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C is the total of
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(a) the total of all amounts each of which
is the amount by which an allowable
capital loss (determined without
reference to this section), of a
corporation or foreign affiliate described
in the description of B from a disposition
at or before that time by a partnership of
the affiliate share or a share for which the
affiliate share was substituted, was
reduced under this subsection in respect
of the exempt dividends referred to in the
description of B,
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(b) the total of all amounts each of which
is 3/4 of the amount by which a loss
(determined without reference to this
section), of a corporation or foreign
affiliate described in the description of B
from another disposition at or before that
time of the affiliate share or a share for
which the affiliate share was substituted,
was reduced under subsection (2) in
respect of the exempt dividends referred
to in the description of B,
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(c) the total of all amounts each of which
is 3/4 of the amount by which a loss
(determined without reference to this
section), from a disposition at or before
that time by a corporation or foreign
affiliate described in the description of B
of an interest in a partnership, was
reduced under subsection (2.2) in respect
of the exempt dividends referred to in the
description of B, and
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(d) the total of all amounts each of which
is the amount by which an allowable
capital loss (determined without
reference to this section), of a
corporation or foreign affiliate described
in the description of B from a disposition
at or before that time by a partnership of
an interest in another partnership, was
reduced under subsection (2.3) in respect
of exempt dividends referred to in the
description of B.
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| Loss
limitation -
disposition of
partnership
interest
|
(2.2) Where
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(a) a corporation resident in Canada has a
loss from the disposition by it at any time of
an interest in a partnership (in this
subsection referred to as the ``partnership
interest''), which has a direct or indirect
interest in shares of the capital stock of a
foreign affiliate of the corporation resident
in Canada (in this subsection referred to as
``affiliate shares''), or
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(b) a foreign affiliate of a corporation
resident in Canada has a loss from the
disposition by it at any time of an interest in
a partnership (in this subsection referred to
as the ``partnership interest''), which has a
direct or indirect interest in shares of the
capital stock of another foreign affiliate of
the corporation resident in Canada that
would not be excluded property if the shares
were owned by the affiliate (in this
subsection referred to as ``affiliate shares''),
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the amount of the loss is deemed to be the
amount determined by the formula
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A - (B - C)
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where
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A is the amount of the loss determined
without reference to this subsection,
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B is the total of all amounts each of which
was received before that time, in respect of
an exempt dividend on affiliate shares or
on shares for which affiliate shares were
substituted, by
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(a) the corporation resident in Canada,
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(b) a corporation related to the
corporation resident in Canada,
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(c) a foreign affiliate of the corporation
resident in Canada, or
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(d) a foreign affiliate of a corporation
related to the corporation resident in
Canada, and
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|
C is the total of
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(a) the total of all amounts each of which
is the amount by which a loss
(determined without reference to this
section), from another disposition at or
before that time by a corporation or
foreign affiliate described in the
description of B of affiliate shares or
shares for which affiliate shares were
substituted, was reduced under
subsection (2) in respect of the exempt
dividends referred to in the description of
B,
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(b) the total of all amounts each of which
is 4/3 of the amount by which an
allowable capital loss (determined
without reference to this section), of a
corporation or foreign affiliate described
in the description of B from another
disposition at or before that time by a
partnership of affiliate shares or shares
for which affiliate shares were
substituted, was reduced under
subsection (2.1) in respect of the exempt
dividends referred to in the description of
B,
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(c) the total of all amounts each of which
is the amount by which a loss
(determined without reference to this
section), from a disposition at or before
that time by a corporation or foreign
affiliate described in the description of B
of an interest in a partnership, was
reduced under this subsection in respect
of the exempt dividends referred to in the
description of B, and
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(d) the total of all amounts each of which
is 4/3 of the amount by which an
allowable capital loss (determined
without reference to this section), of a
corporation or foreign affiliate described
in the description of B from a disposition
at or before that time by a partnership of
an interest in another partnership, was
reduced under subsection (2.3) in respect
of the exempt dividends referred to in the
description of B.
