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124. (1) If an individual ceased at any
time after 1992 and before October 2, 1996
to be resident in Canada and so elects in
writing and files the election with the
Minister of National Revenue before the
end of the sixth month following the month
in which this Act receives royal assent,
subparagraph 128.1(4)(b)(iii) of the Act as
it read at that time shall, in respect of the
cessation of residence, be read as enacted by
this Act and as though subsection 128.1(10)
of the Act, as enacted by this Act, applied.
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(2) Where an individual makes an
election under subsection (1),
notwithstanding subsections 152(4) to (5) of
the Act, any reassessment of the
individual's tax, interest or penalties for
any year shall be made that is necessary to
take the election into account.
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125. (1) The Act is amended by adding the
following after section 128.2:
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Former
resident -
replaced
shares
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128.3 If, in a transaction to which section
51, subparagraphs 85.1(1)(a)(i) and (ii) or
section 86 or 87 apply, a person acquires a
share (in this section referred to as the ``new
share'') in exchange for another share (in this
section referred to as the ``old share''), for the
purposes of section 119, subsections
126(2.21) to (2.23), 128.1(6) to (8), 180.1(1.4)
and 220(4.5) and (4.6), the person is deemed
not to have disposed of the old share, and the
new share is deemed to be the same share as
the old share.
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(2) Subsection (1) applies after October 1,
1996.
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126. (1) Section 129 of the Act is amended
by adding the following after subsection (3):
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Application
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(3.1) Where, in a taxation year that begins
after November 12, 1981, a corporation that
last became a private corporation on or before
that date and that was throughout the year a
private corporation, other than a
Canadian-controlled private corporation, has
included in its income for the year an amount
in respect of property that the corporation
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(a) disposed of before November 13, 1981,
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(b) was obligated to dispose of under the
terms of an agreement in writing entered
into before November 13, 1981, or
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(c) is deemed by subsection 44(2) to have
disposed of at any time after November 12,
1981 because of an event referred to in
paragraph (b), (c) or (d) of the definition
``proceeds of disposition'' in section 54 in
respect of the disposition that occurred
before November 13, 1981,
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paragraph 3(a) shall apply as if the
corporation were a Canadian-controlled
private corporation throughout the year,
except that the total of the amounts
determined under that paragraph in respect of
the corporation for the year shall not exceed
the amount that would be so determined if the
only income of the corporation for the year
were the amount included in respect of the
disposition of such property.
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(2) Subsection (1) applies to taxation
years that end after June 1995 and before
2003.
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127. (1) Subparagraph 130.1(1)(a)(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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(2) Subparagraph 130.1(4)(a)(i) of the
Act is amended by replacing the reference
to the expression ``4/3 of'' with a reference
to the word ``twice''.
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(3) Paragraph 130.1(4)(b) of the Act is
replaced by the following:
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(b) notwithstanding any other provision of
this Act, any amount received by a taxpayer
in a taxation year as, on account of, in lieu
of payment of or in satisfaction of, the
dividend shall not be included in computing
the taxpayer's income for the year as
income from a share of the capital stock of
the corporation, and
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(i) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
before February 28, 2000 and the
taxation year of the taxpayer began after
February 27, 2000 and ended before
October 18, 2000, 9/8 of the dividend is
deemed to be a capital gain of the
taxpayer from the disposition by the
taxpayer of a capital property in the year,
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(ii) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
before February 28, 2000, and the
taxation year of the taxpayer includes
February 27, 2000, the dividend is
deemed to be a capital gain of the
taxpayer from the disposition by the
taxpayer of a capital property in the year
and before February 28, 2000,
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(iii) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
before February 28, 2000 and the
taxation year of the taxpayer began after
October 17, 2000, 3/2 of the dividend is
deemed to be a capital gain of the
taxpayer from the disposition by the
taxpayer of a capital property in the year,
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(iv) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
after February 27, 2000 and before
October 18, 2000, and the taxation year
of the taxpayer began after October 17,
2000, 4/3 of the dividend is deemed to be
a capital gain of the taxpayer from the
disposition by the taxpayer of a capital
property in the year,
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(v) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
after February 27, 2000, and before
October 18, 2000 and the taxation year of
the taxpayer includes October 17, 2000,
the dividend is deemed to be a capital
gain of the taxpayer from the disposition
by the taxpayer of a capital property in
the year and before October 18, 2000,
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(vi) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
after February 27, 2000, and before
October 17, 2000 and the taxation year of
the taxpayer began after February 27,
2000 and ended before October 17, 2000,
the dividend is deemed to be a capital
gain of the taxpayer from the disposition
by the taxpayer of a capital property in
the year, and
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(vii) in any other case, the dividend is
deemed to be a capital gain of the
taxpayer from the disposition of capital
property after October 17, 2000 and in
the year.
