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(s) where a net amount is included as a
capital gain of a taxpayer for a taxation
year because of the granting of an option
under subsection 49(1) of the Act, the net
amount is deemed to be a capital gain of
the taxpayer from a disposition of
property on the day on which the option
was granted,
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(t) where a net amount is included as a
capital gain of a corporation for its
taxation year under subsection 49(2) of
the Act because of the expiration of an
option that was granted by the
corporation, the net amount is deemed to
be a capital gain of the corporation from
a disposition of property on the day on
which the option expired,
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(u) where a net amount is included as a
capital gain of a trust for its taxation year
under subsection 49(2.1) of the Act
because of the expiration of an option
that was granted by the trust, the net
amount is deemed to be a capital gain of
the trust from a disposition of property
on the day on which the option expired,
and
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(v) where a net amount is included as a
capital gain of a taxpayer for a taxation
year because of subsection 49(3), (3.01) or
(3.1) of the Act, the net amount is deemed
to be a capital gain of the taxpayer from
a disposition of property on the day on
which the option was exercised.
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(6) Subsection (2) applies to the 2000 and
subsequent taxation years except that
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(a) for a taxation year of a taxpayer that
includes either February 28, 2000 or
October 17, 2000, the reference to the
fraction ``1/4'' in paragraph 38(a.1) of
the Act, as enacted by subsection (2), shall
be read as a reference to 1/2 of the
fraction in paragraph 38(a) of the Act, as
enacted by subsection (1), that applies to
the taxpayer for the year; and
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(b) for a taxation year that ended before
February 28, 2000, the reference to the
fraction ``1/4'' in paragraph 38(a.1) of
the Act, as enacted by subsection (2), shall
be read as a reference to the fraction
``3/8''.
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(7) Subsection (3) applies to gifts made by
a taxpayer after February 27, 2000 except
that
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(a) if the taxpayer's taxation year began
after February 28, 2000 and ended before
October 17, 2000, the reference to the
fraction ``1/4'' in paragraph 38(a.2) of
the Act, as enacted by subsection (3), shall
be read as a reference to the fraction
``1/3''; and
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(b) if the taxpayer's taxation year
includes either February 28, 2000 or
October 17, 2000, the reference to the
fraction ``1/4'' in paragraph 38(a.2) of
the Act, as enacted by subsection (3), shall
be read as a reference to 1/2 of the
fraction in paragraph 38(a) of the Act, as
enacted by subsection (1), that applies to
the taxpayer for the year.
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23. (1) Subparagraphs 39(9)(b)(i) to (i.2)
of the Act are replaced by the following:
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(i) the total of all amounts each of which
is twice the amount deducted by the
taxpayer under section 110.6 in
computing the taxpayer's taxable income
for a preceding taxation year that
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(A) ended before 1988, or
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(B) begins after October 17, 2000 ,
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(i.1) the total of all amounts each of
which is
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(A) 3/2 of the amount deducted under
section 110.6 in computing the
taxpayer's taxable income for a
preceding taxation year that
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(I) ended after 1987 and before
1990, or
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(II) began after February 27, 2000
and ended before October 18, 2000,
or
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(B) the amount determined by
multiplying the reciprocal of the
fraction in paragraph 38(a) that applies
to the taxpayer for each of the
taxpayer's taxation years that includes
either February 28, 2000 or October
18, 2000 by the amount deducted
under section 110.6 in computing the
taxpayer's taxable income for that
year, and
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(i.2) the total of all amounts each of
which is 4/3 of the amount deducted
under section 110.6 in computing the
taxpayer's taxable income for a
preceding taxation year that ended after
1989 and before February 28, 2000
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(2) Subparagraphs 39(10)(b)(i) to (i.2) of
the Act are replaced by the following:
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(i) the total of all amounts each of which
is twice the amount designated by the
trust under subsection 104(21.2) in
respect of a beneficiary in its return of
income for a preceding taxation year that
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(A) ended before 1988, or
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(B) begins after October 17, 2000 ,
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(i.1) the total of all amounts each of
which is
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(A) 3/2 of the amount designated by
the trust under subsection 104(21.2) in
respect of a beneficiary in its return of
income for a preceding taxation year
that
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(I) ended after 1987 and before
1990, or
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(II) began after February 27, 2000
and ended before October 18, 2000,
or
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(B) the amount determined by
multiplying the reciprocal of the
fraction in paragraph 38(a) that applies
to the trust for each of the trust's
taxation years that includes either
February 28, 2000 or October 18, 2000
by the amount designated by the trust
under subsection 104(21.2) in respect
of a beneficiary in its return of income
for that year, and
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(i.2) the total of all amounts each of
which is 4/3 of the amount designated by
the trust under subsection 104(21.2) in
respect of a beneficiary in its return of
income for a preceding taxation year that
ended after 1989 and before February 28,
2000
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(3) Subsection 39(11) of the Act is
replaced by the following:
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| Recovery of
bad debt
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(11) Where an amount is received in a
taxation year on account of a debt (in this
subsection referred to as the ``recovered
amount'') in respect of which a deduction for
bad debts had been made under subsection
20(4.2) in computing a taxpayer's income for
a preceding taxation year, the amount, if any,
by which 1/2 of the recovered amount exceeds
the amount determined under paragraph
12(1)(i.1) in respect of the recovered amount
is deemed to be a taxable capital gain of the
taxpayer from a disposition of capital property
in the year.
