(19) Subsection 126(7) of the Act is amended by adding the following in alphabetical order:
``commercial obligation'' « obligation commerciale »	``commercial obligation'' in respect of a taxpayer's foreign oil and gas business in a country means an obligation of the taxpayer to a particular person, undertaken in the course of carrying on the business or in contemplation of the business, if the law of the country would have allowed the taxpayer to undertake an obligation, on substantially the same terms, to a person other than the particular person;
``foreign oil and gas business'' « entreprise pétrolière et gazière à l'étranger »	``foreign oil and gas business'' of a taxpayer means a business, carried on by the taxpayer in a taxing country, the principal activity of which is the extraction from natural accumulations, or from oil or gas wells, of petroleum, natural gas or related hydrocarbons;
``production tax amount'' « impôt sur la production »	``production tax amount'' of a taxpayer for a foreign oil and gas business carried on by the taxpayer in a taxing country for a taxation year means the total of all amounts each of which
	(a) became receivable in the year by the government of the country because of an obligation (other than a commercial obligation) of the taxpayer, in respect of the business, to the government or an agent or instrumentality of the government,
	(b) is computed by reference to the amount by which
	(i) the amount or value of petroleum, natural gas or related hydrocarbons produced or extracted by the taxpayer in the course of carrying on the business in the year
	exceeds
	(ii) an allowance or other deduction that
	(A) is deductible, under the agreement or law that creates the obligation described in paragraph (a), in computing the amount receivable by the government of the country, and
	(B) is intended to take into account the taxpayer's operating and capital costs of that production or extraction, and can reasonably be considered to have that effect,
	(c) would not, if this Act were read without reference to subsection (5), be an income or profits tax, and
	(d) is not identified as a royalty under the agreement that creates the obligation or under any law of the country;
``taxing country'' « pays taxateur »	``taxing country'' means a country (other than Canada) the government of which regularly imposes, in respect of income from businesses carried on in the country, a levy or charge of general application that would, if this Act were read without reference to subsection (5), be an income or profits tax.
	(20) Subsection 126(8) of the Act is repealed.
	(21) Section 126 of the Act is amended by adding the following after subsection (8):
Computation of qualifying incomes and losses	(9) The qualifying incomes and qualifying losses for a taxation year of a taxpayer from sources in a country shall be determined
	(a) without reference to
	(i) any portion of income that was deductible under subparagraph 110(1)(f)(i) in computing the taxpayer's taxable income,
	(ii) for the purpose of subparagraph (1)(b)(i), any portion of income in respect of which an amount was deducted under section 110.6 in computing the taxpayer's income,
	(iii) any income or loss from a source in the country if any income of the taxpayer from the source would be tax-exempt income; and
	(b) as if the total of all amounts each of which is that portion of an amount deducted under subsection 66(4), 66.21(4), 66.7(2) or 66.7(2.3) in computing those qualifying incomes and qualifying losses for the year that applies to those sources were the greater of
	(i) the total of all amounts each of which is that portion of an amount deducted under subsection 66(4), 66.21(4), 66.7(2) or 66.7(2.3) in computing the taxpayer's income for the year that applies to those sources, and
	(ii) the total of
	(A) the portion of the maximum amount that would be deductible under subsection 66(4) in computing the taxpayer's income for the year that applies to those sources if the amount determined under subparagraph 66(4)(b)(ii) for the taxpayer in respect of the year were equal to the amount, if any, by which the total of
	(I) the taxpayer's foreign resource income (within the meaning assigned by subsection 66.21(1)) for the year in respect of the country, determined as if the taxpayer had claimed the maximum amounts deductible for the year under subsections 66.7(2) and (2.3), and