|
|
| Loss
limitation -
disposition of
partnership
interest
|
(2.3) Where
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|
(a) a corporation resident in Canada has an
allowable capital loss from a partnership
from a disposition at any time of an interest
in another partnership that has a direct or
indirect interest in shares of the capital
stock of a foreign affiliate of the corporation
resident in Canada (in this subsection
referred to as ``affiliate shares''), or
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(b) a foreign affiliate of a corporation
resident in Canada has an allowable capital
loss from a partnership from a disposition at
any time by a partnership of an interest in
another partnership that has a direct or
indirect interest in shares of the capital
stock of a foreign affiliate of the corporation
resident in Canada that would not be
excluded property of the affiliate if the
affiliate owned the shares immediately
before the disposition (in this subsection
referred to as ``affiliate shares''),
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the amount of the allowable capital loss is
deemed to be the amount determined by the
formula
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A - (B - C)
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where
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|
A is the amount of the allowable capital loss
determined without reference to this
subsection,
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|
B is 3/4 of the total of all amounts each of
which was received before that time, in
respect of an exempt dividend on affiliate
shares or on shares for which affiliate
shares were substituted, by
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|
(a) the corporation resident in Canada,
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|
(b) a corporation related to the
corporation resident in Canada,
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|
(c) a foreign affiliate of the corporation
resident in Canada, or
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|
(d) a foreign affiliate of a corporation
related to the corporation resident in
Canada, and
|
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|
C is the total of
|
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|
(a) the total of all amounts each of which
is 3/4 of the amount by which a loss
(determined without reference to this
section), of a corporation or foreign
affiliate described in the description of B
from another disposition at or before that
time of affiliate shares or shares for
which affiliate shares were substituted,
was reduced under subsection (2) in
respect of the exempt dividends referred
to in the description of B,
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(b) the total of all amounts each of which
is the amount by which an allowable
capital loss (determined without
reference to this section), of a
corporation or foreign affiliate described
in the description of B from a disposition
at or before that time by a partnership of
affiliate shares or shares for which
affiliate shares were substituted, was
reduced under subsection (2.1) in respect
of the exempt dividends referred to in the
description of B,
|
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|
(c) the total of all amounts each of which
is 3/4 of the amount by which a loss
(determined without reference to this
section), from a disposition at or before
that time by a corporation or foreign
affiliate described in the description of B
of an interest in a partnership, was
reduced under subsection (2.2) in respect
of the exempt dividends referred to in the
description of B, and
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(d) the total of all amounts each of which
is the amount by which an allowable
capital loss (determined without
reference to this section), of a
corporation or foreign affiliate described
in the description of B from a disposition
at or before that time by a partnership of
an interest in another partnership, was
reduced under this subsection in respect
of the exempt dividends referred to in the
description of B.
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(4) Subsection 93(1.2) of the Act, as
enacted by subsection (2), is amended by
replacing the reference to the expression
``4/3 of'' with a reference to the word
``twice''.
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|
(5) Subsection 93(2) of the Act, as enacted
by subsection (3), is amended by replacing
the references to the expression ``4/3 of''
with references to the word ``twice''.
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|
(6) Subsection 93(2.1) of the Act, as
enacted by subsection (3), is amended by
replacing the references to the fraction
``3/4'' with references to the fraction ``1/2''.
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(7) Subsection 93(2.2) of the Act, as
enacted by subsection (3), is amended by
replacing the references to the expression
``4/3 of'' with references to the word
``twice''.
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|
(8) Subsection 93(2.3) of the Act, as
enacted by subsection (3), is amended by
replacing the references to the fraction
``3/4'' with references to the fraction ``1/2''.