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(4) Subsections (1) to (3) apply to taxation
years that end after February 27, 2000
except that, for taxation years that ended
after February 27, 2000 and before October
18, 2000, the reference to the fraction ``1/2''
in subsection 39(11) of the Act, as enacted
by subsection (3), shall be read as a
reference to the fraction ``2/3''.
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24. (1) Paragraphs (a) and (b) of the
description of C in the definition ``exempt
capital gains balance'' in subsection 39.1(1)
of the Act are replaced by the following:
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(a) if the entity is a trust described in any of
paragraphs (d) and (h) to (j) of the definition
``flow-through entity'' in this subsection,
the total of
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(i) 3/2 of the total of all amounts each of
which is the amount by which the
individual's taxable capital gain
(determined without reference to this
section) , for a preceding taxation year
that began after February 27, 2000 and
ended before October 18, 2000 that
resulted from a designation made under
subsection 104(21) by the trust, was
reduced under subsection (3),
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(ii) 4/3 of the total of all amounts each of
which is the amount by which the
individual's taxable capital gain
(determined without reference to this
section), for a preceding taxation year
that ended before February 28, 2000 and
that resulted from a designation made
under subsection 104(21) by the trust,
was reduced under subsection (3),
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(iii) the amount claimed by the individual
under subparagraph 104(21.4)(a)(ii) for a
preceding taxation year, and
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(iv) twice the total of all amounts each of
which is the amount by which the
individual's taxable capital gain
(determined without reference to this
section) for a preceding taxation year that
began after October 17, 2000 and that
resulted from a designation made under
subsection 104(21) by the trust, was
reduced under subsection (3),
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(b) if the entity is a partnership, the total of
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(A) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
taxable capital gains (determined
without reference to this section) , for
its fiscal period that began after
February 27, 2000 and ended before
October 18, 2000 , was reduced under
subsection (4), and
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(B) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
income from a business (determined
without reference to this section) , for
its fiscal period that began after
February 27, 2000 and ended before
October 18, 2000 , was reduced under
subsection (5),
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(A) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
taxable capital gains (determined
without reference to this section), for
its fiscal period that ended before
February 28, 2000 and in a preceding
taxation year was reduced under
subsection (4), and
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(B) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
income from a business (determined
without reference to this section), for
its fiscal period that ended before
February 28, 2000 and in a preceding
taxation year, was reduced under
subsection (5),
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(iii) the product obtained when the
reciprocal of the fraction in paragraph
38(a) that applies to the partnership for
its fiscal period that includes either
February 28, 2000 or October 17, 2000 is
multiplied by the total of
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(A) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
taxable capital gains (determined
without reference to this section), for
its fiscal period that includes either
February 28, 2000 or October 17, 2000
and ended in a preceding taxation year,
was reduced under subsection (4), and
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(B) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
income from a business (determined
without reference to this section), for
its fiscal period that includes either
February 28, 2000 or October 17, 2000
and ended in a preceding taxation year
was reduced under subsection (5), and
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(A) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
taxable capital gains (determined
without reference to this section), for
its fiscal period that began after
October 17, 2000 and ended in a
preceding taxation year, was reduced
under subsection (4), and
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(B) the total of all amounts each of
which is the amount by which the
individual's share of the partnership's
income from a business (determined
without reference to this section), for
its fiscal period that began after
October 17, 2000 and ended in a
preceding taxation year, was reduced
under subsection (5), and
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(2) Paragraphs (a) and (b) of the
description of B in subsection 39.1(2) of the
Act are amended by replacing the reference
to the expression ``4/3 of'' with a reference
to the word ``twice''.
