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(B) not less than 95% of its income for
each of the relevant periods (computed
without regard to subsections 49(2.1)
and 104(6) and as though each of those
periods were a taxation year) was
derived from, or from the disposition
of, investments described in
subparagraph (iii) ,
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(v) throughout the relevant periods , not
more than 10% of its property consisted
of bonds, securities or shares in the
capital stock of any one corporation or
debtor other than Her Majesty in right of
Canada or a province or a Canadian
municipality, and
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(vi) where the trust would not be a unit
trust at the particular time if this
paragraph were read without reference to
this subparagraph and subparagraph (iii)
were read without reference to clause
(F) , the units of the trust are listed at any
time in the current year or in the
following taxation year on a prescribed
stock exchange in Canada, or
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(10) The portion of subsection 108(3) of
the Act before paragraph (a) is replaced by
the following:
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| Income of a
trust in certain
provisions
|
(3) For the purposes of the definition
``income interest'' in subsection (1), the
income of a trust is its income computed
without reference to the provisions of this Act
and, for the purposes of the definition
``pre-1972 spousal trust'' in subsection (1) and
paragraphs 70(6)(b) and (6.1)(b), 73(1.01)(c)
and 104(4)(a), the income of a trust is its
income computed without reference to the
provisions of this Act, minus any dividends
included in that income
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(11) Subsection 108(4) of the Act is
replaced by the following:
|
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| Trust not
disqualified
|
(4) For the purposes of the definition
``pre-1972 spousal trust'' in subsection (1),
subparagraphs 70(6)(b)(ii) and (6.1)(b)(ii) and
paragraphs 73(1.01)(c) and 104(4)(a), where
a trust was created by a taxpayer whether by
the taxpayer's will or otherwise, no person is
deemed to have received or otherwise
obtained or to be entitled to receive or
otherwise obtain the use of any income or
capital of the trust solely because of the
payment, or provision for payment, as the case
may be, by the trust of
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(a) any estate, legacy, succession or
inheritance duty payable, in consequence of
the death of the taxpayer, or a spouse or
common-law partner of the taxpayer who is
a beneficiary under the trust , in respect of
any property of, or interest in, the trust; or
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(b) any income or profits tax payable by the
trust in respect of any income of the trust.
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|
(12) Subsection 108(6) of the Act is
replaced by the following:
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| Variation of
trusts
|
(6) Where at any time the terms of a trust are
varied
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|
(a ) for the purposes of subsections 104(4),
(5) and (5.2) and subject to paragraph (b) ,
the trust is , at and after that time, deemed to
be the same trust as, and a continuation of,
the trust immediately before that time;
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(b ) for greater certainty, paragraph (a) does
not affect the application of paragraph
104(4)(a.1); and
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(c) for the purposes of paragraph 53(2)(h),
subsection 107(1), paragraph (j) of the
definition ``excluded right or interest'' in
subsection 128.1(10) and the definition
``personal trust'' in subsection 248(1), no
interest of a beneficiary under the trust
before it was varied is considered to be
consideration for the interest of the
beneficiary in the trust as varied.
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| Interests
acquired for
consideration
|
(7) For the purposes of paragraph 53(2)(h),
subsection 107(1), paragraph (j) of the
definition ``excluded right or interest'' in
subsection 128.1(10) and the definition
``personal trust'' in subsection 248(1),
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(a) an interest in a trust is deemed not to be
acquired for consideration solely because it
was acquired in satisfaction of any right as
a beneficiary under the trust to enforce
payment of an amount by the trust; and
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(b) where all the beneficial interests in a
particular inter vivos trust acquired by way
of the transfer, assignment or other
disposition of property to the particular
trust were acquired by
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(ii) two or more persons who would be
related to each other if
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(A) a trust and another person were
related to each other, where the other
person is a beneficiary under the trust
or is related to a beneficiary under the
trust, and
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(B) a trust and another trust were
related to each other, where a
beneficiary under the trust is a
beneficiary under the other trust or is
related to a beneficiary under the other
trust,
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any beneficial interest in the particular trust
acquired by such a person is deemed to have
been acquired for no consideration.
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|
(13) Subsection (1) and subsection 108(6)
of the Act, as enacted by subsection (12),
apply to the 2000 and subsequent taxation
years.
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(14) Subsection (2) and the definition
``eligible offset'' in subsection 108(1) of the
Act, as enacted by subsection (8), apply
after 1999.
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(15) Subsection (3) applies in respect of
interests created or materially altered after
January 1987 that were acquired after 10
p.m. Eastern Standard Time, February 6,
1987.
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(16) Subsection (4) applies to the 1993
and subsequent taxation years.
