(a) the trust is deemed to have disposed of the property for proceeds equal to its fair market value at that time;
	(b) the taxpayer is deemed to have acquired the property at a cost equal to that fair market value; and
	(c) the taxpayer is deemed to have disposed of all or part, as the case may be, of the taxpayer's capital interest in the trust, for proceeds of disposition equal to the adjusted cost base to the taxpayer of that interest or part of the interest, as the case may be, immediately before that time.
	81. (1) The portion of section 107.1 of the Act before subparagraph (a)(i) is replaced by the following:
Distribution by employee trust, employee benefit plan or similar trust	107.1 Where at any time any property of an employee trust, a trust governed by an employee benefit plan or a trust described in paragraph (a.1) of the definition ``trust'' in subsection 108(1) has been distributed by the trust to a taxpayer who was a beneficiary under the trust in satisfaction of all or any part of the taxpayer's interest in the trust, the following rules apply:
	(a) in the case of an employee trust or a trust described in paragraph (a.1) of the definition ``trust'' in subsection 108(1) ,
	(2) Subsection (1) applies to the 1999 and subsequent taxation years.
	82. (1) The Act is amended by adding the following after section 107.3:
Qualifying disposition	107.4 (1) For the purpose of this section, a ``qualifying disposition'' of a property means a disposition of the property by a person or partnership (in this subsection referred to as the ``contributor'') as a result of a transfer of the property to a particular trust where
	(a) the disposition does not result in a change in the beneficial ownership of the property;
	(b) the proceeds of disposition would, if this Act were read without reference to this section and sections 69 and 73, not be determined under any provision of this Act;
	(c) if the particular trust is non-resident, the disposition is not
	(i) by a person resident in Canada or by a partnership (other than a partnership each member of which is non-resident), or
	(ii) a transfer of taxable Canadian property from a non-resident person who was resident in Canada in any of the ten calendar years preceding the transfer;
	(d) the contributor is not a partnership, if the disposition is part of a series of transactions or events that begin after December 17, 1999 that includes the cessation of the partnership's existence and a subsequent distribution from a personal trust to a former member of the partnership in circumstances to which subsection 107(2) applies;
	(e) unless the contributor is a trust, there is immediately after the disposition no absolute or contingent right of a person or partnership (other than the contributor or, where the property was co-owned, each of the joint contributors) as a beneficiary (determined with reference to subsection 104(1.1)) under the particular trust;
	(f) the contributor is not an individual (other than a trust described in any of paragraphs (a) to (e.1) of the definition ``trust'' in subsection 108(1)), if the particular trust is described in any of paragraphs (a) to (e.1) of the definition ``trust'' in subsection 108(1);
	(g) the disposition is not part of a series of transactions or events
	(i) that begins after December 17, 1999 and that includes the subsequent acquisition, for consideration given to a personal trust, of a capital interest or an income interest in the trust,
	(ii) that begins after December 17, 1999 and that includes the disposition of all or part of a capital interest or an income interest in a personal trust, other than a disposition solely as a consequence of a distribution from a trust to a person or partnership in satisfaction of all or part of that interest, or
	(iii) that begins after June 5, 2000 and that includes the transfer to the particular trust of particular property as consideration for the acquisition of a capital interest in the particular trust, if the particular property can reasonably be considered to have been received by the particular trust in order to fund a distribution (other than a distribution that is proceeds of disposition of a capital interest in the particular trust);
	(h) the disposition is not, and is not part of, a transaction
	(i) that occurs after December 17, 1999, and
	(ii) that includes the giving to the contributor, for the disposition, of any consideration (other than consideration that is an interest of the contributor as a beneficiary under the particular trust or that is the assumption by the particular trust of debt for which the property can, at the time of the disposition, reasonably be considered to be security);
	(i) subsection 73(1) does not apply to the disposition and would not apply to the disposition if
	(i) no election had been made under that subsection, and
	(ii) section 73 were read without reference to subsection 73(1.02); and
	(j) if the contributor is an amateur athlete trust, a cemetery care trust, an employee trust, an inter vivos trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (as defined by section 138.1), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered education savings plan or a registered supplementary unemployment benefit plan, the particular trust is the same type of trust.