	(II) all amounts each of which would have been an amount included in computing the taxpayer's income for the year under subsection 59(1) in respect of a disposition of a foreign resource property in respect of the country, determined as if each amount determined under subparagraph 59(1)(b)(ii) were nil,
	exceeds
	(III) the total of all amounts each of which is a portion of an amount (other than a portion that results in a reduction of the amount otherwise determined under subclause (I)) that applies to those sources and that would be deducted under subsection 66.7(2) in computing the taxpayer's income for the year if the maximum amounts deductible for the year under that subsection were deducted,
	(B) the maximum amount that would be deductible under subsection 66.21(4) in respect of those sources in computing the taxpayer's income for the year if
	(I) the amount deducted under subsection 66(4) in respect of those sources in computing the taxpayer's income for the year were the amount determined under clause (A),
	(II) the amounts deducted under subsections 66.7(2) and (2.3) in respect of those sources in computing the taxpayer's income for the year were the maximum amounts deductible under those subsections,
	(III) for the purposes of the definition ``cumulative foreign resource expense'' in subsection 66.21(1), the total of the amounts designated under subparagraph 59(1)(b)(ii) for the year in respect of dispositions by the taxpayer of foreign resource properties in respect of the country in the year were the maximum total that could be so designated without any reduction in the maximum amount that would be determined under clause (A) in respect of the taxpayer for the year in respect of the country if no assumption had been made under subclause (A)(II) in respect of designations made under subparagraph 59(1)(b)(ii), and
	(IV) the amount determined under paragraph 66.21(4)(b) were nil, and
	(C) the total of all amounts each of which is the maximum amount, applicable to one of those sources, that is deductible under subsection 66.7(2) or (2.3) in computing the taxpayer's income for the year.
	(22) Subsections (1), (3), (5), (8) and (9) apply to the 1998 and subsequent taxation years except that, in their application to the 1998 and 1999 taxation years, subclauses 126(1)(b)(ii)(A)(I) and (2.1)(a)(ii)(A)(I) and subparagraph 126(3)(b)(i) of the Act, as enacted by subsections (1), (3) and (9), respectively, shall be read without reference to the expression ``computed without reference to paragraph 20(1)(ww)''.
	(23) Subsections (2), (10), (11), (13), (16) to (18) and (20) apply after June 27, 1999.
	(24) Subsections (4) and (6) apply to the 1996 and subsequent taxation years.
	(25) Subsections (7) and (15) apply to the 2001 and subsequent taxation years.
	(26) Subsections (12), (14), (19) and (21) apply to taxation years of a taxpayer that begin after the earlier of
	(a) December 31, 1999; and
	(b) where, for the purposes of this subsection, 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
	(i) the date so designated, and
	(ii) December 31, 1994.
	118. (1) Subparagraph 127(5)(a)(i) of the Act is replaced by the following:
	(i) the taxpayer's investment tax credit at the end of the year in respect of property acquired before the end of the year, of the taxpayer's flow-through mining expenditure for the year or a preceding taxation year or of the taxpayer's SR&ED qualified expenditure pool at the end of the year or of a preceding taxation year, and
	(2) Clause 127(5)(a)(ii)(A) of the Act is replaced by the following:
	(A) the taxpayer's investment tax credit at the end of the year in respect of property acquired in a subsequent taxation year, of the taxpayer's flow-through mining expenditure for a subsequent taxation year or of the taxpayer's SR&ED qualified expenditure pool at the end of a subsequent taxation year to the extent that an investment tax credit was not deductible under this subsection for the subsequent year, and
	(3) Paragraph 127(5)(b) of the Act is replaced by the following:
	(b) where Division E.1 applies to the taxpayer for the year, the amount, if any, by which
	(i) the taxpayer's tax otherwise payable under this Part for the year
	exceeds
	(ii) the taxpayer's minimum amount for the year determined under section 127.51.