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(3) Subsection 39.1(3) 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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(4) The description of A in subsection
39.1(4) 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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(5) Subsection 39.1(5) of the Act is
replaced by the following:
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| Reduction in
share of
partnership's
income from a
business
|
(5) An individual's share otherwise
determined for a taxation year of the income
of a partnership from a business for the
partnership's fiscal period that ends in the year
and the individual's share of the partnership's
taxable capital gain, if any, arising under
paragraph 14(1)(b) shall be reduced by such
amount as the individual claims, not
exceeding the lesser of
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(a) the amount, if any, by which 1/2 of the
individual's exempt capital gains balance
for the year in respect of the partnership
exceeds the total of
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(i) the amount, if any, claimed under
subsection (4) by the individual for the
year in respect of the partnership, and
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(ii) all amounts, if any, claimed under this
subsection by the individual for the year
in respect of other businesses of the
partnership, and
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(b) the amount determined by the formula
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A x (B/C)
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A is the amount included under paragraph
14(1)(b) in computing the income of the
partnership from the business for the
fiscal period,
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B is the amount that would otherwise be
the individual's share of the
partnership's income from the business
for the fiscal period, and
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C is the partnership's income from the
business for the fiscal period.
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(6) Subsection (1) applies to taxation
years that end after February 27, 2000.
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(7) Subsections (2) to (5) apply to taxation
years that end after February 27, 2000
except that, where the taxation year of an
entity that ends in the taxpayer's taxation
year 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 word ``twice'' in
paragraphs (a) and (b) of the description
of B in subsection 39.1(2) 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
entity for its taxation year that ends in the
taxpayer's taxation year, multiplied by'';
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(b) the reference to the fraction ``1/2'' in
subsection 39.1(3) of the Act, as enacted
by subsection (3), 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 entity for its
taxation year that ends in the taxpayer's
taxation year;
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(c) the reference to the fraction ``1/2'' in
the description of A in subsection 39.1(4)
of the Act, as enacted by subsection (4),
shall be read as reference to the fraction
in paragraph 38(a) of the Act, as enacted
by subsection 22(1), that applies to the
entity for its taxation year that ends in the
taxpayer's taxation year;
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(d) the reference to the fraction ``1/2'' in
subsection 39.1(5) of the Act, as enacted
by subsection (5), shall be read as
reference to the fraction in paragraph
14(1)(b) of the Act, as enacted by
subsection 7(1), that applies to the entity
for its taxation year that ends in the
taxpayer's taxation year; and
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(e) subparagraph 39.1(5)(a)(i) of the Act,
as enacted by subsection (5), shall be read
as follows:
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(i) the amount, if any, claimed under
subsection (4) by the individual for the
year in respect of the partnership
multiplied by the fraction obtained when
the fraction in paragraph 14(1)(b)
applicable to the entity for its taxation
year that ends in the taxpayer's taxation
year is divided by the fraction in
paragraph 38(a) that applies to the entity
for that taxation year.
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25. (1) Clause 40(2)(g)(iv)(A) of the Act is
replaced by the following:
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(A) a trust governed by a deferred
profit sharing plan, an employees
profit sharing plan or a registered
retirement income fund under which
the taxpayer is a beneficiary or
immediately after the disposition
becomes a beneficiary, or
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(2) Paragraph 40(3.14)(a) of the Act is
replaced by the following:
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(a) by operation of any law governing the
partnership arrangement, the liability of the
member as a member of the partnership is
limited (except by operation of a provision
of a statute of Canada or a province that
limits the member's liability only for debts,
obligations and liabilities of the
partnership, or any member of the
partnership, arising from negligent acts or
omissions or misconduct that another
member of the partnership or an employee,
agent or representative of the partnership
commits in the course of the partnership
business while the partnership is a limited
liability partnership);
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(3) Section 40 of the Act is amended by
adding the following after subsection (3.6):
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| Losses of
non-resident
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(3.7) If an individual disposes of a property
at any time after having ceased to be resident
in Canada, for the purposes of applying
subsections 100(4), 107(1) and 112(3) to
(3.32) and (7) in computing the individual's
loss from the disposition,
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(a) the individual is deemed to be a
corporation in respect of dividends received
by the individual, or deemed under Part
XIII to have been paid to the individual, at
a particular time that is after the time at
which the individual last acquired the
property and at which the individual was
non-resident; and
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(b) an amount on account of
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(i) each taxable dividend received by the
individual at a particular time described
in paragraph (a), and
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(ii) each amount deemed under Part XIII
to have been paid to the individual at a
particular time described in paragraph
(a), as a dividend from a corporation
resident in Canada, to the extent that the
amount can reasonably be considered to
relate to the property,
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is deemed to be a taxable dividend that was
received by the individual and that was
deductible under section 112 in computing
the individual's taxable income or taxable
income earned in Canada for the taxation
year that includes that particular time.
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(4) The portion of subsection 40(9) of the
Act before the formula is replaced by the
following:
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