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(4) Section 130.1 of the Act is amended by
adding the following after subsection (4.1):
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Reporting
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(4.2) Where subparagraph (4)(b)(i) to (vii)
applies to a dividend paid by a mortgage
investment corporation to a shareholder of any
class of shares of its capital stock in the period
that begins 91 days after the beginning of the
corporation's taxation year that includes
either February 28, 2000 or October 17, 2000
and ends 90 days after the end of that year, the
corporation shall disclose to the shareholder in
prescribed form the amount of the dividend
that is in respect of capital gains realized on
dispositions of property that occurred
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(a) before February 28, 2000,
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(b) after February 27, 2000 and before
October 18, 2000, and
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(c) after October 17, 2000
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and, if it does not do so, the dividend is
deemed to be in respect of capital gains from
dispositions of property that occurred before
February 28, 2000.
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Allocation
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(4.3) Where subsection (4) applies in
respect of a dividend paid by a mortgage
investment corporation at any time in the
period that begins 91 days after the beginning
of the corporation's taxation year that includes
either February 28, 2000 or October 17, 2000
and ends 90 days after the end of that year, and
the corporation does not elect under
subsection (4.4), the following rules apply:
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(a) the portion of the dividend that is in
respect of capital gains from dispositions of
property that occurred in the year and in the
particular period that began at the
beginning of the year and ended at the end
of February 27, 2000 is deemed to be that
proportion of the dividend that the net
capital gains of the corporation from the
dispositions of property in the particular
period is of the total of the corporation's net
capital gains from the dispositions of
property in each of the particular periods
referred to in this subsection,
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(b) the portion of the dividend that is in
respect of capital gains from dispositions of
property that occurred in the year and in the
particular period that began at the
beginning of February 28, 2000 and ended
at the end of October 17, 2000 is deemed to
be that proportion of the dividend that the
net capital gains of the corporation from the
dispositions of property in the particular
period is of the total of the corporation's net
capital gains from the dispositions of
property in each of the particular periods
referred to in this subsection,
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(c) the portion of the dividend that is in
respect of capital gains from dispositions of
property that occurred in the year and in the
particular period that begins at the
beginning of October 18, 2000 and ends at
the end of the year, is deemed to be that
proportion of the dividend that the net
capital gains of the corporation from the
dispositions of property in the particular
period is of the total of the corporation's net
capital gains from the dispositions of
property in each of the periods referred to in
this subsection, and
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in this subsection net capital gains from
dispositions of property in a particular period
means the amount, if any, by which the
corporation's capital gains from dispositions
of property in the particular period exceeds the
corporation's capital losses from dispositions
of property in the particular period.
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Allocation
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(4.4) Where subsection (4) applies in
respect of a dividend paid by a mortgage
investment corporation in the period that
begins 91 days after the beginning of the
corporation's taxation year that includes
either February 28, 2000 or October 17, 2000
and ends 90 days after the end of that year, and
the corporation so elects under this subsection
in its return of income for the year, the
following rules apply:
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(a) the portion of the dividend that is in
respect of capital gains from dispositions of
property that occurred in the year and
before February 28, 2000 is deemed to be
that proportion of the dividend that the
number of days that are in that year and
before February 28, 2000 is of the number
of days that are in that year;
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(b) the portion of the dividend that is in
respect of capital gains from dispositions of
property that occurred in the year and in the
period that began at the beginning of
February 28, 2000 and ended at the end of
October 17, 2000 is deemed to be that
proportion of the dividend that the number
of days that are in the year and in that period
is of the number of days that are in the year;
and
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(c) the portion of the dividend that is in
respect of capital gains from dispositions of
property that occurred in the year and in the
period that begins at the beginning of
October 18, 2000 and ends at the end of the
year, is deemed to be that proportion of the
dividend that the number of days that are in
the year and in that period is of the number
of days that are in the year.
