(6) Subparagraph (a)(ii) of the description of D in subsection 80(13) of the Act is amended by replacing the reference to the expression ``4/3 of'' with a reference to the word ``twice''.

(7) Paragraph (b) of the description of E in subsection 80(13) of the Act is amended by replacing the reference to the number ``0.75'' with a reference to the fraction ``1/2''.

(8) Subsections (1), (3) and (4) apply to taxation years that begin after 2000.

(9) Subsections (2) and (5) to (7) apply to taxation years that end after February 27, 2000 except that, for a taxation year of a debtor that includes either February 28, 2000 or October 17, 2000 or began after February 28, 2000 and ended before October 17, 2000,

    (a) the reference to the word ``twice'' in clause 80(12)(a)(ii)(B) of the Act, as enacted by subsection (5), and in subparagraph (a)(ii) of the description of D in subsection 80(13) of the Act, as enacted by subsection (6), shall be read as a reference to the expression ``the fraction that is the reciprocal of the fraction in paragraph 38(a), as enacted by subsection 22(1) of the Income Tax Amendments Act, 2000, that applies to the debtor for the year, multiplied by''; and

    (b) the reference to the fraction ``1/2'' in paragraph (b) of the description of E in subsection 80(13) of the Act, as enacted by subsection (7), shall be read as a reference to the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the debtor for the year.

59. (1) Subsection 80.01(10) of the Act is amended by replacing the reference to the number ``0.75'' in the formula with a reference to the number ``0.5''.

(2) Subsection (1) applies to taxation years that end after February 27, 2000 except that, for a taxation year of a debtor that includes either February 28, 2000 or October 17, 2000 or began after February 28, 2000 and ended before October 17, 2000, the reference to the fraction ``1/2'' in subsection 80.01(10) of the Act, as enacted by subsection (1), shall be read as a reference to the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the debtor for the year.

60. (1) Subsection 81(1) of the Act is amended by adding the following after paragraph (g.3):

Relief for increased heating expenses

    (g.4) an amount received pursuant to the Order Authorizing Ex Gratia Payments for Increased Heating Expenses;

(2) Subsection 81(3.1) of the Act is replaced by the following:

Travel expenses

(3.1) There shall not be included in computing an individual's income for a taxation year an amount (not in excess of a reasonable amount ) received by the individual from an employer with whom the individual was dealing at arm's length as an allowance for, or reimbursement of, travel expenses incurred by the individual in the year in respect of the individual's part-time employment in the year with the employer (other than expenses incurred in the performance of the duties of the individual's part-time employment) if

    (a) throughout the period in which the expenses were incurred,

      (i ) the individual had other employment or was carrying on a business, or

      (ii) where the employer is a designated educational institution (within the meaning assigned by subsection 118.6(1)), the duties of the individual's part-time employment were the provision in Canada of a service to the employer in the individual's capacity as a professor or teacher; and

    (b) the duties of the individual's part-time employment were performed at a location not less than 80 kilometres from,

      (i) where subparagraph (a)(i) applies, both the individual's ordinary place of residence and the place of the other employment or business referred to in that subparagraph, and

      (ii) where subparagraph (a)(ii) applies, the individual's ordinary place of residence.

Payments for volunteer services

(4) Where

    (a) an individual was employed or otherwise engaged in a taxation year by a government, municipality or public authority (in this subsection referred to as ``the employer'') and received in the year from the employer one or more amounts for the performance, as a volunteer, of the individual's duties as

      (i) an ambulance technician,

      (ii) a firefighter, or

      (iii) a person who assists in the search or rescue of individuals or in other emergency situations, and

    (b) if the Minister so demands, the employer has certified in writing that

      (i) the individual was in the year a person described in paragraph (a), and

      (ii) the individual was at no time in the year employed or otherwise engaged by the employer, otherwise than as a volunteer, in connection with the performance of any of the duties referred to in paragraph (a) or of similar duties,

there shall not be included in computing the individual's income derived from the performance of those duties the lesser of $1,000 and the total of those amounts.

(3) Subsection (1) applies to amounts received after 2000.

(4) Subsection 81(3.1) of the Act, as enacted by subsection (2), applies to the 1995 and subsequent taxation years and, notwithstanding subsections 152(4) to (5) of the Act, any assessment of an individual's tax payable under the Act for any taxation year that ends before 2000 shall be made that is necessary to take into account the application of that subsection 81(3.1).

