii) the amount, if any, designated by the
original owner in the prescribed form
filed with the Minister within six months
after the end of the year in respect of an
amount described under subparagraph
(i); and
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(i) the amount claimed under subsection
66.21(4) by the original owner in respect
of the country for the year, and
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(ii) the amount that would, but for
paragraph 66.21(3)(c), be determined
under subsection 66.21(3) in respect of
the country and the original owner for the
year.
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(9) Section 66.7 of the Act is amended by
adding the following after subsection (15):
|
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| Disposal of
foreign
resource
properties -
subsection
(2.3)
|
(15.1) Where in a taxation year a
predecessor owner of foreign resource
properties disposes of foreign resource
properties to a corporation in circumstances to
which subsection (2.3) applies,
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(a) for the purpose of applying that
subsection to the predecessor owner in
respect of its acquisition of any foreign
resource properties owned by it
immediately before the disposition, it is
deemed, after the disposition, never to have
acquired any such properties except for the
purposes of
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(i) where the predecessor owner and the
corporation dealt with each other at arm's
length at the time of the disposition or the
disposition was by way of an
amalgamation or merger, determining an
amount deductible under subsection
(2.3) for the year, and
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(ii) determining the value of F in the
definition ``cumulative foreign resource
expense'' in subsection 66.21(1); and
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(b) where the corporation or another
corporation acquires any of the properties
on or after the disposition in circumstances
to which subsection (2.3) applies, amounts
that become receivable by the predecessor
owner after the disposition in respect of
foreign resource properties retained by it at
the time of the disposition are, for the
purposes of applying subsection (2.3) to the
corporation or the other corporation in
respect of the acquisition, deemed not to
have become receivable by the predecessor
owner.
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(10) Subsection 66.7(18) of the Act is
replaced by the following:
|
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| Application of
interpretation
provisions
|
(18) The definitions in subsection 66(15)
and sections 66.1 to 66.4 apply in this section.
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(11) Subsections (1) and (5) apply to the
1999 and subsequent taxation years.
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(12) Subsections 66.7(2.1) and (2.2) of the
Act, as enacted by subsection (2), apply to
taxation years of a taxpayer that begin after
the earlier of
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(a) December 31, 1999; and
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(b) where, for the purposes of subsection
117(26), a date is designated in writing by
the taxpayer and the designation is filed
with the Minister of National Revenue on
or before the taxpayer's filing-due date
for the taxpayer's taxation year that
includes the day on which this Act
receives royal assent, the later of
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(i) the date so designated, and
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(13) Subsection 66.7(2.3) of the Act, as
enacted by subsection (2), and subsections
(3), (4) and (6) to (10) apply to taxation years
that begin after 2000.
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50. (1) Subparagraph 66.8(1)(a)(i) of the
Act is amended by striking out the word
``or'' at the end of clause (C) and by
replacing clause (D) with the following:
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(D) the foreign resource expenses in
respect of a country (in this subsection
referred to as ``country-specific
foreign expenses''), or
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(E) the foreign exploration and
development expenses (in this
subsection referred to as ``global
foreign expenses''),
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(2) Paragraph 66.8(1)(b) of the Act is
amended by striking out the word ``and'' at
the end of subparagraph (iii) and by
replacing subparagraph (iv) with the
following:
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(iv) if any remains unapplied, then to
reduce (in the order specified by the
taxpayer in writing filed with the
Minister on or before the taxpayer's
filing-due date for the taxpayer's
taxation year in which the fiscal period
ends or, where no such specification is
made, in the order determined by the
Minister) the taxpayer's share of
country-specific foreign expenses, and
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(v) if any remains unapplied, then to
reduce the taxpayer's share of global
foreign expenses ; and
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(3) Subsections (1) and (2) apply to fiscal
periods that begin after 2000.
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51. (1) Paragraph 69(1)(b) of the Act is
amended by striking out the word ``or'' at
the end of subparagraph (i), by adding the
word ``or'' at the end of subparagraph (ii)
and by adding the following after
subparagraph (ii):
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(iii) to a trust because of a disposition of
a property that does not result in a change
in the beneficial ownership of the
property ; and
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(2) Paragraph 69(1)(c) of the Act is
replaced by the following:
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(c) where a taxpayer acquires a property by
way of gift, bequest or inheritance or
because of a disposition that does not result
in a change in the beneficial ownership of
the property , the taxpayer is deemed to
acquire the property at its fair market value.
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(3) Paragraph 69(5)(c) of the Act is
replaced by the following:
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(c) subsections 52(1) and (2) do not apply
for the purposes of determining the cost to
the shareholder of the property; and
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(4) Subsection (1) applies to dispositions
that occur after December 23, 1998.
