Loss limitation - disposition of partnership interest	(2.2) Where
	(a) a corporation resident in Canada has a loss from the disposition by it at any time of an interest in a partnership (in this subsection referred to as the ``partnership interest''), which has a direct or indirect interest in shares of the capital stock of a foreign affiliate of the corporation resident in Canada (in this subsection referred to as ``affiliate shares''), or
	(b) a foreign affiliate of a corporation resident in Canada has a loss from the disposition by it at any time of an interest in a partnership (in this subsection referred to as the ``partnership interest''), which has a direct or indirect interest in shares of the capital stock of another foreign affiliate of the corporation resident in Canada that would not be excluded property if the shares were owned by the affiliate (in this subsection referred to as ``affiliate shares'')
	the amount of the loss is deemed to be the amount determined by the formula
	A - (B - C)
	where
	A is the amount of the loss determined without reference to this subsection,
	B is the total of all amounts each of which was received before that time, in respect of an exempt dividend on affiliate shares or on shares for which affiliate shares were substituted, by
	(a) the corporation resident in Canada,
	(b) a corporation related to the corporation resident in Canada,
	(c) a foreign affiliate of the corporation resident in Canada, or
	(d) a foreign affiliate of a corporation related to the corporation resident in Canada, and
	C is the total of
	(a) the total of all amounts each of which is the amount by which a loss (determined without reference to this section), from another disposition at or before that time by a corporation or foreign affiliate described in the description of B of affiliate shares or shares for which affiliate shares were substituted, was reduced under subsection (2) in respect of the exempt dividends referred to in the description of B,
	(b) the total of all amounts each of which is 4/3 of the amount by which an allowable capital loss (determined without reference to this section), of a corporation or foreign affiliate described in the description of B from another disposition at or before that time by a partnership of affiliate shares or shares for which affiliate shares were substituted, was reduced under subsection (2.1) in respect of the exempt dividends referred to in the description of B,
	(c) the total of all amounts each of which is the amount by which a loss (determined without reference to this section), from a disposition at or before that time by a corporation or foreign affiliate described in the description of B of an interest in a partnership, was reduced under this subsection in respect of the exempt dividends referred to in the description of B, and
	(d) the total of all amounts each of which is 4/3 of the amount by which an allowable capital loss (determined without reference to this section), of a corporation or foreign affiliate described in the description of B from a disposition at or before that time by a partnership of an interest in another partnership, was reduced under subsection (2.3) in respect of the exempt dividends referred to in the description of B.
Loss limitation - disposition of partnership interest	(2.3) Where
	(a) a corporation resident in Canada has an allowable capital loss from a partnership from a disposition at any time of an interest in another partnership that has a direct or indirect interest in shares of the capital stock of a foreign affiliate of the corporation resident in Canada (in this subsection referred to as ``affiliate shares''), or
	(b) a foreign affiliate of a corporation resident in Canada has an allowable capital loss from a partnership from a disposition at any time by a partnership of an interest in another partnership that has a direct or indirect interest in shares of the capital stock of a foreign affiliate of the corporation resident in Canada that would not be excluded property of the affiliate if the affiliate owned the shares immediately before the disposition (in this subsection referred to as ``affiliate shares''),
	the amount of the allowable capital loss is deemed to be the amount determined by the formula
	A - (B - C)
	where
	A is the amount of the allowable capital loss determined without reference to this subsection,
	B is 3/4 of the total of all amounts each of which was received before that time, in respect of an exempt dividend on affiliate shares or on shares for which affiliate shares were substituted, by
	(a) the corporation resident in Canada,
	(b) a corporation related to the corporation resident in Canada,
	(c) a foreign affiliate of the corporation resident in Canada, or
	(d) a foreign affiliate of a corporation related to the corporation resident in Canada, and
	C is the total of
	(a) the total of all amounts each of which is 3/4 of the amount by which a loss (determined without reference to this section), of a corporation or foreign affiliate described in the description of B from another disposition at or before that time of affiliate shares or shares for which affiliate shares were substituted, was reduced under subsection (2) in respect of the exempt dividends referred to in the description of B,
	(b) the total of all amounts each of which is the amount by which an allowable capital loss (determined without reference to this section), of a corporation or foreign affiliate described in the description of B from a disposition at or before that time by a partnership of affiliate shares or shares for which affiliate shares were substituted, was reduced under subsection (2.1) in respect of the exempt dividends referred to in the description of B,
	(c) the total of all amounts each of which is 3/4 of the amount by which a loss (determined without reference to this section), from a disposition at or before that time by a corporation or foreign affiliate described in the description of B of an interest in a partnership, was reduced under subsection (2.2) in respect of the exempt dividends referred to in the description of B, and
	(d) the total of all amounts each of which is the amount by which an allowable capital loss (determined without reference to this section), of a corporation or foreign affiliate described in the description of B from a disposition at or before that time by a partnership of an interest in another partnership, was reduced under this subsection in respect of the exempt dividends referred to in the description of B.