Application of paragraph (1)(a)	(2) For the purpose of paragraph (1)(a),
	(a) except where paragraph (b) applies, where a trust (in this paragraph and subsection (2.1) referred to as the ``transferor trust''), in a period that does not exceed one day, disposes of one or more properties in the period to one or more other trusts, there is deemed to be no resulting change in the beneficial ownership of those properties if
	(i) the transferor trust receives no consideration for the disposition, and
	(ii) as a consequence of the disposition, the value of each beneficiary's beneficial ownership at the beginning of the period under the transferor trust in each particular property of the transferor trust (or group of two or more properties of the transferor trust that are identical to each other) is the same as the value of the beneficiary's beneficial ownership at the end of the period under the transferor trust and the other trust or trusts in each particular property (or in property that was immediately before the disposition included in the group of identical properties referred to above); and
	(b) where a trust (in this paragraph referred to as the ``transferor'') governed by a registered retirement savings plan or by a registered retirement income fund transfers a property to a trust (in this paragraph referred to as the ``transferee'') governed by a registered retirement savings plan or by a registered retirement income fund, the transfer is deemed not to result in a change in the beneficial ownership of the property if the annuitant of the plan or fund that governs the transferor is also the annuitant of the plan or fund that governs the transferee.
Fractional interests	(2.1) For the purpose of applying paragraph (2)(a) in respect of a transfer by a transferor trust of property that includes a share and money, the other trust or trusts referred to in that paragraph may receive, in lieu of a transfer of a fractional interest in a share that would otherwise be required, a disproportionate amount of money or interest in the share (the value of which does not exceed the lesser of $200 and the fair market value of the fractional interest).
Tax consequences of qualifying dispositions	(3) Where at a particular time there is a qualifying disposition of a property by a person or partnership (in this subsection referred to as the ``transferor'') to a trust (in this subsection referred to as the ``transferee trust''),
	(a) the transferor's proceeds of disposition of the property are deemed to be
	(i) where the transferor so elects in writing and files the election with the Minister on or before the transferor's filing-due date for its taxation year that includes the particular time, or at any later time that is acceptable to the Minister, the amount specified in the election that is not less than the cost amount to the transferor of the property immediately before the particular time and not more than the fair market value of the property at the particular time, and
	(ii) in any other case, the cost amount to the transferor of the property immediately before the particular time;
	(b) except as otherwise provided under paragraph (c), the transferee trust's cost of the property is deemed to be the amount, if any, by which
	(i) the proceeds determined under paragraph (a) in respect of the qualifying disposition
	exceed
	(ii) the amount by which the transferor's loss otherwise determined from the qualifying disposition would be reduced because of subsection 100(4), paragraph 107(1)(c) or (d) or any of subsections 112(3) to (4.2), if the proceeds determined under paragraph (a) were equal to the fair market value of the property at the particular time;
	(c) notwithstanding subsection 206(4), for the purposes of Part XI and regulations made for the purposes of that Part, the transferee trust's cost of the property is deemed to be
	(i) the cost amount to the transferor immediately before the particular time where
	(A) the particular time is before 2000,
	(B) the transferor is a trust governed by a registered retirement savings plan or a registered retirement income fund,
	(C) the transferee trust is governed by a registered retirement savings plan or a registered retirement income fund,
	(D) the transferee trust files a written election with the Minister on or before the later of March 31, 2001 and its filing-due date for its taxation year that includes the particular time (or at such later date that is acceptable to the Minister) that this subparagraph apply, and
	(E) it can reasonably be considered that the election was not made for the purpose of avoiding tax under Part XI,
	(ii) the fair market value of the property at the particular time where
	(A) subparagraph (iii) does not apply,
	(B) the transferee trust files a written election with the Minister on or before the later of March 31, 2001 and its filing-due date for its taxation year that includes the particular time (or at such later date that is acceptable to the Minister) that this subparagraph apply, and
	(C) it can reasonably be considered that the election was not made for the purpose of avoiding tax under Part XI,
	(iii) the fair market value of the property at the particular time where
	(A) subparagraph (i) does not apply to the qualifying disposition,
	(B) the particular time is before 2000,
	(C) the transferor is a trust governed by a registered retirement savings plan or a registered retirement income fund, and
	(D) the transferee trust is governed by a registered retirement savings plan or a registered retirement income fund, and
	(iv) the cost amount to the transferor of the property immediately before the particular time, in any other case;
	(d) if the property was depreciable property of a prescribed class of the transferor and its capital cost to the transferor exceeds the cost at which the transferee trust is deemed by this subsection to have acquired the property, for the purposes of sections 13 and 20 and any regulations made for the purpose of paragraph 20(1)(a),