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|
(9) Subsection 93(3) of the Act is replaced
by the following:
|
|
| Exempt
dividends
|
(3) For the purposes of subsections (2) to
(2.3),
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(a) a dividend received by a corporation
resident in Canada is an exempt dividend to
the extent of the amount in respect of the
dividend that is deductible from the income
of the corporation for the purpose of
computing the taxable income of the
corporation because of paragraph
113(1)(a), (b) or (c); and
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(b) a dividend received by a particular
foreign affiliate of a corporation resident in
Canada from another foreign affiliate of the
corporation is an exempt dividend to the
extent of the amount, if any, by which the
portion of the dividend that was not
prescribed to have been paid out of the
pre-acquisition surplus of the other affiliate
exceeds the total of such portion of the
income or profits tax that can reasonably be
considered to have been paid in respect of
that portion of the dividend by the particular
affiliate or by a partnership in which the
particular affiliate had, at the time of the
payment of the income or profits tax, a
partnership interest, either directly or
indirectly.
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|
(10) Subsections (1) to (3) and (9) apply to
dispositions that occur after November
1999.
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|
(11) Subsections (4), (5) and (7) apply to
taxation years that end after February 27,
2000 except that, for a taxation year of a
taxpayer that includes February 28, 2000 or
October 17, 2000, or began after February
28, 2000 and ended before October 17,
2000, the references to the word ``twice'' in
subsection 93(2) of the Act, as enacted by
subsection (5), and in subsection 93(2.2) of
the Act, as enacted by subsection (7), shall
be read as references 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
taxpayer for the year, multiplied by''.
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|
(12) Subsections (6) and (8) apply to
taxation years that end after February 27,
2000 except that, for a taxation year of a
taxpayer that includes February 28, 2000 or
October 17, 2000, or began after February
28, 2000 and ended before October 17,
2000, the references to the fraction ``1/2'' in
subsection 93(2.1) of the Act, as enacted by
subsection (6), and in subsection 93(2.3) of
the Act, as enacted by subsection (8), shall
be read as references to the fraction in
paragraph 38(a) of the Act, as enacted by
subsection 22(1), that applies to the
taxpayer for the year.
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|
71. (1) The Act is amended by adding the
following after section 93:
|
|
| Shares held
by a
partnership
|
93.1 (1) For the purpose of determining
whether a non-resident corporation is a
foreign affiliate of a corporation resident in
Canada for the purposes of subsections (2) and
20(12), sections 93 and 113, paragraph
128.1(1)(d), (and any regulations made for the
purposes of those provisions), section 95 (to
the extent that that section is applied for the
purposes of those provisions) and section 126,
where based on the assumptions contained in
paragraph 96(1)(c), at any time shares of a
class of the capital stock of a corporation are
owned by a partnership or are deemed under
this subsection to be owned by a partnership,
each member of the partnership is deemed to
own at that time that number of those shares
that is equal to the proportion of all those
shares that
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|
(a) the fair market value of the member's
interest in the partnership at that time
|
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|
is of
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|
(b) the fair market value of all members'
interests in the partnership at that time.
