(3) Section 40 of the Act is amended by adding the following after subsection (3.6):
Losses of non-resident	(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,
	(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
	(b) an amount on account of
	(i) each taxable dividend received by the individual at a particular time described in paragraph (a), and
	(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,
	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.
	(4) The portion of subsection 40(9) of the Act before the formula is replaced by the following:
Additions to taxable Canadian property	(9) If a non-resident person disposes of a taxable Canadian property
	(a) that the person last acquired before April 27, 1995,
	(b) that would not be a taxable Canadian property immediately before the disposition if section 115 were read as it applied to dispositions that occurred on April 26, 1995, and
	(c) that would be a taxable Canadian property immediately before the disposition if section 115 were read as it applied to dispositions that occurred on January 1, 1996,
	the person's gain or loss from the disposition is deemed to be the amount determined by the formula
	(5) Subsection (1) applies to the 1998 and subsequent taxation years.
	(6) Subsection (2) applies after 1997.
	(7) Subsection (3) applies to dispositions after December 23, 1998 by individuals who cease to be resident in Canada after October 1, 1996.
	(8) Subsection (4) applies to dispositions that occur after April 26, 1995.
	26. (1) Subsection 41(1) of the Act is amended by replacing the reference to the fraction ``3/4'' with a reference to the fraction ``1/2''.
	(2) Subsection (1) applies to taxation years that end after February 27, 2000 except that, for taxation years that include 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 41(1) 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 taxpayer for the year.
	27. (1) Section 43 of the Act is replaced by the following:
General rule for part dispositions	43. (1) For the purpose of computing a taxpayer's gain or loss for a taxation year from the disposition of part of a property, the adjusted cost base to the taxpayer, immediately before the disposition, of that part is the portion of the adjusted cost base to the taxpayer at that time of the whole property that can reasonably be regarded as attributable to that part.
Ecological gifts	(2) For the purposes of subsection (1) and section 53, where at any time a taxpayer disposes of a servitude, covenant or easement to which land is subject in circumstances where subsection 110.1(5) or 118.1(12) applies,
	(a) the portion of the adjusted cost base to the taxpayer of the land immediately before the disposition that can reasonably be regarded as attributable to the servitude, covenant or easement, as the case may be, is deemed to be equal to the amount determined by the formula
	A x B/C
	where
	A is the adjusted cost base to the taxpayer of the land immediately before the disposition,
	B is the amount determined under subsection 110.1(5) or 118.1(12) in respect of the disposition, and
	C is the fair market value of the land immediately before the disposition; and
	(b) for greater certainty, the cost to the taxpayer of the land shall be reduced at the time of the disposition by the amount determined under paragraph (a).
Payments out of trust income, etc.	(3) Notwithstanding subsection (1), where part of a capital interest of a taxpayer in a trust would, but for paragraph (h) or (i) of the definition ``disposition'' in subsection 248(1), be disposed of solely because of the satisfaction of a right to enforce payment of an amount by the trust, no part of the adjusted cost base to the taxpayer of the taxpayer's capital interest in the trust shall be allocated to that part of the capital interest.
	(2) Subsection 43(1) of the Act, as enacted by subsection (1), applies after February 27, 1995.
	(3) Subsection 43(2) of the Act, as enacted by subsection (1), applies in respect of gifts made after February 27, 1995.
	(4) Subsection 43(3) of the Act, as enacted by subsection (1), applies to satisfactions of rights that occur after 1999.
	28. (1) The portion of subsection 44(1) of the Act before paragraph (a) is replaced by the following:
Exchanges of property	44. (1) Where at any time in a taxation year (in this subsection referred to as the ``initial year'') an amount has become receivable by a taxpayer as proceeds of disposition of a capital property that is not a share of the capital stock of a corporation (which capital property is in this section referred to as the taxpayer's ``former property'') that is either
	(2) Subsection (1) applies to shares disposed of after April 15, 1999, other than shares disposed of after that date as a consequence of a public takeover bid or offer filed with a public authority before April 16, 1999.
	29. (1) The Act is amended by adding the following after section 44:
Definitions	44.1 (1) The definitions in this subsection apply in this section.
``ACB reduction'' « réduction du prix de base rajusté »	``ACB reduction'' of an individual in respect of a replacement share of the individual in respect of a qualifying disposition of the individual means the amount determined by the formula
	D x (E/F)
	where
	D is the permitted deferral of the individual in respect of the qualifying disposition;
	E is the qualifying cost to the individual of the replacement share; and
	F is the qualifying cost to the individual of all the replacement shares of the individual in respect of the qualifying disposition.
``active business corporation'' « société exploitant activement une entreprise »	``active business corporation'' at any time means, subject to subsection (10), a corporation that is, at that time, a taxable Canadian corporation all or substantially all of the fair market value of the assets of which at that time is attributable to assets of the corporation that are
	(a) assets used principally in an active business carried on by the corporation or by an active business corporation that is related to the corporation;
	(b) shares issued by or debt owing by other active business corporations that are related to the corporation; or
	(c) a combination of assets described in paragraphs (a) and (b).