	(i) the capital cost of the property to the transferee trust is deemed to be the amount that was the capital cost of the property to the transferor, and
	(ii) the excess is deemed to have been allowed to the transferee trust in respect of the property under regulations made for the purpose of paragraph 20(1)(a) in computing income for taxation years that ended before the particular time;
	(e) if the property was eligible capital property of the transferor in respect of a business of the transferor,
	(i) where the eligible capital expenditure of the transferor in respect of the property exceeds the cost at which the transferee trust is deemed by this subsection to have acquired the property, for the purposes of sections 14, 20 and 24,
	(A) the eligible capital expenditure of the transferee trust in respect of the property is deemed to be the amount that was the eligible capital expenditure of the transferor in respect of the property, and
	(B) 3/4 of the excess is deemed to have been allowed under paragraph 20(1)(b) to the transferee trust in respect of the property in computing income for taxation years that ended
	(I) before the particular time, and
	(II) after the adjustment time of the transferee trust in respect of the business, and
	(ii) for the purpose of determining after the particular time the amount required by paragraph 14(1)(b) to be included in computing the transferee trust's income in respect of any subsequent disposition of the property of the business, there shall be added to the value otherwise determined for Q in the definition ``cumulative eligible capital'' in subsection 14(5) the amount determined by the formula
	A x (B/C)
	where
	A is the amount, if any, determined for Q in that definition in respect of the business of the transferor immediately before the particular time,
	B is the fair market value of the property immediately before the particular time, and
	C is the fair market value immediately before the particular time of all eligible capital property of the transferor in respect of the business;
	(f) if the property was deemed to be taxable Canadian property of the transferor by this paragraph or paragraph 51(1)(f), 85(1)(i) or 85.1(1)(a), subsection 87(4) or (5) or paragraph 97(2)(c) or 107(2)(d.1), the property is deemed to be taxable Canadian property of the transferee trust;
	(g) where the transferor is a related segregated fund trust (in this paragraph having the meaning assigned by section 138.1),
	(i) paragraph 138.1(1)(i) does not apply in respect of a disposition of an interest in the transferor that occurs in connection with the qualifying disposition, and
	(ii) in computing the amount determined under paragraph 138.1(1)(i) in respect of a subsequent disposition of an interest in the transferee trust where the interest is deemed to exist in connection with a particular life insurance policy, the acquisition fee (as defined by subsection 138.1(6)) in respect of the particular policy shall be determined as if each amount determined under any of paragraphs 138.1(6)(a) to (d) in respect of the policyholder's interest in the transferor had been determined in respect of the policyholder's interest in the transferee trust;
	(h) if the transferor is a trust to which property had been transferred by an individual (other than a trust),
	(i) where subsection 73(1) applied in respect of the property so transferred and it is reasonable to consider that the property was so transferred in anticipation of the individual ceasing to be resident in Canada, for the purposes of paragraph 104(4)(a.3) and the application of this paragraph to a disposition by the transferee trust after the particular time, the transferee trust is deemed after the particular time to be a trust to which the individual had transferred property in anticipation of the individual ceasing to reside in Canada and in circumstances to which subsection 73(1) applied, and
	(ii) for the purposes of paragraph (j) of the definition ``excluded right or interest'' in subsection 128.1(10) and the application of this paragraph to a disposition by the transferee trust after the particular time, where the property so transferred was transferred in circumstances to which this subsection would apply if subsection (1) were read without reference to paragraphs (1)(h) and (i), the transferee trust is deemed after the particular time to be a trust an interest in which was acquired by the individual as a consequence of a qualifying disposition;
	(i) if the transferor is a trust (other than a personal trust or a trust prescribed for the purposes of subsection 107(2)), the transferee trust is deemed to be neither a personal trust nor a trust prescribed for the purposes of subsection 107(2);
	(j) if the transferor is a trust and a taxpayer disposes of all or part of a capital interest in the transferor because of the qualifying disposition and, as a consequence, acquires a capital interest or part of it in the transferee trust
	(i) the taxpayer is deemed to dispose of the capital interest or part of it in the transferor for proceeds equal to the cost amount to the taxpayer of that interest or part of it immediately before the particular time, and
	(ii) the taxpayer is deemed to acquire the capital interest or part of it in the transferee trust at a cost equal to the amount, if any, by which
	(A) that cost amount
	exceeds
	(B) the amount by which the taxpayer's loss otherwise determined from the disposition referred to in subparagraph (i) would be reduced because of paragraph 107(1)(c) or (d) if the proceeds under that subparagraph were equal to the fair market value of the capital interest or part of it in the transferor immediately before the particular time;