	(4) Paragraph (a.1) of the definition ``investment tax credit'' in subsection 127(9) of the Act is replaced by the following:
	(a.1) 20% of the amount by which the taxpayer's SR&ED qualified expenditure pool at the end of the year exceeds the total of all amounts each of which is the super-allowance benefit amount for the year in respect of the taxpayer in respect of a province,
	(a.2) where the taxpayer is an individual (other than a trust), 15% of the taxpayer's flow-through mining expenditures for the year,
	(5) Paragraph (c) of the definition ``investment tax credit'' in subsection 127(9) of the Act is replaced by the following:
	(c) the total of all amounts each of which is an amount determined under paragraph (a), (a.1), (a.2) or (b) in respect of the taxpayer for any of the 10 taxation years immediately preceding or the 3 taxation years immediately following the year,
	(6) Paragraph (l) of the definition ``investment tax credit'' in subsection 127(9) of the Act is replaced by the following:
	(l) any of the income is exempt income or is exempt from tax under this Part ,
	(7) Subsection 127(9) of the Act is amended by adding the following in alphabetical order:
``flow-throug h mining expenditure'' « dépense minière détermi- née »	``flow-through mining expenditure'' of a taxpayer for a taxation year means an expense deemed by subsection 66(12.61) (or by subsection 66(18) as a consequence of the application of subsection 66(12.61) to the partnership, referred to in paragraph (c) of this definition, of which the taxpayer is a member) to be incurred by the taxpayer in the year
	(a) that is a Canadian exploration expense incurred after October 17, 2000 and before 2004 by a corporation in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition ``mineral resource'' in subsection 248(1),
	(b) that
	(i) is an expense described in paragraph (f) of the definition ``Canadian exploration expense'' in subsection 66.1(6), and
	(ii) is not an expense in respect of
	(A) trenching, if one of the purposes of the trenching is to carry out preliminary sampling (other than specified sampling),
	(B) digging test pits (other than digging test pits for the purpose of carrying out specified sampling), and
	(C) preliminary sampling (other than specified sampling),
	(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after October 17, 2000,
	(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after October 17, 2000, and
	(e) that is an expense that would be incurred by the corporation before 2004 if this Act were read without reference to subsection 66(12.66);
``specified sampling'' « échantillonn age déterminé »	``specified sampling'' means the collecting and testing of samples in respect of a mineral resource except that specified sampling does not include
	(a) the collecting or testing of a sample that, at the time the sample is collected, weighs more than 15 tonnes, and
	(b) the collecting or testing of a sample collected at any time in a calendar year in respect of any one mineral resource if the total weight of all such samples collected (by any person or partnership or any combination of persons and partnerships) in the calendar year and before that time (other than samples each of which weighs less than one tonne) exceeds 1,000 tonnes.
``super-allowa nce benefit amount'' « avantage relatif à la superdéductio n »	``super-allowance benefit amount'' for a particular taxation year in respect of a corporation in respect of a province means the amount determined by the formula
	(A - B) x C
	where
	A is the total of all amounts each of which is an amount that is or may become deductible by the corporation, in computing income or taxable income relevant in calculating an income tax payable by the corporation under a law of the province for any taxation year, in respect of an expenditure on scientific research and experimental development incurred in the particular year,
	B is the amount by which the amount of the expenditure exceeds the total of all amounts that would be required by subsections (18) to (20) to reduce the corporation's qualified expenditures otherwise determined under this section if the definitions ``government assistance'' and ``non-government assistance'' did not apply to assistance provided under that law, and
	C is,
	(a) where the corporation's expenditure limit for the particular year is nil, the maximum rate of the province's income tax that applies for that year to active business income earned in the province by a corporation, and
	(b) in any other case, the rate of the province's income tax for that year that would apply to the corporation if
	(i) it were not associated with any other corporation in the year,
	(ii) its taxable income for the year were less than $200,000, and
	(iii) its taxable income for the year were earned in the province in respect of an active business carried on in the province.
	(8) Paragraph 127(10.1)(b) of the Act is replaced by the following:
	(b) the amount by which the corporation's SR&ED qualified expenditure pool at the end of the year exceeds the total of all amounts each of which is the super-allowance benefit amount for the year in respect of the corporation in respect of a province; and