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Allocation
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(4.5) Where no dividend to which
subsection (4.4) applies is paid by a mortgage
investment corporation in respect of its net
taxable capital gains for its taxation year that
includes either February 28, 2000 or October
17, 2000, the corporation has net capital gains
or net capital losses from dispositions of
property in the year, and the corporation so
elects under this subsection in its return of
income for the year
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(a) the portion of those net capital gains and
net capital losses that is in respect of capital
gains and losses from dispositions of
property that occurred before February 28,
2000 is deemed to be that proportion of the
net capital gains or net capital losses
respectively that the number of days that are
in the year and before February 28, 2000 is
of the number of days that are in the year,
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(b) the portion of those net capital gains and
net capital losses that is in respect of capital
gains and losses from dispositions of
property that occurred in the year and in the
period that began at the beginning of
February 28, 2000 and ended at the end of
October 17, 2000, is deemed to be that
proportion of the net capital gains or net
capital losses respectively that the number
of days that are in the year and in that period
is of the number of days that are in the year,
and
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(c) the portion of those net capital gains and
net capital losses that is in respect of capital
gains and losses from dispositions of
property that occurred in the year and in the
period that began at the beginning of
October 18, 2000 and ended at the end of the
year, is deemed to be that proportion of the
net capital gains or net capital losses
respectively that the number of days that are
in the year and in that period is of the
number of days that are in the year,
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and, for the purpose of this subsection,
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(d) the net capital gains of a mortgage
investment corporation from dispositions
of property in a year is the amount, if any,
by which the corporation's capital gains
from dispositions of property in a year
exceeds the corporation's capital losses
from dispositions of property in the year,
and
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(e) the net capital losses of a mortgage
investment corporation from dispositions
of property in a year is the amount, if any,
by which the corporation's capital losses
from dispositions of property in a year
exceeds the corporation's capital gains
from dispositions of property in the year.
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(5) Subsections (1) to (4) apply to taxation
years that end after February 27, 2000
except that, for a corporation'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,
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(a) the reference to the fraction ``1/2'' in
subparagraph 130.1(1)(a)(ii) of the Act,
as enacted by subsection (1), 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
corporation for the year; and
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(b) the reference to the word ``twice'' in
subparagraph 130.1(4)(a)(i) of the Act, as
enacted by subsection (2), shall be read as
a reference 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
corporation for the year, multiplied by''.
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128. (1) Paragraph 131(1)(b) of the Act is
replaced by the following:
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(b) notwithstanding any other provision of
this Act, any amount received by a taxpayer
in a taxation year as, on account of, in lieu
of payment of or in satisfaction of, the
dividend shall not be included in computing
the taxpayer's income for the year as
income from a share of the capital stock of
the corporation, and
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(i) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
before February 28, 2000, and the
taxation year of the taxpayer began after
February 27, 2000 and ended before
October 18, 2000, 9/8 of the dividend is
deemed to be a capital gain of the
taxpayer from the disposition by the
taxpayer of a capital property in the year,
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(ii) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
before February 28, 2000, and the
taxation year of the taxpayer includes
February 27, 2000, the dividend is
deemed to be a capital gain of the
taxpayer from the disposition by the
taxpayer of a capital property in the year
and before February 28, 2000,
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(iii) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
before February 28, 2000, and the
taxation year of the taxpayer began after
October 17, 2000, 3/2 of the dividend is
deemed to be a capital gain of the
taxpayer from the disposition by the
taxpayer of a capital property in the year,
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(iv) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
after February 27, 2000 and before
October 18, 2000, and the taxation year
of the taxpayer began after October 17,
2000, 4/3 of the dividend is deemed to be
a capital gain of the taxpayer from the
disposition by the taxpayer of a capital
property in the year,
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(v) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
after February 27, 2000 and before
October 18, 2000, and the taxation year
of the taxpayer includes October 17,
2000, the dividend is deemed to be a
capital gain of the taxpayer from the
disposition by the taxpayer of a capital
property in the year and before October
18, 2000,
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(vi) where the dividend was in respect of
capital gains of the corporation from
dispositions of property that occurred
after February 27, 2000, and before
October 17, 2000 and the taxation year of
the taxpayer began after February 27,