(5) Subsection 81(4) of the Act, as enacted by subsection (2), applies to the 1998 and subsequent taxation years.

61. (1) Subsection 84.1(2.1) of the Act is amended by replacing the references to the expression ``4/3 of'' with references to the word ``twice'' and by replacing the reference to the fraction ``3/4'' with a reference to the fraction ``1/2''.

(2) Subsection (1) applies to taxation years that end after February 27, 2000 except that, for a taxation year of a taxpayer that includes either February 28, 2000 or October 17, 2000 or began after February 28, 2000 and ended before October 17, 2000, the references to the word ``twice'' in subsection 84.1(2.1) of the Act, as enacted by subsection (1), shall be read as references to the expression ``the fraction that is the reciprocal of the fraction in paragraph 38(a), as enacted by subsection 22(1) of the Income Tax Amendments Act, 2000, that applies to the taxpayer for the year multiplied by'' and the reference to the fraction ``1/2'' shall be read as a reference to the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the taxpayer for the year.

62. (1) The descriptions of D and E in paragraph 85(1)(d.1) of the Act are replaced by the following:

    D is the amount, if any, that would be included under subsection 14(1) in computing the taxpayer's income as a result of the disposition if the values determined for C and D in paragraph 14(1)(b) were zero, and

    E is the amount, if any, that would be included under subsection 14(1) in computing the taxpayer's income as a result of the disposition if the value determined for D in paragraph 14(1)(b) were zero;

(2) Section 85 of the Act is amended by adding the following after subsection (1.1):

Exception

(1.11) Notwithstanding subsection (1.1), a foreign resource property, or an interest in a partnership that derives all or part of its value from one or more foreign resource properties, is not an eligible property of a taxpayer in respect of a disposition by the taxpayer to a corporation where

    (a) the taxpayer and the corporation do not deal with each other at arm's length; and

    (b) it is reasonable to conclude that one of the purposes of the disposition, or a series of transactions or events of which the disposition is a part, is to increase the extent to which any person may claim a deduction under section 126.

(3) Subsection (1) applies in respect of taxation years that end after February 27, 2000.

(4) Subsection (2) applies to dispositions that occur after December 21, 2000 other than a disposition by a taxpayer that occurs pursuant to an agreement in writing made by the taxpayer on or before that date.

63. (1) Subsection 85.1(2) of the Act is amended by striking out the word ``or'' at the end of paragraph (c), by adding the word ``or'' at the end of paragraph (d) and by adding the following after paragraph (d):

    (e) the vendor

      (i) is a foreign affiliate of a taxpayer resident in Canada at the end of the taxation year of the vendor in which the exchange occurred, and

      (ii) has included any portion of the gain or loss, otherwise determined, from the disposition of the exchanged shares in computing its foreign accrual property income for the taxation year of the vendor in which the exchange occurred.

(2) Section 85.1 of the Act is amended by adding the following after subsection (4):

Foreign share for foreign share exchange

(5) Subject to subsections (3) and (6) and 95(2), where a corporation resident in a country other than Canada (in this section referred to as the ``foreign purchaser'') issues shares of its capital stock (in this section referred to as the ``issued foreign shares'') to a vendor in exchange for shares of the capital stock of another corporation resident in a country other than Canada (in this section referred to as the ``exchanged foreign shares'') that were immediately before the exchange capital property of the vendor, except where the vendor has, in the vendor's return of income for the taxation year in which the exchange occurred, included in computing the vendor's income for that year any portion of the gain or loss, otherwise determined, from the disposition of the exchanged foreign shares, the vendor is deemed

    (a) to have disposed of the exchanged foreign shares for proceeds of disposition equal to the adjusted cost base to the vendor of those shares immediately before the exchange, and

    (b) to have acquired the issued foreign shares at a cost to the vendor equal to the adjusted cost base to the vendor of the exchanged foreign shares immediately before the exchange,

and where the exchanged foreign shares were taxable Canadian property of the vendor, the issued foreign shares so acquired by the vendor are deemed to be taxable Canadian property of the vendor.