	(4) Subsection 93(1.2) of the Act, as enacted by subsection (2), is amended by replacing the reference to the expression ``4/3 of'' with a reference to the word ``twice''.
	(5) Subsection 93(2) of the Act, as enacted by subsection (3), is amended by replacing the references to the expression ``4/3 of'' with references to the word ``twice''.
	(6) Subsection 93(2.1) of the Act, as enacted by subsection (3), is amended by replacing the references to the fraction ``3/4'' with references to the fraction ``1/2''.
	(7) Subsection 93(2.2) of the Act, as enacted by subsection (3), is amended by replacing the references to the expression ``4/3 of'' with references to the word ``twice''.
	(8) Subsection 93(2.3) of the Act, as enacted by subsection (3), is amended by replacing the references to the fraction ``3/4'' with references to the fraction ``1/2''.
	(9) Subsection 93(3) of the Act is replaced by the following:
Exempt dividends	(3) For the purposes of subsections (2) to (2.3) ,
	(a) a dividend received by a corporation resident in Canada is an exempt dividend to the extent of the amount in respect of the dividend that is deductible from the income of the corporation for the purpose of computing the taxable income of the corporation because of paragraph 113(1)(a), (b) or (c); and
	(b) a dividend received by a particular foreign affiliate of a corporation resident in Canada from another foreign affiliate of the corporation is an exempt dividend to the extent of the amount, if any, by which the portion of the dividend that was not prescribed to have been paid out of the pre-acquisition surplus of the other affiliate exceeds the total of such portion of the income or profits tax that can reasonably be considered to have been paid in respect of that portion of the dividend by the particular affiliate or by a partnership in which the particular affiliate had, at the time of the payment of the income or profits tax, a partnership interest, either directly or indirectly.
	(10) Subsections (1) to (3) and (9) apply to dispositions that occur after November 1999.
	(11) Subsections (4), (5) and (7) apply 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 93(2) of the Act, as enacted by subsection (5), and in subsection 93(2.2) of the Act, as enacted by subsection (7), 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''.
	(12) Subsections (6) and (8) apply 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 fraction ``1/2'' in subsection 93(2.1) of the Act, as enacted by subsection (6), and in subsection 93(2.3) of the Act, as enacted by subsection (8), 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.
	71. (1) The Act is amended by adding the following after section 93:
Shares held by a partnership	93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2) and 20(12), sections 93 and 113, paragraph 128(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that that section is applied for the purposes of those provisions) and section 126, where based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, each member of the partnership is deemed to own at that time that number of those shares that is equal to the proportion of all those shares that
	(a) the fair market value of the member's interest in the partnership at that time
	is of
	(b) the fair market value of all members' interests in the partnership at that time.
Where dividends received by a partnership	(2) Where, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a foreign affiliate of a corporation resident in Canada (in this subsection referred to as ``affiliate shares'') are owned by a partnership and at that time the affiliate pays a dividend on affiliate shares to the partnership (in this subsection referred to as the ``partnership dividend''),
	(a) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, each member of the partnership is deemed to have received the proportion of the partnership dividend that
	(i) the fair market value of the member's interest in the partnership at that time
	is of
	(ii) the fair market value of all members' interests in the partnership at that time;
	(b) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, the proportion of the partnership dividend deemed by paragraph (a) to have been received by a member of the partnership at that time is deemed to have been received by the member in equal proportions on each affiliate share that is property of the partnership at that time;
	(c) for the purpose of applying section 113, in respect of the dividend referred to in paragraph (a), each affiliate share referred to in paragraph (b) is deemed to be owned by each member of the partnership; and
	(d) notwithstanding paragraphs (a) to (c),
	(i) where the corporation resident in Canada is a member of the partnership, the amount deductible by it under section 113 in respect of the dividend referred to in paragraph (a) shall not exceed the portion of the amount of the dividend included in its income pursuant to subsection 96(1), and
	(ii) where another foreign affiliate of the corporation resident in Canada is a member of the partnership, the amount included in that other affiliate's income in respect of the dividend referred to in paragraph (a) shall not exceed the amount that would be included in its income pursuant to subsection 96(1) in respect of the partnership dividend received by the partnership if the value for H in the definition ``foreign accrual property income'' in subsection 95(1) were nil and this Act were read without reference to this subsection.
