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(3) Paragraph 80(8)(a) of the Act is
replaced by the following:
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(a) where the debtor is a corporation
resident in Canada throughout that year,
each particular amount that would be
determined in respect of the debtor under
paragraph 66.7(2)(a), (2.3)(a), (3)(a),
(4)(a) or (5)(a) if paragraphs 66.7(2.3)(a),
(4)(a) and (5)(a) were read without
reference to the expressions ``30% of'',
``30% of'' and ``10% of'', respectively, as
a consequence of the acquisition of control
of the debtor by a person or group of
persons, the debtor ceasing to be exempt
from tax under this Part on its taxable
income or the acquisition of properties by
the debtor by way of an amalgamation or
merger, where the amount so applied does
not exceed the successor pool immediately
after that time for the obligation and in
respect of the particular amount;
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(4) Subsection 80(8) of the Act is amended
by striking out the word ``and'' at the end of
paragraph (d), by adding the word ``and'' at
the end of paragraph (e) and by adding the
following after paragraph (e):
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(f) the cumulative foreign resource expense
(within the meaning assigned by subsection
66.21(1)) of the debtor in respect of a
country.
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(5) Clause 80(12)(a)(ii)(B) 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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(6) Subparagraph (a)(ii) of the
description of D in subsection 80(13) 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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(7) Paragraph (b) of the description of E
in subsection 80(13) of the Act is amended
by replacing the reference to the number
``0.75'' with a reference to the fraction
``1/2''.
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(8) Subsections (1), (3) and (4) apply to
taxation years that begin after 2000.
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(9) Subsections (2) and (5) to (7) apply to
taxation years that end after February 27,
2000 except that, for a taxation year of a
debtor that includes 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
clause 80(12)(a)(ii)(B) of the Act, as
enacted by subsection (5), and in
subparagraph (a)(ii) of the description of
D in subsection 80(13) of the Act, as
enacted by subsection (6), 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
debtor for the year, multiplied by''; and
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(b) the reference to the fraction ``1/2'' in
paragraph (b) of the description of E in
subsection 80(13) of the Act, as enacted
by subsection (7), 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 debtor for the
year.
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59. (1) Subsection 80.01(10) of the Act is
amended by replacing the reference to the
number ``0.75'' in the formula with a
reference to the number ``0.5''.
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(2) Subsection (1) applies to taxation
years that end after February 27, 2000
except that, for a taxation year of a debtor
that includes February 28, 2000 or October
17, 2000, or began after February 28, 2000
and ended before October 17, 2000, the
reference to the fraction ``1/2'' in
subsection 80.01(10) 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 debtor for the year.
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60. (1) Subsection 81(1) of the Act is
amended by adding the following after
paragraph (g.3):
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| Relief for
increased
heating
expenses
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(g.4) an amount received pursuant to the
Order Authorizing Ex Gratia Payments for
Increased Heating Expenses;
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(2) Subsection 81(3.1) of the Act is
replaced by the following:
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| Travel
expenses
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(3.1) There shall not be included in
computing an individual's income for a
taxation year an amount (not in excess of a
reasonable amount) received by the individual
from an employer with whom the individual
was dealing at arm's length as an allowance
for, or reimbursement of, travel expenses
incurred by the individual in the year in
respect of the individual's part-time
employment in the year with the employer
(other than expenses incurred in the
performance of the duties of the individual's
part-time employment) if
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(a) throughout the period in which the
expenses were incurred,
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(i) the individual had other employment
or was carrying on a business, or
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(ii) where the employer is a designated
educational institution (within the
meaning assigned by subsection
118.6(1)), the duties of the individual's
part-time employment were the
provision in Canada of a service to the
employer in the individual's capacity as
a professor or teacher; and
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(b) the duties of the individual's part-time
employment were performed at a location
not less than 80 kilometres from,
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(i) where subparagraph (a)(i) applies,
both the individual's ordinary place of
residence and the place of the other
employment or business referred to in
that subparagraph, and
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(ii) where subparagraph (a)(ii) applies,
the individual's ordinary place of
residence.
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| Payments for
volunteer
services
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(4) Where
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(a) an individual was employed or
otherwise engaged in a taxation year by a
government, municipality or public
authority (in this subsection referred to as
``the employer'') and received in the year
from the employer one or more amounts for
the performance, as a volunteer, of the
individual's duties as
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(i) an ambulance technician,
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(iii) a person who assists in the search or
rescue of individuals or in other
emergency situations, and
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(b) if the Minister so demands, the
employer has certified in writing that
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(i) the individual was in the year a person
described in paragraph (a), and
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(ii) the individual was at no time in the
year employed or otherwise engaged by
the employer, otherwise than as a
volunteer, in connection with the
performance of any of the duties referred
to in paragraph (a) or of similar duties,
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there shall not be included in computing the
individual's income derived from the
performance of those duties the lesser of
$1,000 and the total of those amounts.
