(g) a trust all interests in which, at that time, have vested indefeasibly, other than
	(i) an alter ego trust, a joint spousal or common-law partner trust, a post-1971 spousal or common-law partner trust or a trust to which paragraph 104(4)(a.4) applies,
	(ii) a trust that has elected under subsection 104(5.3),
	(iii) a trust that has, in its return of income under this Part for its first taxation year that ends after 1992, elected that this paragraph not apply,
	(iv) a trust that is at that time resident in Canada where the total fair market value at that time of all interests in the trust held at that time by beneficiaries under the trust who at that time are non-resident is more than 20% of the total fair market value at that time of all interests in the trust held at that time by beneficiaries under the trust,
	(v) a trust under the terms of which, at that time, all or part of a person's interest in the trust is to be terminated with reference to a period of time (including a period of time determined with reference to the person's death), otherwise than as a consequence of terms of the trust under which an interest in the trust is to be terminated as a consequence of a distribution to the person (or the person's estate) of property of the trust if the fair market value of the property to be distributed is required to be commensurate with the fair market value of that interest immediately before the distribution, or
	(vi) a trust that, before that time and after December 17, 1999, has made a distribution to a beneficiary in respect of the beneficiary's capital interest in the trust, if the distribution can reasonably be considered to have been financed by a liability of the trust and one of the purposes of incurring the liability was to avoid taxes otherwise payable under this Part as a consequence of the death of any individual.
	(8) Subsection 108(1) of the Act is amended by adding the following in alphabetical order:
``eligible offset'' « montant de réduction admissible »	``eligible offset'' at any time of a taxpayer in respect of all or part of the taxpayer's capital interest in a trust is the portion of any debt or obligation that is assumed by the taxpayer and that can reasonably be considered to be applicable to property distributed at that time in satisfaction of the interest or part of the interest, as the case may be, if the distribution is conditional upon the assumption by the taxpayer of the portion of the debt or obligation;
``exempt property'' « bien exonéré »	``exempt property'' of a taxpayer at any time means property any income or gain from the disposition of which by the taxpayer at that time would, because the taxpayer is non-resident or because of a provision contained in a tax treaty, not cause an increase in the taxpayer's tax payable under this Part;
	(9) Paragraph 108(2)(b) of the Act is replaced by the following:
	(b) each of the following conditions was satisfied:
	(i) throughout the taxation year that includes the particular time (in this paragraph referred to as the ``current year''), the trust was resident in Canada,
	(ii) throughout the period or periods (in this paragraph referred to as the ``relevant periods'') that are in the current year and throughout which the conditions in paragraph (a) are not satisfied in respect of the trust, its only undertaking was
	(A) the investing of its funds in property (other than real property or an interest in real property),
	(B) the acquiring, holding, maintaining, improving, leasing or managing of any real property or an interest in real property, that is capital property of the trust, or
	(C) any combination of the activities described in clauses (A) and (B),
	(iii) throughout the relevant periods at least 80% of its property consisted of any combination of
	(A) shares,
	(B) any property that, under the terms or conditions of which or under an agreement, is convertible into, is exchangeable for or confers a right to acquire, shares,
	(C) cash,
	(D) bonds, debentures, mortgages, hypothecary claims, notes and other similar obligations,
	(E) marketable securities,
	(F) real property situated in Canada and interests in real property situated in Canada, and
	(G) rights to and interests in any rental or royalty computed by reference to the amount or value of production from a natural accumulation of petroleum or natural gas in Canada, from an oil or gas well in Canada or from a mineral resource in Canada,
	(iv) either
	(A) not less than 95% of its income for the current year (computed without regard to subsections 49(2.1) and 104(6)) was derived from, or from the disposition of, investments described in subparagraph (iii), or
	(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),
	(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
	(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
	(10) The portion of subsection 108(3) of the Act before paragraph (a) is replaced by the following:
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
	(11) Subsection 108(4) of the Act is replaced by the following:
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
	(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
	(b) any income or profits tax payable by the trust in respect of any income of the trust.
	(12) Subsection 108(6) of the Act is replaced by the following:
Variation of trusts	(6) Where at any time the terms of a trust are varied
	(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;
	(b) for greater certainty, paragraph (a) does not affect the application of paragraph 104(4)(a.1); and
	(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.
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),
	(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
	(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
	(i) one person, or
	(ii) two or more persons who would be related to each other if
	(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
	(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,
	any beneficial interest in the particular trust acquired by such a person is deemed to have been acquired for no consideration.
	(13) Subsection (1) and subsection 108(6) of the Act, as enacted by subsection (12), apply to the 2000 and subsequent taxation years.
	(14) Subsection (2) and the definition ``eligible offset'' in subsection 108(1) of the Act, as enacted by subsection (8), apply after 1999.
	(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.
	(16) Subsection (4) applies to the 1993 and subsequent taxation years.
	(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.
	(18) Subsection (6) applies to the 1999 and subsequent taxation years.
	(19) Subsections (7) and (9) apply to the 1998 and subsequent taxation years, except that
	(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
	(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:
	(v) a trust any interest in which may become effective in the future, or
	(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''.
	(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.
	(22) Subsection 108(7) of the Act, as enacted by subsection (12), applies after December 23, 1998.
	84. (1) The portion of paragraph 110(1)(d) of the Act before subparagraph (i) is replaced by the following:
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
	(2) Subparagraphs 110(1)(d)(ii) and (iii) of the Act are replaced by the following:
	(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,
	(A) the amount payable by the taxpayer to acquire the security under the agreement is not less than the amount by which
	(I) the fair market value of the security at the time the agreement was made
	exceeds
	(II) the amount, if any, paid by the taxpayer to acquire the right to acquire the security, and
	(B) at the time immediately after the agreement was made, the taxpayer was dealing at arm's length with
	(I) the particular qualifying person,
	(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
	(III) the qualifying person of which the taxpayer had, under the agreement, a right to acquire a security, and
	(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,
	(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,
	(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
	(I) the qualifying person that made the original agreement,
	(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
	(III) the qualifying person of which the taxpayer had, under the original agreement, a right to acquire a security,
	(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
	(I) the fair market value of the particular security at the time the original agreement was made
	exceeded
	(II) the amount, if any, paid by the taxpayer to acquire the right to acquire the security, and
	(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,
	(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
	was not less than
	(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;
	(3) Subsection 110(1) of the Act is amended by adding the following after paragraph (d):