(ii) for the purpose of computing the tax payable under Part XIII by the taxpayer, included in an amount that was paid or credited to the taxpayer,
	for the purposes of this subdivision, the amount so included shall be added in computing the cost to the taxpayer of the property, except to the extent that the amount was otherwise added to the cost or included in computing the adjusted cost base to the taxpayer of the property.
	(2) Subsection 52(6) of the Act is repealed.
	(3) Subsection (1) applies after 1999 except that, in respect of property acquired before 2000 and disposed of before March 2000, paragraph 52(1)(a) of the Act, as enacted by that subsection, shall be read as follows:
	(a) a taxpayer acquired property after 1971 (other than an annuity contract or property acquired as described in subsection (2), (3) or (6)), and
	(4) Subsection (2) applies after 1999, but not to rights that were acquired before 2000 and disposed of before March 2000.
	36. (1) Clauses 53(1)(e)(i)(A) and (A.1) of the Act are replaced by the following:
	(A) the fractions set out in subsection 14(5), paragraphs 38(a) to (a.2), subsection 41(1) and in the formula in paragraph 14(1)(b),
	(A.1) paragraph 18(1)(l.1),
	(A.2) the description of C in the formula in paragraph 14(1)(b), and
	(2) Paragraph 53(1)(j) of the Act is replaced by the following:
Share or fund unit taxed as stock option benefit	(j) if the property is a security (within the meaning assigned by subsection 7(7)) and, in respect of its acquisition by the taxpayer, a benefit was deemed by section 7 to have been received in any taxation year that ends after 1971 and begins before that time by the taxpayer or by a person that did not deal at arm's length with the taxpayer or, if the security was acquired after February 27, 2000, would have been so deemed if section 7 were read without reference to subsections 7(1.1) and (8), the amount of the benefit that was, or would have been, so deemed to have been received;
	(3) Subparagraph (ii) of the description of A in paragraph 53(1)(r) of the Act is amended by replacing the reference to the expression ``4/3 of'' with a reference to the word ``twice''.
	(4) Paragraph 53(2)(a) of the Act is amended by striking out the word ``and'' at the end of subparagraph (iii), by adding the word ``and'' at the end of subparagraph (iv) and by adding the following after subparagraph (iv):
	(v) any amount required by paragraph 44.1(2)(b) to be deducted in computing the adjusted cost base to the taxpayer of the share;
	(5) Clauses 53(2)(c)(i)(A) and (A.1) of the Act are replaced by the following:
	(A) the fractions set out in subsection 14(5), paragraph 38(b) and in the formula in paragraph 14(1)(b),
	(A.1) paragraph 18(1)(l.1),
	(A.2) the description of C in the formula in paragraph 14(1)(b),
	(6) Clause 53(2)(c)(ii)(B) of the Act is replaced by the following:
	(B) the Canadian exploration and development expenses and foreign resource pool expenses, if any, incurred by the partnership in the fiscal period,
	(7) The portion of paragraph 53(2)(h) of the Act before subparagraph (i) is replaced by the following:
	(h) where the property is a capital interest of the taxpayer in a trust (other than an interest in a personal trust that has never been acquired for consideration or an interest of a taxpayer in a trust described in any of paragraphs (a) to (e.1) of the definition ``trust'' in subsection 108(1)),
	(8) Subclause 53(2)(h)(i.1)(B)(I) of the Act is amended by striking out the reference to the expression ``1/3 of''.
