| Withholding
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(15) Where, because of subsection (8), a
taxpayer is deemed by paragraph (1)(a) to
have received a benefit from employment in
a taxation year, the benefit is deemed to be nil
for the purpose of subsection 153(1).
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| Prescribed
form for
deferral
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(16) Where, at any time in a taxation year,
a taxpayer holds a security that was acquired
under circumstances to which subsection (8)
applied, the taxpayer shall file with the
Minister, with the taxpayer's return of income
for the year, a prescribed form containing
prescribed information relating to the
taxpayer's acquisition and disposition of
securities under agreements referred to in
subsection (1).
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(10) Subsections (1), (4), (6), (7) and (9)
apply to the 2000 and subsequent taxation
years except that
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(a) a share acquired in 2000 under an
agreement referred to in subsection 7(1)
of the Act, as enacted by subsection (1), is
deemed to comply with the requirements
of paragraph 7(9)(d) of the Act, as
enacted by subsection (9), if, at all times
during the period beginning at the time
the agreement was made (determined
without reference to subsection 7(1.4) of
the Act, as enacted by subsections (3) and
(4)) and ending at the time the share was
acquired, the class of shares to which the
share belongs was listed on a prescribed
stock exchange;
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(b) an election under subsection 7(10) of
the Act, as enacted by subsection (9), to
have subsection 7(8) of the Act, as
enacted by subsection (9), apply in
respect of a security acquired in 2000 is
deemed to have been filed in a timely
manner if it is filed on or before the day
that is 60 days after the day on which this
Act receives royal assent; and
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(c) a written request under subsection
7(13) of the Act, as enacted by subsection
(9), to revoke an election in respect of a
security acquired in 2000 is deemed to
have been filed in a timely manner if it is
filed on or before the day that is 60 days
after the day on which this Act receives
royal assent.
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(11) Subsection (2) applies to securities
acquired, but not disposed of, before
February 28, 2000 and to securities
acquired after February 27, 2000.
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(12) Subsection (3) applies to the 1998
and subsequent taxation years.
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(13) Subsection 7(1.5) of the Act, as
enacted by subsection (5), applies to
dispositions and exchanges of securities by
a taxpayer that occur after February 27,
2000.
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(14) Subsection 7(1.6) of the Act, as
enacted by subsection (5), applies after
1992.
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(15) Subsection 7(1.7) of the Act, as
enacted by subsection (5), applies to
amounts received on or after March 16,
2001, other than amounts received on or
after that day
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(a) pursuant to an agreement in writing
made before that day in settlement of
claims arising as a result of a cessation
occurring before that day; or
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(b) pursuant to an order or judgment
issued before that day in respect of claims
arising as a result of a cessation occurring
before that day.
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(16) Subsection (8) applies after 1997,
except that
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(a) it does not apply to a right under an
agreement to which subsection 7(7) of the
Act, as enacted by subsection 3(7) of
chapter 22 of the Statutes of Canada,
1999, does not (except for the purpose of
applying paragraph 7(3)(b) of the Act)
apply; and
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(b) before 2000, the portion of subsection
7(7) of the Act, as enacted by subsection
(8), before the definition ``qualifying
person'' shall be read as follows:
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(7) The definitions in this subsection apply
in this section and in paragraph 110(1)(d) and
subsections 110(1.5) and (1.6).
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3. (1) Paragraph 8(1)(a) of the Act is
repealed.
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(2) Paragraph 8(1)(c) of the Act is
replaced by the following:
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| Clergy
residence
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(c) where, in the year , the taxpayer
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(i) is a member of the clergy or of a
religious order or a regular minister of a
religious denomination, and
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(A) in charge of a diocese, parish or
congregation ,
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(B) ministering to a diocese, parish or
congregation, or
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(C) engaged exclusively in full-time
administrative service by appointment
of a religious order or religious
denomination,
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the amount, not exceeding the taxpayer's
remuneration for the year from the office or
employment , equal to
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(iii) the total of all amounts including
amounts in respect of utilities, included
in computing the taxpayer's income for
the year under section 6 in respect of the
residence or other living accommodation
occupied by the taxpayer in the course of,
or because of, the taxpayer's office or
employment as such a member or
minister so in charge of or ministering to
a diocese, parish or congregation, or so
engaged in such administrative service,
or
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(iv) rent and utilities paid by the taxpayer
for the taxpayer's principal place of
residence (or other principal living
accommodation) , ordinarily occupied
during the year by the taxpayer, or the
fair rental value of such a residence (or
other living accommodation), including
utilities, owned by the taxpayer or the
taxpayer's spouse or common-law
partner , not exceeding the lesser of
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(I) $1,000 multiplied by the number
of months (to a maximum of ten) in
the year, during which the taxpayer
is a person described in
subparagraphs (i) and (ii), and
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(II) one-third of the taxpayer's
remuneration for the year from the
office or employment, and
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(B) the amount, if any, by which
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(I) the rent paid or the fair rental
value of the residence or living
accommodation, including utilities
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(II) the total of all amounts each of
which is an amount deducted, in
connection with the same
accommodation or residence, in
computing an individual's income
for the year from an office or
employment or from a business
(other than an amount deducted
under this paragraph by the
taxpayer), to the extent that the
amount can reasonably be
considered to relate to the period, or
a portion of the period, in respect of
which an amount is claimed by the
taxpayer under this paragraph;
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(3) Subsection 8(10) of the Act is replaced
by the following:
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| Certificate of
employer
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(10) An amount otherwise deductible for a
taxation year under paragraph (1)(c) , (f), (h)
or (h.1) or subparagraph (1)(i)(ii) or (iii) by a
taxpayer shall not be deducted unless a
prescribed form, signed by the taxpayer's
employer certifying that the conditions set out
in the applicable provision were met in the
year in respect of the taxpayer, is filed with the
taxpayer's return of income for the year.