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|
(17) Subsection (5) applies to deaths that
occur after 1999 and, where a day before
the 2000 taxation year is determined under
paragraph 104(4)(a.4) of the Act, as enacted
by subsection 78(4), in respect of a trust, it
applies to deaths that occur after December
23, 1998.
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|
(18) Subsection (6) applies to the 1999
and subsequent taxation years.
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(19) Subsections (7) and (9) apply to the
1998 and subsequent taxation years, except
that
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(a) subsection (7) does not apply for the
purpose of applying subparagraph (g)(iv)
of the definition ``trust'' in subsection
108(1) of the Act, as enacted by
subsection (7), before December 24,
1998; and
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(b) where the trust so elects in writing and
files the election with the Minister of
National Revenue on or before the trust's
filing-due date for the taxation year of the
trust that includes the day on which this
Act receives royal assent (or any later day
that is acceptable to that Minister),
subparagraph (g)(v) of that definition, as
enacted by subsection (7), as it applies
before 2001, shall be read as follows:
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(v) a trust any interest in which may
become effective in the future, or
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|
(20) The definition ``exempt property'' in
subsection 108(1) of the Act, as enacted by
subsection (8), applies after 1992 except
that, before 1999, the words ``tax treaty'' in
that definition shall be read as ``convention
or agreement with another country that has
the force of law in Canada''.
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|
(21) Subsections (10) and (11) apply to the
2000 and subsequent taxation years, except
for the purpose of applying section 73 of the
Act to transfers that occur before 2000.
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|
(22) Subsection 108(7) of the Act, as
enacted by subsection (12), applies after
December 23, 1998.
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|
84. (1) The portion of paragraph
110(1)(d) of the Act before subparagraph (i)
is replaced by the following:
|
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| Employee
options
|
(d) an amount equal to 1/2 of the amount of
the benefit deemed by subsection 7(1) to
have been received by the taxpayer in the
year in respect of a security that a particular
qualifying person has agreed after February
15, 1984 to sell or issue under an agreement,
or in respect of the transfer or other
disposition of rights under the agreement, if
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(2) Subparagraphs 110(1)(d)(ii) and (iii)
of the Act are replaced by the following:
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(ii) where rights under the agreement
were not acquired by the taxpayer as a
result of a disposition of rights to which
subsection 7(1.4) applied,
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(A) the amount payable by the
taxpayer to acquire the security under
the agreement is not less than the
amount by which
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(I) the fair market value of the
security at the time the agreement
was made
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(II) the amount, if any, paid by the
taxpayer to acquire the right to
acquire the security, and
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(B) at the time immediately after the
agreement was made, the taxpayer was
dealing at arm's length with
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(I ) the particular qualifying person,
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(II) each other qualifying person
that, at the time, was an employer of
the taxpayer and was not dealing at
arm's length with the particular
qualifying person, and
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(III) the qualifying person of which
the taxpayer had, under the
agreement, a right to acquire a
security, and
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(iii) where rights under the agreement
were acquired by the taxpayer as a result
of one or more dispositions to which
subsection 7(1.4) applied,
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(A) the amount payable by the
taxpayer to acquire the security under
the agreement is not less than the
amount that was included, in respect of
the security, in the amount determined
under subparagraph 7(1.4)(c)(ii) with
respect to the most recent of those
dispositions,
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(B) at the time immediately after the
agreement the rights under which were
the subject of the first of those
dispositions (in this subparagraph
referred to as the ``original
agreement'') was made, the taxpayer
was dealing at arm's length with
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(I) the qualifying person that made
the original agreement,
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(II) each other qualifying person
that, at the time, was an employer of
the taxpayer and was not dealing at
arm's length with the qualifying
person that made the original
agreement, and
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(III) the qualifying person of which
the taxpayer had, under the original
agreement, a right to acquire a
security,
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(C) the amount that was included, in
respect of each particular security that
the taxpayer had a right to acquire
under the original agreement, in the
amount determined under
subparagraph 7(1.4)(c)(iv) with
respect to the first of those dispositions
was not less than the amount by which
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(I) the fair market value of the
particular security at the time the
original agreement was made
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(II) the amount, if any, paid by the
taxpayer to acquire the right to
acquire the security, and
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(D) for the purpose of determining if
the condition in paragraph 7(1.4)(c)
was satisfied with respect to each of
the particular dispositions following
the first of those dispositions,
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(I) the amount that was included, in
respect of each particular security
that could be acquired under the
agreement the rights under which
were the subject of the particular
disposition, in the amount
determined under subparagraph
7(1.4)(c)(iv) with respect to the
particular disposition
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(II) the amount that was included, in
respect of the particular security, in
the amount determined under
subparagraph 7(1.4)(c)(ii) with
respect to the last of those
dispositions preceding the
particular disposition;
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|
(3) Subsection 110(1) of the Act is
amended by adding the following after
paragraph (d):
|
|
| Charitable
donation of
employee
option
securities
|
(d.01) subject to subsection (2.1), where the
taxpayer disposes of a security acquired in
the year by the taxpayer under an agreement
referred to in subsection 7(1) by making a
gift of the security to a qualified donee
(other than a private foundation), an
amount in respect of the disposition of the
security equal to 1/4 of the lesser of the
benefit deemed by paragraph 7(1)(a) to
have been received by the taxpayer in the
year in respect of the acquisition of the
security and the amount that would have
been that benefit had the value of the
security at the time of its acquisition by the
taxpayer been equal to the value of the
security at the time of the disposition, if
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(i) the security is a security described in
subparagraph 38(a.1)(i),
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(ii) the taxpayer acquired the security
after February 27, 2000 and before 2002,
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(iii) the gift is made in the year and on or
before the day that is 30 days after the day
on which the taxpayer acquired the
security, and
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(iv) the taxpayer is entitled to a deduction
under paragraph (d) in respect of the
acquisition of the security;
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|
(4) Paragraphs 110(1)(d.1), (d.2) and (d.3)
of the Act are amended by replacing the
reference to the fraction ``1/4'' with a
reference to the fraction ``1/2''.