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(5) Subsection (2) applies to acquisitions
that occur after December 23, 1998.
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(6) Subsection (3) applies to dispositions
that occur after 1999.
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52. (1) The portion of paragraph
70(5.1)(d) of the Act before the formula is
replaced by the following:
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(d) for the purpose of determining, after that
time, the amount required by paragraph
14(1)(b) to be included in computing the
income of the beneficiary in respect of any
subsequent disposition of the property of
the business, there shall be added to the
amount determined for Q in the definition
``cumulative eligible capital'' in subsection
14(5) the amount determined by the
formula
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(2) Paragraph 70(5.2)(a) of the Act is
replaced by the following:
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(a) the taxpayer is deemed to have,
immediately before the taxpayer's death,
disposed of each Canadian resource
property and foreign resource property of
the taxpayer and received proceeds of
disposition for that property equal to its fair
market value immediately before the death;
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(a.1) subject to subparagraph (b)(ii), any
particular person who as a consequence of
the taxpayer's death acquires any property
that is deemed by paragraph (a) to have
been disposed of by the taxpayer is deemed
to have acquired the property at the time of
the death at a cost equal to the fair market
value of the property immediately before
the death;
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(3) Subparagraph 70(5.2)(b)(ii) of the Act
is replaced by the following:
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(ii) the spouse, common-law partner or
trust, as the case may be, is deemed to
have acquired the property at the time of
the death at a cost equal to the amount
determined in respect of the disposition
under subparagraph (i) ;
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(4) Paragraph 70(5.2)(c) of the Act is
replaced by the following:
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(c) the taxpayer is deemed to have,
immediately before the taxpayer's death,
disposed of each property that was land
included in the inventory of a business of
the taxpayer and received proceeds of
disposition for that property equal to its fair
market value immediately before the death;
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(c.1) subject to subparagraph (d)(ii), any
particular person who as a consequence of
the taxpayer's death acquires any property
that is deemed by paragraph (c) to have
been disposed of by the taxpayer is deemed
to have acquired the property at the time of
the death at a cost equal to the fair market
value of the property immediately before
the death; and
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(5) Subsection 70(5.3) of the Act is
replaced by the following:
|
|
| Fair market
value
|
(5.3) For the purposes of subsections (5) and
104(4) and section 128.1 , the fair market
value at any time of any property deemed to
have been disposed of at that time as a
consequence of a particular individual's death
or as a consequence of the particular
individual becoming or ceasing to be resident
in Canada shall be determined as though the
fair market value at that time of any life
insurance policy, under which the particular
individual (or any other individual not dealing
at arm's length with the particular individual
at that time or at the time the policy was
issued) was a person whose life was insured,
were the cash surrender value (as defined in
subsection 148(9)) of the policy immediately
before the particular individual died or
became or ceased to be resident in Canada, as
the case may be.
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(6) The portion of subsection 70(9.1) of
the Act before paragraph (a) is replaced by
the following:
|
|
| Transfer of
farm property
from trust to
settlor's
children
|
(9.1) Where any property in Canada of a
taxpayer that is land or depreciable property of
a prescribed class has been transferred or
distributed to a trust described in subsection
(6) or 73(1) (as that subsection applied to
transfers before 2000) or a trust to which
subparagraph 73(1.01)(c)(i) applies and the
property or a replacement property for that
property in respect of which the trust has made
an election under subsection 13(4) or 44(1)
was, immediately before the death of the
taxpayer's spouse or common-law partner
who was a beneficiary under the trust, used in
the business of farming and has, on the death
of the spouse or common-law partner and as a
consequence of the death , been transferred or
distributed to and vested indefeasibly in an
individual who was a child of the taxpayer
and who was resident in Canada immediately
before the death of the spouse or common-law
partner, the following rules apply:
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(7) The portion of subsection 70(9.3) of
the Act before paragraph (a) is replaced by
the following:
|
|
| Transfer of
family farm
corporation or
partnership
from trust to
children of
settlor
|
(9.3) Where property of a taxpayer has been
transferred or distributed to a trust described
in subsection (6) or 73(1) (as that subsection
applied to transfers before 2000) or a trust to
which subparagraph 73(1.01)(c)(i) applies
and the property was,
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(8) Subsection (1) applies in respect of
taxation years that end after February 27,
2000.
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(9) Paragraphs 70(5.2)(a) and (c) of the
Act, as enacted by subsections (2) and (4),
respectively, and subsection (3) apply to
taxation years that begin after 2000.
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