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(4) Subsections (1) and (3) apply to the
1998 and subsequent taxation years except
that in its application to the 1998 to 2000
taxation years the reference to ``paragraph
(1)(c), (f)'' in subsection 8(10), as enacted by
subsection (3), shall be read as a reference
to ``paragraph (1)(f)''.
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(5) Subsection (2) applies to the 2001 and
subsequent taxation years.
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4. (1) Section 10 of the Act is amended by
adding the following after subsection (11):
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| Removing
property from
inventory
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(12) If at any time a non-resident taxpayer
ceases to use, in connection with a business or
part of a business carried on by the taxpayer in
Canada immediately before that time, a
property that was immediately before that
time described in the inventory of the business
or the part of the business, as the case may be,
(other than a property that was disposed of by
the taxpayer at that time), the taxpayer is
deemed
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(a) to have disposed of the property
immediately before that time for proceeds
of disposition equal to its fair market value
at that time; and
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(b) to have received those proceeds
immediately before that time in the course
of carrying on the business or the part of the
business, as the case may be.
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| Adding
property to
inventory
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(13) If at any time a property becomes
included in the inventory of a business or part
of a business that a non-resident taxpayer
carries on in Canada after that time (other than
a property that was, otherwise than because of
this subsection, acquired by the taxpayer at
that time), the taxpayer is deemed to have
acquired the property at that time at a cost
equal to its fair market value at that time.
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| Work in
progress
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(14) For the purposes of subsections (12)
and (13), property that is included in the
inventory of a business includes property that
would be so included if paragraph 34(a) did
not apply.
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(2) Subsection (1) applies after December
23, 1998.
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5. (1) Paragraph 12(1)(c) of the Act is
replaced by the following:
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| Interest
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(c) subject to subsections (3) and (4.1 ), any
amount received or receivable by the
taxpayer in the year (depending on the
method regularly followed by the taxpayer
in computing the taxpayer's income) as, on
account of, in lieu of payment of or in
satisfaction of, interest to the extent that the
interest was not included in computing the
taxpayer's income for a preceding taxation
year;
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(2) Paragraph 12(1)(i.1) of the Act is
replaced by the following:
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| Bad debts
recovered
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(i.1) where an amount is received in the year
on account of a debt in respect of which a
deduction for bad debts was made under
subsection 20(4.2) in computing the
taxpayer's income for a preceding taxation
year, the amount determined by the formula
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A x B/C
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A is 1/2 of the amount so received;
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B is the amount that was deducted under
subsection 20(4.2) in respect of the
debt; and
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C is the total of the amount that was so
deducted under subsection 20(4.2) and
the amount that was deemed by that
subsection or subsection 20(4.3) to be
an allowable capital loss in respect of
the debt;
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(3) Subsection 12(1) of the Act is amended
by adding the following after paragraph
(o):
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| Foreign oil
and gas
production
taxes
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(o.1) the total of all amounts, each of which
is the taxpayer's production tax amount for
a foreign oil and gas business of the
taxpayer for the year, within the meaning
assigned by subsection 126(7);
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(4) Subsection (1) applies to taxation
years that end after September 1997.
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(5) Subsection (2) applies in respect of
taxation years that end after February 27,
2000 except that, for taxation years that
ended after February 27, 2000 and before
October 18, 2000, the reference to the
fraction ``1/2'' in the description of A in
paragraph 12(1)(i.1) of the Act, as enacted
by subsection (2), shall be read as a
reference to the fraction ``2/3''.
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(6) Subsection (3) applies 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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6. (1) Clause 13(7)(b)(ii)(B) of the Act is
amended by replacing the reference to the
fraction ``3/4'' with a reference to the
fraction ``1/2'' and by replacing the
reference to the expression ``4/3 of'' with a
reference to the word ``twice''.
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(2) Clause 13(7)(d)(i)(B) of the Act is
amended by replacing the reference to the
fraction ``3/4'' with a reference to the
fraction ``1/2'' and by replacing the
reference to the expression ``4/3 of'' with a
reference to the word ``twice''.