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(3) Subsection (1) applies to amounts
received after 2000.
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(4) Subsection 81(3.1) of the Act, as
enacted by subsection (2), applies to the
1995 and subsequent taxation years and,
notwithstanding subsections 152(4) to (5) of
the Act, any assessment of an individual's
tax payable under the Act for any taxation
year that ends before 2000 shall be made
that is necessary to take into account the
application of that subsection 81(3.1).
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(5) Subsection 81(4) of the Act, as enacted
by subsection (2), applies to the 1998 and
subsequent taxation years.
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61. (1) Subsection 84.1(2.1) of the Act is
amended by replacing the references to the
expression ``4/3 of'' with references to the
word ``twice'' and by replacing the
reference to the fraction ``3/4'' with a
reference to the fraction ``1/2''.
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(2) Subsection (1) applies to taxation
years that end after February 27, 2000
except that, for a taxation year of a
taxpayer that includes February 28, 2000 or
October 17, 2000, or began after February
28, 2000 and ended before October 17,
2000, the references to the word ``twice'' in
subsection 84.1(2.1) of the Act, as enacted
by subsection (1), shall be read as references
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 taxpayer for the year
multiplied by'' and the reference to the
fraction ``1/2'' 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 taxpayer for the year.
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62. (1) The descriptions of D and E in
paragraph 85(1)(d.1) of the Act are
replaced by the following:
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D is the amount, if any, that would be
included under subsection 14(1) in
computing the taxpayer's income as a
result of the disposition if the values
determined for C and D in paragraph
14(1)(b) were zero, and
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E is the amount, if any, that would be
included under subsection 14(1) in
computing the taxpayer's income as a
result of the disposition if the value
determined for D in paragraph 14(1)(b)
were zero;
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(2) Section 85 of the Act is amended by
adding the following after subsection (1.1):
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| Exception
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(1.11) Notwithstanding subsection (1.1), a
foreign resource property, or an interest in a
partnership that derives all or part of its value
from one or more foreign resource properties,
is not an eligible property of a taxpayer in
respect of a disposition by the taxpayer to a
corporation where
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(a) the taxpayer and the corporation do not
deal with each other at arm's length; and
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(b) it is reasonable to conclude that one of
the purposes of the disposition, or a series of
transactions or events of which the
disposition is a part, is to increase the extent
to which any person may claim a deduction
under section 126.
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(3) Subsection (1) applies in respect of
taxation years that end after February 27,
2000.
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(4) Subsection (2) applies to dispositions
that occur after December 21, 2000 other
than a disposition by a taxpayer that occurs
pursuant to an agreement in writing made
by the taxpayer on or before that date.
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63. (1) Subsection 85.1(2) of the Act is
amended by striking out the word ``or'' at
the end of paragraph (c), by adding the
word ``or'' at the end of paragraph (d) and
by adding the following after paragraph
(d):
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(i) is a foreign affiliate of a taxpayer
resident in Canada at the end of the
taxation year of the vendor in which the
exchange occurred, and
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(ii) has included any portion of the gain
or loss, otherwise determined, from the
disposition of the exchanged shares in
computing its foreign accrual property
income for the taxation year of the
vendor in which the exchange occurred.
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(2) Section 85.1 of the Act is amended by
adding the following after subsection (4):
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| Foreign share
for foreign
share
exchange
|
(5) Subject to subsections (3) and (6) and
95(2), where a corporation resident in a
country other than Canada (in this section
referred to as the ``foreign purchaser'') issues
shares of its capital stock (in this section
referred to as the ``issued foreign shares'') to
a vendor in exchange for shares of the capital
stock of another corporation resident in a
country other than Canada (in this section
referred to as the ``exchanged foreign shares'')
that were immediately before the exchange
capital property of the vendor, except where
the vendor has, in the vendor's return of
income for the taxation year in which the
exchange occurred, included in computing the
vendor's income for that year any portion of
the gain or loss, otherwise determined, from
the disposition of the exchanged foreign
shares, the vendor is deemed
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(a) to have disposed of the exchanged
foreign shares for proceeds of disposition
equal to the adjusted cost base to the vendor
of those shares immediately before the
exchange, and
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(b) to have acquired the issued foreign
shares at a cost to the vendor equal to the
adjusted cost base to the vendor of the
exchanged foreign shares immediately
before the exchange,
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and where the exchanged foreign shares were
taxable Canadian property of the vendor, the
issued foreign shares so acquired by the
vendor are deemed to be taxable Canadian
property of the vendor.