Where subsection (5) does not apply

(6) Subsection (5) does not apply where

    (a) the vendor and foreign purchaser were, immediately before the exchange, not dealing with each other at arm's length (otherwise than because of a right referred to in paragraph 251(5)(b) that is a right of the foreign purchaser to acquire the exchanged foreign shares);

    (b) immediately after the exchange the vendor, persons with whom the vendor did not deal at arm's length or the vendor together with persons with whom the vendor did not deal at arm's length,

      (i) controlled the foreign purchaser, or

      (ii) beneficially owned shares of the capital stock of the foreign purchaser having a fair market value of more than 50% of the fair market value of all of the outstanding shares of the capital stock of the foreign purchaser;

    (c) consideration other than issued foreign shares was received by the vendor for the exchanged foreign shares, notwithstanding that the vendor may have disposed of shares of the capital stock of the other corporation referred to in subsection (5) (other than the exchanged foreign shares) to the foreign purchaser for consideration other than shares of the capital stock of the foreign purchaser;

    (d) the vendor

      (i) is a foreign affiliate of a taxpayer resident in Canada at the end of the taxation year of the vendor in which the exchange occurred, and

      (ii) has included any portion of the gain or loss, otherwise determined, from the disposition of the exchanged foreign shares in computing its foreign accrual property income for the taxation year of the vendor in which the exchange occurred; or

    (e) the vendor is a foreign affiliate of a taxpayer resident in Canada at the end of the taxation year of the vendor in which the exchange occurred and the exchanged foreign shares are excluded property (within the meaning assigned by subsection 95(1)) of the vendor.

(3) Subsections (1) and (2) apply to exchanges that occur after 1995.

64. (1) The Act is amended by adding the following after section 86:

Foreign Spin-offs

Eligible distribution not included in income

86.1 (1) Notwithstanding any other provision of this Part,

    (a) the amount of an eligible distribution received by a taxpayer shall not be included in computing the income of the taxpayer; and

    (b) subsection 52(2) does not apply to the eligible distribution received by the taxpayer.

Eligible distribution

(2) For the purposes of this section and Part XI, a distribution by a particular corporation that is received by a taxpayer is an eligible distribution if

    (a) the distribution is with respect to all of the taxpayer's common shares of the capital stock of the particular corporation (in this section referred to as the ``original shares'');

    (b) the distribution consists solely of common shares of the capital stock of another corporation that were owned by the particular corporation immediately before their distribution to the taxpayer (in this section referred to as the ``spin-off shares'');

    (c) in the case of a distribution that is not prescribed,

      (i) at the time of the distribution, both corporations are resident in the United States and were never resident in Canada,

      (ii) at the time of the distribution, the shares of the class that includes the original shares are widely held and actively traded on a prescribed stock exchange in the United States, and

      (iii) under the United States Internal Revenue Code applicable to the distribution, the shareholders of the particular corporation who are resident in the United States are not taxable in respect of the distribution;

    (d) in the case of a distribution that is prescribed,

      (i) at the time of the distribution, both corporations are resident in the same country, other than the United States, with which Canada has a tax treaty (in this section referred to as the ``foreign country'') and were never resident in Canada,

      (ii) at the time of the distribution, the shares of the class that includes the original shares are widely held and actively traded on a prescribed stock exchange,

      (iii) under the law of the foreign country, those shareholders of the particular corporation who are resident in that country are not taxable in respect of the distribution, and

      (iv) the distribution is prescribed subject to such terms and conditions as are considered appropriate in the circumstances;

    (e) before the end of the sixth month following the day on which the particular corporation first distributes a spin-off share in respect of the distribution, the particular corporation provides to the Minister information satisfactory to the Minister establishing

      (i) that, at the time of the distribution, the shares of the class that includes the original shares are widely held and actively traded on a prescribed stock exchange,

      (ii) that the particular corporation and the other corporation referred to in paragraph (b) were never resident in Canada,

      (iii) the date of the distribution,

      (iv) the type and fair market value of each property distributed to residents of Canada,

      (v) the name and address of each resident of Canada that received property with respect to the distribution,

      (vi) in the case of a distribution that is not prescribed, that the distribution is not taxable under the United States Internal Revenue Code applicable to the distribution,

      (vii) in the case of a distribution that is prescribed, that the distribution is not taxable under the law of the foreign country, and

      (viii) such other matters that are required, in prescribed form; and

    (f) except where Part XI applies in respect of the taxpayer, the taxpayer elects in writing filed with the taxpayer's return of income for the taxation year in which the distribution occurs (or, in the case of a distribution received before October 18, 2000, filed with the Minister before July 2001) that this section apply to the distribution and provides information satisfactory to the Minister