	(2) Subsection 93.1(1) of the Act, as enacted by subsection (1), applies in determining whether a non-resident corporation is, at any time after November 1999, a foreign affiliate of a taxpayer and, where a taxpayer so elects and notifies the Minister of National Revenue in writing before 2002 of its election, that subsection also applies in determining (other than for the purposes of subsection 20(12) and section 126 of the Act) whether a non-resident corporation was, at any time after 1972 and before December 1999, a foreign affiliate of the taxpayer.
	(3) Subsection 93.1(2) of the Act, as enacted by subsection (1), applies in respect of dividends received after November 1999.
	72. (1) Subparagraphs 94(1)(c)(i) and (ii) of the Act are replaced by the following:
	(i) the trust is deemed for the purposes of this Part and sections 233.3 and 233.4 to be a person resident in Canada no part of whose taxable income is exempt because of section 149 from tax under this Part and whose taxable income for the year is the amount, if any, by which the total of
	(A) the amount, if any, that would but for this subparagraph be its taxable income earned in Canada for the year,
	(B) the amount that would be its foreign accrual property income for the year if
	(I) except for the purpose of applying subsections 104(4) to (5.2) to days after 1998 that are determined under subsection 104(4), the trust were a non-resident corporation all the shares of which were owned by a person who was resident in Canada,
	(II) the description of A in the definition ``foreign accrual property income'' in subsection 95(1) were, in respect of dividends received after 1998, read without reference to paragraph (b) of that description,
	(III) the descriptions of B and E in that definition were, in respect of dispositions that occur after 1998, read without reference to ``other than dispositions of excluded property to which none of paragraphs (2)(c), (d) and (e) apply'',
	(IV) the value of C in that definition were nil, and
	(V) for the purposes of computing the trust's foreign accrual property income, the consequences of the application of subsections 104(4) to (5.2) applied in respect of days after 1998 that are determined under subsection 104(4) ,
	(C) the amount, if any, by which the total of all amounts each of which is an amount required by subsection 91(1) or (3) to be included in computing its income for the year exceeds the total of all amounts each of which is an amount deducted by it for that year under subsection 91(2), (4) or (5), and
	(D) the amount, if any, required by section 94.1 to be included in computing its income for the year,
	exceeds
	(E) the amount, if any, by which the total of all amounts each of which is an amount deducted by it under subsection 91(2), (4) or (5) in computing its income for the year exceeds the total of all amounts each of which is an amount included in computing its income for the year because of subsection 91(1) or (3) , and
	(ii) for the purposes of section 126,
	(A) the amount that would be determined under subparagraph (i) in respect of the trust for the year, if that subparagraph were read without reference to clause (i)(A), is deemed to be income of the trust for the year from sources in the country other than Canada in which the trust would, but for subparagraph (i), be resident, and
	(B) any income or profits tax paid by the trust for the year (other than any tax paid because of this section), to the extent that it can reasonably be regarded as having been paid in respect of that income, is deemed to be non-business income tax paid by the trust to the government of that country, and
	(2) Subsection (1) applies to the 1999 and subsequent taxation years.
	73. (1) The formula in the definition ``foreign accrual property income'' in subsection 95(1) of the Act is replaced by the following:
	(A+A.1+A.2+B+C) - (D+E+F+G+H )
	(2) The description of A.1 in the definition ``foreign accrual property income'' in subsection 95(1) of the Act is amended by replacing the reference to the expression ``4/3 of'' with a reference to the word ``twice''.