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(n) where the election made under
paragraph 104(21.4)(d) of the Act, as
enacted by subsection 78(23), or
subsection 104(21.5) of the Act, as
enacted by subsection 78(23), for the year
was made by a personal trust, the portion
of the taxpayer's net capital gains for the
year that are to be treated as being in
respect of capital gains realized on
dispositions of property that occurred in
a particular period in the year is that
proportion of those net capital gains that
the number of days in the particular
period is of the number of days that are in
all periods in the year in which a net gain
was realized,
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(o) where an amount is designated under
subsection 104(21) of the Act in respect of
a beneficiary by a trust in respect of the
net taxable capital gains of the trust for a
taxation year of the trust and the trust
does not elect under paragraph
104(21.4)(d) of the Act, as enacted by
subsection 78(23), for the year, the
deemed gains of the beneficiary referred
to in subsection 104(21.4) of the Act, as
enacted by subsection 78(23), are deemed
to have been realized in each period in the
year in a proportion that is equal to the
same proportion that the net capital gains
of the trust realized by the trust in that
period is of all the net capital gains
realized by the trust in the year,
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(p) where in the course of administering
the estate of a deceased taxpayer, a
capital loss from a disposition of property
by the legal representative of a deceased
taxpayer is deemed under paragraph
164(6)(c) of the Act to be a capital loss of
the deceased taxpayer from the
disposition of property by the taxpayer in
the taxpayer's last taxation year and not
to be a capital loss of the estate, the
capital loss is deemed to be from the
disposition of a property by the taxpayer
immediately before the taxpayer's death,
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(q) each capital gain referred to in
paragraph 104(21.4)(a) of the Act, as
enacted by subsection 78(23), in respect
of a beneficiary, shall be determined as if
that paragraph were read without
reference to subparagraph
104(21.4)(a)(ii) of the Act,
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(r) where no capital gains or losses are
realized in a period, the amount of net
capital gains or losses for that period is
deemed to be nil,
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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 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;
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(a.1) for a taxation year that began after
February 28, 2000 and ended before
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 the fraction
``1/3''; 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 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
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 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) or (21.7)(b)(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 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 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 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
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(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 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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