2000 and ended before October 18, 2000,
the dividend is deemed to be a capital
gain of the taxpayer from the disposition
by the taxpayer of a capital property in
the year, and
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(vii) in any other case, the dividend is
deemed to be a capital gain of the
taxpayer from the disposition of capital
property after October 17, 2000 and in
the year,
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and, for the purpose of this paragraph,
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(viii) dividends paid by a corporation is
deemed to be paid in respect of the
corporation's net capital gains in the
order in which those net capital gains
were realized by the corporation, and
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(ix) for the purposes of the application of
subparagraph (viii)
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(A) net capital gains of a corporation
for a year is the amount by which the
corporation's capital gains from
dispositions of property in the year
exceed the corporation's capital losses
from dispositions of property in the
year,
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(B) net capital losses of a corporation
for a year is the amount by which the
corporation's capital losses from
dispositions of property in the year
exceed the corporation's capital gains
from dispositions of property in the
year,
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(C) net capital gains of a corporation
for a year are deemed to be realized
evenly throughout the year, and
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(D) net capital losses of a corporation
for a year are deemed to be a capital
loss of the corporation from the
disposition of property in the
following year.
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(2) Section 131 of the Act is amended by
adding the following after subsection (1.4):
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Reporting
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(1.5) Where subparagraph (1)(b)(i) to (vii)
applies to a dividend paid by a mutual fund
corporation to a shareholder of any class of
shares of its capital stock, the corporation
shall disclose to the shareholder in prescribed
form the amount of the dividend that is in
respect of capital gains realized on
dispositions of property that occurred
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(a) before February 28, 2000,
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(b) after February 27, 2000 and before
October 18, 2000, and
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(c) after October 17, 2000,
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and if it does not do so, the dividend is deemed
to be in respect of capital gains from
dispositions of property that occurred before
February 28, 2000.
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Allocation
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(1.6) Where subsection (1) applies in
respect of a dividend paid by a mutual fund
corporation in the period that begins 60 days
after the beginning of the corporation's
taxation year that includes either February 28,
2000 or October 17, 2000 and ends 60 days
after the end of that year, and the corporation
does not elect under subsection (1.7), the
following rules apply:
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(a) the portion of the dividend that is in
respect of capital gains of the mutual fund
corporation from dispositions of property
by the mutual fund corporation in the year
and in the particular period that began at the
beginning of the year and ended at the end
of February 27, 2000 is deemed to be that
proportion of the dividend that the
corporation's net capital gains from
dispositions of property in the particular
period to which the dividend relates is of the
total of the corporation's net capital gains
from dispositions of property in each of the
particular periods referred to in this
subsection,
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(b) the portion of the dividend that is in
respect of capital gains of the mutual fund
corporation from dispositions of property
by the mutual fund corporation in the year
and in the particular period that began at the
beginning of February 28, 2000 and ended
at the end of October 17, 2000 is deemed to
be that proportion of the dividend that the
corporation's net capital gains from
dispositions of property in the particular
period is of the total of the corporation's net
capital gains from dispositions of property
in each of the particular periods referred to
in this subsection, and
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(c) the portion of the dividend that is in
respect of capital gains of the mutual fund
corporation from dispositions of property
by the mutual fund corporation in the year
and in the particular period that begins at
the beginning of October 18, 2000 and ends
at the end of the year, is deemed to be that
proportion of the dividend that the
corporation's net capital gains from
dispositions of property in the particular
period is of the total of the corporation's net
capital gains from dispositions of property
in each of the particular periods referred to
in this subsection,
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and, in this subsection and in subsection (1.8),
net capital gains from dispositions of property
in a particular period means the amount, if
any, by which the corporation's capital gains
from dispositions of property in the particular
period exceeds the corporation's capital losses
from dispositions of property in the particular
period.
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Allocation
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(1.7) Where subsection (1) applies in
respect of a dividend paid by a mutual fund
corporation in the period that begins 60 days
after the beginning of the corporation's
taxation year that includes either February 28,
2000 or October 17, 2000 and ends 60 days
after the end of that year, and the corporation
so elects under this paragraph in its return of
income
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