	(9) The portion of paragraph 53(2)(i) of the Act before subparagraph (i) is replaced by the following:
	(i) where the property is a capital interest in a trust (other than a unit trust) not resident in Canada that was purchased after 1971 and before that time by the taxpayer from a non-resident person at a time (in this paragraph referred to as the ``purchase time'') when the property was not taxable Canadian property and the fair market value of such of the trust property as was
	(10) The portion of paragraph 53(2)(i) of the Act after subparagraph (v) is replaced by the following:
	was not less than 50% of the fair market value of all the trust property, that proportion of the amount, if any, by which
	(vi) the fair market value at the purchase time of such of the trust properties as were properties described in any of subparagraphs (i) to (v)
	exceeds
	(vii) the total of the cost amounts to the trust at the purchase time of such of the trust properties as were properties described in any of subparagraphs (i) to (v),
	that the fair market value at the purchase time of the interest is of the fair market value at the purchase time of all capital interests in the trust;
	(11) The portion of paragraph 53(2)(j) of the Act before subparagraph (i) is replaced by the following:
	(j) where the property is a unit of a unit trust not resident in Canada that was purchased after 1971 and before that time by the taxpayer from a non-resident person at a time (in this paragraph referred to as the ``purchase time'') when the property was not taxable Canadian property and the fair market value of such of the trust property as was
	(12) The portion of paragraph 53(2)(j) of the Act after subparagraph (v) is replaced by the following:
	was not less than 50% of the fair market value of all the trust property, that proportion of the amount, if any, by which
	(vi) the fair market value at the purchase time of such of the trust properties as were properties described in any of subparagraphs (i) to (v)
	exceeds
	(vii) the total of the cost amounts to the trust at the purchase time of such of the trust properties as were properties described in any of subparagraphs (i) to (v),
	that the fair market value at the purchase time of the unit is of the fair market value at the purchase time of all the issued units of the trust;
	(13) Subsection 53(3) of the Act is repealed.
	(14) The portion of subsection 53(4) of the Act before paragraph (a) is replaced by the following:
Recomputa- tion of adjusted cost base on transfers and deemed dispositions	(4) Where at any time in a taxation year a person or partnership (in this subsection referred to as the ``vendor'') disposes of a specified property and the proceeds of disposition of the property are determined under paragraph 48.1(1)(c), section 70 or 73, subsection 85(1), paragraph 87(4)(a) or (c) or 88(1)(a), subsection 97(2) or 98(2), paragraph 98(3)(f) or (5)(f), subsection 104(4), paragraph 107(2)(a), (2.1)(a), (4)(d) or (5)(a), 107.4(3)(a) or 111(4)(e) or section 128.1,
	(15) Subsections (1) and (5) apply in respect of fiscal periods that end after February 27, 2000 and, for fiscal periods that ended after February 18, 1997 and before February 28, 2000, clause 53(1)(e)(i)(A) of the Act, as enacted by subsection (1), shall be read as follows:
	(A) the fractions set out in subsection 14(5), paragraphs 38(a) and (a.1) and subsection 41(1),
	(16) Subsection (2) applies after 1999.
	(17) Subsection (3) applies to taxation years that end after February 27, 2000 except that, in applying paragraph 53(1)(r) of the Act, as enacted by subsection (3), for those years in respect of a taxpayer's interest in an entity, where a taxation year of the entity that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, ends in the taxpayer's taxation year, the reference to the word ``twice'' in subparagraph (ii) of the description of A in that paragraph 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 in respect of the entity for its taxation year, multiplied by''.
	(18) Subsection (4) applies to dispositions that occur after February 27, 2000.
	(19) Subsection (6) applies to taxation years that begin after 2000.
	(20) Subsection (7) applies to amounts that become payable after 1999.
	(21) Subsection (8) applies to taxation years that end after February 27, 2000 except that, in applying subclause 53(2)(h)(i.1)(B)(I) of the Act, as enacted by subsection (8), for those years in respect of a taxpayer's interest in a trust, where a taxation year of the trust that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, ends in the taxpayer's taxation year, the reference to the expression ``that is equal to the'' in that subclause shall be read as a reference to the expression ``that is equal to the fraction obtained when 1 is subtracted from 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 trust for its taxation year, multiplied by''.
	(22) Subsections (9) to (12) apply for the purpose of computing the adjusted cost base of property after April 26, 1995.
	(23) Subsection (13) applies after October 1, 1996.
	(24) Subsection (14) applies to the 1998 and subsequent taxation years.
