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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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(iii.1) 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 begins after
February 27, 2000 and ends after October
17, 2000, 9/8 of the dividend is deemed
to be a capital gain of the taxpayer from
the disposition by the taxpayer of capital
property in the year and before October
18, 2000,
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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 in the period that
began after February 27, 2000 and ended
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 are
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,
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(viii.1) capital gains redemptions are
deemed to be made in respect of net
capital gains in the order in which those
net capital gains were realized by the
corporation to the extent that they are not
reduced by dividends, and
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(ix) for the purposes of applying
subparagraphs (viii) and (viii.1)
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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 paragraph (1)(b) 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 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 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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(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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(1.8) For the purposes of subsection (1.6)
and (1.7), where the total amount of dividends
paid by a mutual fund corporation in the
period that begins 60 days after the beginning
of the corporation's taxation year that includes
February 28, 2000 or October 17, 2000 and
ends 60 days after the end of that year and to
which subsection (1) applies exceeds the total
amount of the corporation's net capital gains
from dispositions of property in that year
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(a) the amount of those dividends to which
subsections (1.6) and (1.7) apply is the
amount of the corporation's net capital
gains from dispositions of property in that
year, and
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(b) the amount, if any, by which total
amount of the dividends paid by the
corporation in the period exceeds the total
amount of the corporation's net capital
gains from dispositions of property in that
year is deemed to be a dividend in respect
of capital gains from dispositions of
property in the first of the periods described
in subsection (1.6) that ends in the year.
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| Allocation
|
(1.9) Where no dividend to which
subsection (1.7) applies is paid by a mutual
fund corporation in respect of its net taxable
capital gains for its taxation year that includes
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 mutual fund
corporation from dispositions of property in
the 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 mutual fund
corporation from dispositions of property in
the 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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(3) Paragraph 131(2)(a) of the Act is
replaced by the following:
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(a) may, on sending the notice of
assessment for the year, refund an amount
(in this subsection referred to as its ``capital
gains refund'' for the year) equal to the
lesser of
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(I) all capital gains dividends paid
by the corporation in the period
commencing 60 days after the
beginning of the year and ending 60
days after the end of the year, and
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(II) its capital gains redemptions for
the year, and
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(B) the amount, if any, that the
Minister determines to be reasonable
in the circumstances, after giving
consideration to the percentages
applicable in determining the
corporation's capital gains refund for
the year and preceding taxation years
and the percentages applicable in
determining the corporation's
refundable capital gains tax on hand at
the end of the year, and
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(ii) the corporation's refundable capital
gains tax on hand at the end of the year;
and
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(4) Subparagraph (b)(iii) of the definition
``capital gains dividend account'' in
subsection 131(6) of the Act is replaced by
the following:
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(iii) the total of all amounts each of
which is
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(A) an amount equal to 100/21 of its
capital gains refund for any taxation
year throughout which it was a
mutual fund corporation where the
year ended
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(I) more than 60 days before that
time, and
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(II) before February 28, 2000,
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(B) an amount equal to 100/18.7 of
its capital gains refund for any
taxation year throughout which it
was a mutual fund corporation
where the year ended
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(I) more than 60 days before that
time, and
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(II) after February 27, 2000 and
before October 18, 2000, or
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(C) an amount equal to 100/14 of its
capital gain refund for any taxation
year throughout which it was a
mutual fund corporation where the
year ended
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(I) more than 60 days before that
time, and
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(II) after October 17, 2000;
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(5) The description of C in the definition
``capital gains redemptions'' in subsection
131(6) of the Act is amended by replacing
the reference to the fraction ``100/21'' with
a reference to the fraction ``100/14''.
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(6) Paragraph 131(8.1)(a) of the Act is
replaced by the following:
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(a) throughout the period that begins on the
later of February 21, 1990 and the day of its
incorporation and ends at that time, all or
substantially all of its property consisted of
property other than property that would be
taxable Canadian property if the definition
``taxable Canadian property'' in subsection
248(1) were read without reference to
paragraph (b) of that definition; or
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(7) Subsections (1) to (5) apply to taxation
years that end after February 27, 2000
except that, for a taxation year of a mutual
fund corporation 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 percentage
``14%'' in clause 131(2)(a)(i)(A) of the
Act, as enacted by subsection (3), shall be
read as a reference to the percentage
determined when 28% is multiplied by
the fraction in paragraph 38(a) of the
Act, as enacted by subsection 22(1), that
applies to the corporation for the year;
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(b) the reference to the fraction
``100/18.7'' in clause (b)(iii)(B) and the
fraction ``100/14'' in clause (b)(iii)(C) of
the definition ``capital gains dividend
account'' in subsection 131(6) of the Act,
as enacted by subsection (4), shall be read
as a reference to the fraction ``100/28X'',
where ``X'' is 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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(c) the reference to the fraction ``100/14''
in the description of C in the definition
``capital gains redemptions'' in
subsection 131(6) of the Act, as enacted
by subsection (5), shall be read as a
reference to the fraction ``100/28X'',
where ``X'' is the fraction in paragraph
38(a) of the Act, as enacted by subsection
22(1), that applies to the corporation for
the year.
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(8) Subsection (6) applies after October 1,
1996.
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129. (1) Paragraph 132(1)(a) of the Act is
replaced by the following:
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(a) may, on sending the notice of
assessment for the year, refund an amount
(in this subsection referred to as its ``capital
gains refund'' for the year) equal to the
lesser of
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(A) 14.5% of the total of the trust's
capital gains redemptions for the year,
and
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(B) the amount, if any, that the
Minister determines to be reasonable
in the circumstances, after giving
consideration to the percentages
applicable in determining the trust's
capital gains refunds for the year and
preceding taxation years and the
percentages applicable in determining
the trust's refundable capital gains tax
on hand at the end of the year, and
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(ii) the trust's refundable capital gains tax
on hand at the end of the year; and
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(2) The first formula in the definition
``capital gains redemptions'' in subsection
132(4) of the Act is replaced by the
following:
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(A/B x (C + D)) - E
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(3) The description of A in the definition
``capital gains redemptions'' in subsection
132(4) of the Act is replaced by the
following:
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A is the total of all amounts each of which
is the portion of an amount paid by the
trust in the year on the redemption of a
unit in the trust that is included in the
proceeds of disposition in respect of that
redemption,
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(4) The description of C in the definition
``capital gains redemptions'' in subsection
132(4) of the Act is amended by replacing
the reference to the fraction ``100/21.75''
with a reference to the fraction ``100/14.5''.
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(5) The definition ``capital gains
redemptions'' in subsection 132(4) of the
Act is amended by striking out the word
``and'' at the end of the description of C, by
adding the word ``and'' at the end of the
description of D and by adding the
following after the description of D:
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E is twice the total of all amounts each of
which is an amount designated under
subsection 104(21) for the year by the
trust in respect of a unit of the trust
redeemed by the trust at any time in the
year and after December 21, 2000;
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(6) Section 132 of the Act is amended by
adding the following after subsection (6.1):
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| Retention of
status as
mutual fund
trust
|
(6.2) A trust is deemed to be a mutual fund
trust throughout a calendar year where
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(a) at any time in the year, the trust would,
if this section were read without reference
to this subsection, have ceased to be a
mutual fund trust
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(i) because the condition described in
paragraph 108(2)(a) ceased to be
satisfied,
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