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(5) Subsection 110(1.5) of the Act is
replaced by the following:
|
|
Determina-
tion of
amounts
relating to
employee
security
options
|
(1.5) For the purpose of paragraph (1)(d) ,
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(a) the amount payable by a taxpayer to
acquire a security under an agreement
referred to in subsection 7(1) shall be
determined without reference to any change
in the value of a currency of a country other
than Canada, relative to Canadian currency,
occurring after the agreement was made;
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(b) the fair market value of a security at the
time an agreement in respect of the security
was made shall be determined on the
assumption that all specified events
associated with the security that occurred
after the agreement was made and before
the sale or issue of the security or the
disposition of the taxpayer's rights under
the agreement in respect of the security, as
the case may be , had occurred immediately
before the agreement was made; and
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(c) in determining the amount that was
included, in respect of a security that a
qualifying person has agreed to sell or issue
to a taxpayer, in the amount determined
under subparagraph 7(1.4)(c)(ii) for the
purpose of determining if the condition in
paragraph 7(1.4)(c) was satisfied with
respect to a particular disposition, an
assumption shall be made that all specified
events associated with the security that
occurred after the particular disposition and
before the sale or issue of the security or the
taxpayer's subsequent disposition of rights
under the agreement in respect of the
security, as the case may be, had occurred
immediately before the particular
disposition.
|
|
| Meaning of
``specified
event''
|
(1.6) For the purpose of subsection (1.5), a
specified event associated with a security is
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(a) where the security is a share of the
capital stock of a corporation,
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(i) a subdivision or consolidation of
shares of the capital stock of the
corporation,
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(ii) a reorganization of share capital of
the corporation, and
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|
(iii) a stock dividend of the corporation;
and
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|
(b) where the security is a unit of a mutual
fund trust,
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|
(i) a subdivision or consolidation of the
units of the trust, and
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|
(ii) an issuance of units of the trust as
payment, or in satisfaction of a person's
right to enforce payment, out of the
trust's income (determined before the
application of subsection 104(6)) or out
of the trust's capital gains.
|
|
| Definitions in
subsection
7(7)
|
(1.7) The definitions in subsection 7(7)
apply for the purposes of subsections (1.5) and
(1.6).
|
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|
|
(6) Section 110 of the Act is amended by
adding the following after subsection (2):
|
|
| Charitable
donation -
proceeds of
disposition of
employee
option
securities
|
(2.1) Where a taxpayer, in exercising a right
to acquire a security that a particular
qualifying person has agreed to sell or issue to
the taxpayer under an agreement referred to in
subsection 7(1), directs a broker or dealer
appointed or approved by the particular
qualifying person (or by a qualifying person
that does not deal at arm's length with the
particular qualifying person) to immediately
dispose of the security and pay all or a portion
of the proceeds of disposition of the security
to a qualified donee,
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|
(a) if the payment is a gift, the taxpayer is
deemed, for the purpose of paragraph
(1)(d.01), to have disposed of the security
by making a gift of the security to the
qualified donee at the time the payment is
made; and
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|
(b) the amount deductible under paragraph
(1)(d.01) by the taxpayer in respect of the
disposition of the security is the amount
determined by the formula
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|
A x B/C
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|
A is the amount that would be deductible
under paragraph (1)(d.01) in respect of
the disposition of the security if this
subsection were read without reference
to this paragraph,
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|