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(3) Paragraph 13(7)(e) of the Act is
amended by replacing the references to the
fraction ``3/4'' with references to the
fraction ``1/2'' and by replacing the
reference to the expression ``4/3 of'' with a
reference to the word ``twice''.
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(4) Subparagraph 13(7)(f)(ii) of the Act is
amended by replacing the reference to the
fraction ``3/4'' with a reference to the
fraction ``1/2''.
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(5) The definition ``disposition of
property'' in subsection 13(21) of the Act is
repealed.
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(6) Subparagraph 13(21.1)(b)(ii) of the
Act is amended by replacing the reference
to the fraction ``1/4'' with a reference to the
fraction ``1/2''.
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(7) Paragraph 13(21.2)(a) of the Act is
replaced by the following:
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(a) a person or partnership (in this
subsection referred to as the ``transferor'')
disposes at a particular time (otherwise than
in a disposition described in any of
paragraphs (c) to (g) of the definition
``superficial loss'' in section 54) of a
depreciable property of a particular
prescribed class of the transferor,
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(8) Subparagraph 13(21.2)(e)(ii) of the
Act is replaced by the following:
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(ii) where two or more properties of a
prescribed class of the transferor are
disposed of at the same time,
subparagraph (i) applies as if each
property so disposed of had been
separately disposed of in the order
designated by the transferor or, if the
transferor does not designate an order, in
the order designated by the Minister,
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(9) Section 13 of the Act is amended by
adding the following after subsection (33):
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| Deductible
expenses
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(34) Notwithstanding paragraph 1102(1)(a)
of the Regulations, for taxation years that end
after 1987 and before December 6, 1996, the
classes of property prescribed for the purpose
of paragraph 20(1)(a) are deemed to include
property of a taxpayer that, if the Act were
read without reference to sections 66 to 66.4,
would be included in one of the classes.
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(10) Subsections (1) and (2) apply to
changes in use of property that occur in
taxation years that end after February 27,
2000 except that, for changes in use of
property that occur in a taxpayer's taxation
year that includes either February 28, 2000
or October 17, 2000, or began after
February 28, 2000 and ended before
October 17, 2000, the references in clauses
13(7)(b)(ii)(B) and 13(7)(d)(i)(B) of the Act,
as enacted by subsections (1) and (2),
respectively, to the fraction ``1/2'' shall be
read as references to the fraction in
paragraph 38(a) of the Act, as enacted by
subsection 22(1), that applies to the
taxpayer for the year and the references to
the word ``twice'' 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''.
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(11) Subsection (3) applies to acquisitions
of property that occur in taxation years that
end after February 27, 2000 except that, for
acquisitions of property in a taxation year
that includes either February 28, 2000 or
October 17, 2000 or began after February
28, 2000 and ended before October 17, 2000
of a person or partnership from whom the
property was acquired, the references in
paragraph 13(7)(e) of the Act, as enacted by
subsection (3), to the fraction ``1/2'' shall be
read as references to the fraction in
paragraph 38(a) of the Act, as enacted by
subsection 22(1), that applies to the person
or partnership from whom the taxpayer
acquired the property for the year in which
the person or partnership disposed of the
property, and the references to the word
``twice'' 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 person or partnership from
whom the taxpayer acquired the property
for the year in which the person or
partnership disposed of the property,
multiplied by''.
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(12) Subsection (4) applies to acquisitions
of property that occur in taxation years that
end after February 27, 2000 except that, for
acquisitions of property that occur in a
taxpayer's taxation year that includes
either February 28, 2000 or October 17,
2000 or began after February 28, 2000 and
ended before October 17, 2000, the
reference in subparagraph 13(7)(f)(ii) of the
Act, as enacted by subsection (4), 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.
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(13) Subsection (5) applies to transactions
and events that occur after December 23,
1998.
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(14) Subsection (6) applies to taxation
years that end after February 27, 2000
except that, for a taxpayer's taxation year
that includes either February 28, 2000 or
October 17, 2000 or began after February
28, 2000 and ended before October 17,
2000, the reference in subparagraph
13(21.1)(b)(ii) of the Act, as enacted by
subsection (6), to the fraction ``1/2'' shall be
read as a reference to the fraction
determined when the fraction in paragraph
38(a) of the Act, as enacted by subsection
22(1), that applies to the taxpayer for the
year is subtracted from 1.
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(15) Subsections (7) and (8) apply after
November 1999 except that, if an individual
(other than a trust) so elects in writing and
files the election with the Minister of
National Revenue on or before the
individual's filing-due date for the taxation
year in which this Act receives royal assent,
subsection (7) does not apply in respect of
the disposition of a property by the
individual before July 2000
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(a) to a person who was obliged on
November 30, 1999 to acquire the
property pursuant to the terms of an
agreement in writing made on or before
that day; or
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(b) in a transaction, or as part of a series
of transactions, the arrangements for
which, evidenced in writing, were
substantially advanced before December
1999, other than a transaction or series of
transactions a main purpose of which can
reasonably be considered to have been to
enable an unrelated person to obtain the
benefit of
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