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| Where
subsection (5)
does not apply
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(6) Subsection (5) does not apply where
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(a) the vendor and foreign purchaser were,
immediately before the exchange, not
dealing with each other at arm's length
(otherwise than because of a right referred
to in paragraph 251(5)(b) that is a right of
the foreign purchaser to acquire the
exchanged foreign shares);
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(b) immediately after the exchange the
vendor, persons with whom the vendor did
not deal at arm's length or the vendor
together with persons with whom the
vendor did not deal at arm's length
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(i) controlled the foreign purchaser, or
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(ii) beneficially owned shares of the
capital stock of the foreign purchaser
having a fair market value of more than
50% of the fair market value of all of the
outstanding shares of the capital stock of
the foreign purchaser;
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(c) consideration other than issued foreign
shares was received by the vendor for the
exchanged foreign shares, notwithstanding
that the vendor may have disposed of shares
of the capital stock of the other corporation
referred to in subsection (5) (other than the
exchanged foreign shares) to the foreign
purchaser for consideration other than
shares of the capital stock of the foreign
purchaser;
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(i) is a foreign affiliate of a taxpayer
resident in Canada at the end of the
taxation year of the vendor in which the
exchange occurred, and
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(ii) has included any portion of the gain
or loss, otherwise determined, from the
disposition of the exchanged foreign
shares in computing its foreign accrual
property income for the taxation year of
the vendor in which the exchange
occurred; or
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(e) the vendor is a foreign affiliate of a
taxpayer resident in Canada at the end of the
taxation year of the vendor in which the
exchange occurred and the exchanged
foreign shares are excluded property
(within the meaning assigned by subsection
95(1)) of the vendor.
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(3) Subsections (1) and (2) apply to
exchanges that occur after 1995.
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64. (1) The Act is amended by adding the
following after section 86:
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| Eligible
distribution
not included
in income
|
86.1 (1) Notwithstanding any other
provision of this Part,
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(a) the amount of an eligible distribution
received by a taxpayer shall not be included
in computing the income of the taxpayer;
and
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(b) subsection 52(2) does not apply to the
eligible distribution received by the
taxpayer.
|
|
| Eligible
distribution
|
(2) For the purposes of this section and Part
XI, a distribution by a particular corporation
that is received by a taxpayer is an eligible
distribution if
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(a) the distribution is with respect to all of
the taxpayer's common shares of the capital
stock of the particular corporation (in this
section referred to as the ``original
shares'');
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(b) the distribution consists solely of
common shares of the capital stock of
another corporation that were owned by the
particular corporation immediately before
their distribution to the taxpayer (in this
section referred to as the ``spin-off
shares'');
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(c) in the case of a distribution that is not
prescribed,
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(i) at the time of the distribution, both
corporations are resident in the United
States and were never resident in Canada,
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(ii) at the time of the distribution, the
shares of the class that includes the
original shares are widely held and
actively traded on a prescribed stock
exchange in the United States, and
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(iii) under the United States Internal
Revenue Code applicable to the
distribution, the shareholders of the
particular corporation who are resident in
the United States are not taxable in
respect of the distribution;
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(d) in the case of a distribution that is
prescribed,
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(i) at the time of the distribution, both
corporations are resident in the same
country, other than the United States,
with which Canada has a tax treaty (in
this section referred to as the ``foreign
country'') and were never resident in
Canada,
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(ii) at the time of the distribution, the
shares of the class that includes the
original shares are widely held and
actively traded on a prescribed stock
exchange,
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(iii) under the law of the foreign country,
those shareholders of the particular
corporation who are resident in that
country are not taxable in respect of the
distribution, and
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(iv) the distribution is prescribed subject
to such terms and conditions as are
considered appropriate in the
circumstances;
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(e) before the end of the sixth month
following the day on which the particular
corporation first distributes a spin-off share
in respect of the distribution, the particular
corporation provides to the Minister
information satisfactory to the Minister
establishing
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(i) that, at the time of the distribution, the
shares of the class that includes the
original shares are widely held and
actively traded on a prescribed stock
exchange,
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(ii) that the particular corporation and the
other corporation referred to in paragraph
(b) were never resident in Canada,
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(iii) the date of the distribution,
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