	37. (1) The definition ``disposition'' in section 54 of the Act is repealed.
	(2) Paragraph (c) of the definition ``principal residence'' in section 54 of the Act is replaced by the following:
	(c) where the taxpayer is an individual other than a personal trust, unless the particular property was designated by the taxpayer in prescribed form and manner to be the taxpayer's principal residence for the year and no other property has been designated for the purposes of this definition for the year
	(i) where the year is before 1982, by the taxpayer, or
	(ii) where the year is after 1981,
	(A) by the taxpayer,
	(B) by a person who was throughout the year the taxpayer's spouse or common-law partner (other than a spouse or common-law partner who was throughout the year living apart from, and was separated under a judicial separation or written separation agreement from, the taxpayer),
	(C) by a person who was the taxpayer's child (other than a child who was at any time in the year a married person, a person who is in a common-law partnership or 18 years of age or older), or
	(D) where the taxpayer was not at any time in the year a married person, a person who is in a common-law partnership or 18 years of age or older, by a person who was the taxpayer's
	(I) mother or father, or
	(II) brother or sister, where that brother or sister was not at any time in the year a married person, a person who is in a common-law partnership or 18 years of age or older,
	(3) Subsection (1) applies to transactions and events that occur after December 23, 1998.
	(4) Subsection (2) applies to dispositions that occur after 1990 except that clauses (c)(ii)(B) to (D) of the definition ``principal residence'' in section 54 of the Act, as enacted by subsection (2), shall be read without reference to ``or common-law partner'' and ``a person who is in a common-law partnership'' in their application to dispositions made by a taxpayer that occur in a taxation year that is before 2001 and
	(a) before 1998; or
	(b) after 1997, unless a valid election is made by the taxpayer under section 144 of the Modernization of Benefits and Obligations Act, that that Act apply to the taxpayer in respect of one or more taxation years that include the year.
	38. (1) Subsection 55(1) of the Act is amended by adding the following in alphabetical order:
``specified corporation'' « société déterminée »	``specified corporation'' in relation to a distribution means a distributing corporation
	(a) that is a public corporation or a specified wholly-owned corporation of a public corporation,
	(b) shares of the capital stock of which are exchanged for shares of the capital stock of another corporation (referred to in this definition and subsection (3.02) as an ``acquiror'') in an exchange to which the definition ``permitted exchange'' in this subsection would apply if that definition were read without reference to paragraph (a) and subparagraph (b)(ii) of that definition,
	(c) that does not make a distribution, to a corporation that is not an acquiror, after 1998 and before the day that is three years after the day on which the shares of the capital stock of the distributing corporation are exchanged in a transaction described in paragraph (b), and
	(d) no acquiror in relation to which makes a distribution after 1998 and before the day that is three years after the day on which the shares of the capital stock of the distributing corporation are exchanged in a transaction described in paragraph (b),
	and, for the purposes of paragraphs (c) and (d),
	(e) a corporation that is formed by an amalgamation of two or more other corporations is deemed to be the same corporation as, and a continuation of, each of the other corporations, and
	(f) where there has been a winding-up of a corporation to which subsection 88(1) applies, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary;
``specified wholly-owned corporation'' « filiale à cent pour cent déterminée »	``specified wholly-owned corporation'' of a public corporation means a corporation all of the outstanding shares of the capital stock of which (other than directors' qualifying shares and shares of a specified class) are held by
	(a) the public corporation,
	(b) a specified wholly-owned corporation of the public corporation, or
	(c) any combination of corporations described in paragraph (a) or (b).
	(2) Section 55 of the Act is amended by adding the following after subsection (3.01):
Distribution by a specified corporation	(3.02) For the purposes of the definition ``distribution'' in subsection (1), where the transfer referred to in that definition is by a specified corporation to an acquiror described in the definition ``specified corporation'' in subsection (1), the references in the definition ``distribution'' to
	(a) ``each type of property'' shall be read as ``property''; and