|
|
| Where
dividends
received by a
partnership
|
(2) Where, based on the assumptions
contained in paragraph 96(1)(c), at any time
shares of a class of the capital stock of a
foreign affiliate of a corporation resident in
Canada (in this subsection referred to as
``affiliate shares'') are owned by a partnership
and at that time the affiliate pays a dividend on
affiliate shares to the partnership (in this
subsection referred to as the ``partnership
dividend''),
|
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|
(a) for the purposes of sections 93 and 113
and any regulations made for the purposes
of those sections, each member of the
partnership is deemed to have received the
proportion of the partnership dividend that
|
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|
(i) the fair market value of the member's
interest in the partnership at that time
|
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|
(ii) the fair market value of all members'
interests in the partnership at that time;
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|
(b) for the purposes of sections 93 and 113
and any regulations made for the purposes
of those sections, the proportion of the
partnership dividend deemed by paragraph
(a) to have been received by a member of
the partnership at that time is deemed to
have been received by the member in equal
proportions on each affiliate share that is
property of the partnership at that time;
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|
(c) for the purpose of applying section 113,
in respect of the dividend referred to in
paragraph (a), each affiliate share referred
to in paragraph (b) is deemed to be owned
by each member of the partnership; and
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|
(d) notwithstanding paragraphs (a) to (c),
|
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|
(i) where the corporation resident in
Canada is a member of the partnership,
the amount deductible by it under section
113 in respect of the dividend referred to
in paragraph (a) shall not exceed the
portion of the amount of the dividend
included in its income pursuant to
subsection 96(1), and
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(ii) where another foreign affiliate of the
corporation resident in Canada is a
member of the partnership, the amount
included in that other affiliate's income
in respect of the dividend referred to in
paragraph (a) shall not exceed the
amount that would be included in its
income pursuant to subsection 96(1) in
respect of the partnership dividend
received by the partnership if the value
for H in the definition ``foreign accrual
property income'' in subsection 95(1)
were nil and this Act were read without
reference to this subsection.
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|
(2) Subsection 93.1(1) of the Act, as
enacted by subsection (1), applies in
determining whether a non-resident
corporation is, at any time after November
1999, a foreign affiliate of a taxpayer and,
where a taxpayer so elects and notifies the
Minister of National Revenue in writing
before 2002 of its election, that subsection
also applies in determining (other than for
the purposes of subsection 20(12) and
section 126 of the Act) whether a
non-resident corporation was, at any time
after 1972 and before December 1999, a
foreign affiliate of the taxpayer.
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|
(3) Subsection 93.1(2) of the Act, as
enacted by subsection (1), applies in respect
of dividends received after November 1999.
|
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|
|
72. (1) Subparagraphs 94(1)(c)(i) and (ii)
of the Act are replaced by the following:
|
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|
(i) the trust is deemed for the purposes of
this Part and sections 233.3 and 233.4 to
be a person resident in Canada no part of
whose taxable income is exempt because
of section 149 from tax under this Part
and whose taxable income for the year is
the amount, if any, by which the total of
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|
(A) the amount, if any, that would but
for this subparagraph be its taxable
income earned in Canada for the year,
|
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|
(B) the amount that would be its
foreign accrual property income for
the year if
|
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|
(I) except for the purpose of
applying subsections 104(4) to (5.2)
to days after 1998 that are
determined under subsection
104(4), the trust were a non-resident
corporation all the shares of which
were owned by a person who was
resident in Canada,
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|
(II) the description of A in the
definition ``foreign accrual property
income'' in subsection 95(1) were,
in respect of dividends received
after 1998, read without reference to
paragraph (b) of that description,
|
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|
(III) the descriptions of B and E in
that definition were, in respect of
dispositions that occur after 1998,
read without reference to ``other
than dispositions of excluded
property to which none of
paragraphs (2)(c), (d) and (e)
apply'',
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|
(IV) the value of C in that definition
were nil, and
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|
(V) for the purposes of computing
the trust's foreign accrual property
income, the consequences of the
application of subsections 104(4) to
(5.2) applied in respect of days after
1998 that are determined under
subsection 104(4),
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|
(C) the amount, if any, by which the
total of all amounts each of which is an
amount required by subsection 91(1)
or (3) to be included in computing its
income for the year exceeds the total of
all amounts each of which is an amount
deducted by it for that year under
subsection 91(2), (4) or (5), and
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|
(D) the amount, if any, required by
section 94.1 to be included in
computing its income for the year
|
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(E) the amount, if any, by which the
total of all amounts each of which is an
amount deducted by it under
subsection 91(2), (4) or (5) in
computing its income for the year
exceeds the total of all amounts each of
which is an amount included in
computing its income for the year
because of subsection 91(1) or (3), and
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(ii) for the purposes of section 126,
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