``carrying value'' « valeur comptable »	``carrying value'' of the assets of a corporation at any time means the amount at which the assets of the corporation would be valued for the purpose of the corporation's balance sheet as of that time if that balance sheet were prepared in accordance with generally accepted accounting principles used in Canada at that time, except that an asset of a corporation that is a share or debt issued by a related corporation is deemed to have a carrying value of nil.
``common share'' « action ordinaire »	``common share'' means a share prescribed for the purpose of paragraph 110(1)(d).
``eligible pooling arrangement'' « arrangemen t admissible de mise en commun »	``eligible pooling arrangement'' in respect of an individual means an agreement in writing made between the individual and another person or partnership (which other person or partnership is referred to in this definition and subsection (3) as the ``investment manager'') where the agreement provides for
	(a) the transfer of funds or other property by the individual to the investment manager for the purpose of making investments on behalf of the individual;
	(b) the purchase of eligible small business corporation shares with those funds, or the proceeds of a disposition of the other property, within 60 days after receipt of those funds or the other property by the investment manager; and
	(c) the provision of a statement of account to the individual by the investment manager at the end of each month that ends after the transfer disclosing the details of the investment portfolio held by the investment manager on behalf of the individual at the end of that month and the details of the transactions made by the investment manager on behalf of the individual during the month.
``eligible small business corporation'' « société admissible exploitant une petite entreprise »	``eligible small business corporation'' at any time means, subject to subsection (10), a corporation that, at that time, is a Canadian-controlled private corporation all or substantially all of the fair market value of the assets of which at that time is attributable to assets of the corporation that are
	(a) assets used principally in an active business carried on primarily in Canada by the corporation or by an eligible small business corporation that is related to the corporation;
	(b) shares issued by or debt owing by other eligible small business corporations that are related to the corporation; or
	(c) a combination of assets described in paragraphs (a) and (b).
``eligible small business corporation share'' « action déterminée de petite entreprise »	``eligible small business corporation share'' of an individual means a common share issued by a corporation to the individual if
	(a) at the time the share was issued, the corporation was an eligible small business corporation; and
	(b) immediately before and after the share was issued, the total carrying value of the assets of the corporation and corporations related to it did not exceed $50,000,000.
``permitted deferral'' « montant de report autorisé »	``permitted deferral'' of an individual in respect of a qualifying disposition of the individual means the amount determined by the formula
	(G/H) x I
	where
	G is the lesser of the amount included in the description of H and the total of all amounts each of which is the qualifying cost to the individual of a replacement share in respect of the qualifying disposition;
	H is the qualifying portion of the individual's proceeds of disposition from the qualifying disposition; and
	I is the qualifying portion of the individual's capital gain from the qualifying disposition.
``qualifying cost'' « coût admissible »	``qualifying cost'' to an individual of particular replacement shares of the individual in respect of a qualifying disposition of the individual that are shares of the capital stock of a particular eligible small business corporation means the lesser of
	(a) the total of all amounts each of which is the cost to the individual of such a replacement share; and
	(b) the amount by which $2,000,000 exceeds the total of all amounts each of which is the cost to the individual of a share that was a share of the capital stock of the particular eligible small business corporation or of a corporation related to it at the time the particular replacement shares were acquired and that was a replacement share of the individual in respect of another qualifying disposition.
``qualifying disposition'' « disposition admissible »	``qualifying disposition'' of an individual (other than a trust) means, subject to subsection (9), a disposition of shares of the capital stock of a corporation where each such share disposed of was
	(a) an eligible small business corporation share of the individual;
	(b) throughout the period during which the individual owned the share, a common share of an active business corporation; and
	(c) throughout the 185-day period that ended immediately before the disposition of the share, owned by the individual.
``qualifying portion of a capital gain'' « partie admissible d'un gain en capital »	``qualifying portion of a capital gain'' of an individual from a particular qualifying disposition of the individual means the amount determined by the formula
	J x (1 - (K/L))
	where
	J is the individual's capital gain from the particular qualifying disposition, determined without reference to this section;
	K is the amount, if any, by which the total of
	(a) the total of all amounts each of which is the adjusted cost base to the individual of a share of a particular corporation that was the subject of the particular qualifying disposition (which adjusted cost base shall be determined immediately before the share was disposed of and without reference to this section), and
	(b) the total of all amounts each of which is the adjusted cost base to the individual of a share of the particular corporation or a corporation related to it at the time of the particular qualifying disposition that was the subject of another qualifying disposition (in respect of which a permitted deferral was deducted under this section by the individual) that occurred at or before the time of the particular qualifying disposition (which adjusted cost base shall be determined immediately before the share was disposed of and without reference to this section)
	exceeds
	(c) $2,000,000; and
	L is the total of all amounts each of which is the adjusted cost base to the individual of a share of the particular corporation that was the subject of the particular qualifying disposition (which adjusted cost base shall be determined immediately before the share was disposed of and without reference to this section).
``qualifying portion of the proceeds of disposition'' « partie admissible du produit de disposition »	``qualifying portion of the proceeds of disposition'' of an individual from a qualifying disposition means the amount determined by the formula
	M x (N/O)
	where