(A) the amount that would be determined under subparagraph (i) in respect of the trust for the year, if that subparagraph were read without reference to clause (i)(A), is deemed to be income of the trust for the year from sources in the country other than Canada in which the trust would, but for subparagraph (i), be resident, and
	(B) any income or profits tax paid by the trust for the year (other than any tax paid because of this section), to the extent that it can reasonably be regarded as having been paid in respect of that income, is deemed to be non-business income tax paid by the trust to the government of that country, and
	(2) Subsection (1) applies to the 1999 and subsequent taxation years.
	73. (1) The formula in the definition ``foreign accrual property income'' in subsection 95(1) of the Act is replaced by the following:
	(A+A.1+A.2+B+C) - (D+E+F+G+H)
	(2) The description of A.1 in the definition ``foreign accrual property income'' in subsection 95(1) of the Act is amended by replacing the reference to the expression ``4/3 of'' with a reference to the word ``twice''.
	(3) The description of F in the definition ``foreign accrual property income'' in subsection 95(1) of the Act is replaced by the following:
	F is the amount claimed by the taxpayer, which amount may not be greater than the amount prescribed to be the deductible loss of the affiliate for the year, and
	(4) The definition ``foreign accrual property income'' in subsection 95(1) of the Act is amended by striking out the word ``and'' at the end of the description of F, by adding the word ``and'' at the end of the description of G and by adding the following after the description of G:
	H is
	(a) where the affiliate was a member of a partnership at the end of the fiscal period of the partnership that ended in the year and the partnership received a dividend at a particular time in that fiscal period from a corporation that was, for the purposes of sections 93 and 113, a foreign affiliate of the taxpayer at that particular time, the portion of the amount of that dividend that is included in the value of A in respect of the affiliate for the year and that is deemed by paragraph 93.1(2)(a) to have been received by the affiliate for the purposes of sections 93 and 113, and
	(b) in any other case, nil;
	(5) The portion of paragraph 95(2)(a.3) of the Act before subparagraph (iii) is replaced by the following:
	(a.3) in computing the income from a business other than an active business for a taxation year of a foreign affiliate of a taxpayer there shall be included the income of the affiliate for the year derived directly or indirectly from indebtedness and lease obligations (which, for the purposes of this paragraph, includes the income of the affiliate for the year from the purchase and sale of indebtedness and lease obligations on its own account, but does not include excluded income)
	(i) of persons resident in Canada, or
	(ii) in respect of businesses carried on in Canada
	unless more than 90% of the gross revenue of the affiliate derived directly or indirectly from indebtedness and lease obligations (other than excluded revenue) was derived directly or indirectly from indebtedness and lease obligations of non-resident persons with whom the affiliate deals at arm's length and, where this paragraph applies to include income of the affiliate for the year in the income of the affiliate from a business other than an active business,
	(6) Paragraph 95(2)(g) of the Act is replaced by the following:
	(g) where, because of a fluctuation in the value of the currency of a country other than Canada relative to the value of Canadian currency, a particular foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout a taxation year of the particular affiliate has earned income or incurred a loss or realized a capital gain or a capital loss in the year, in reference to
	(i) a debt obligation that was owing to
	(A) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year or any other non-resident corporation to which the particular affiliate and the taxpayer are related throughout the year (referred to in this paragraph as a ``qualified foreign corporation''), or
	(B) the particular affiliate by a qualified foreign corporation,
	(ii) the redemption, cancellation or acquisition of a share of the capital stock of, or the reduction of the capital of, the particular affiliate or another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year, or
	(iii) the disposition to a qualified foreign corporation of a share of the capital stock of another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year,
	that income, gain or loss, as the case may be, is deemed to be nil;
	(7) Subsection 95(2) of the Act is amended by adding the following after paragraph (g.1):
	(g.2) for the purpose of computing the foreign accrual property income of a foreign affiliate of any taxpayer resident in Canada for a taxation year of the affiliate, an election made pursuant to paragraph 86.1(2)(f) in respect of a distribution received by the affiliate in a particular taxation year of the affiliate is deemed to have been filed under that paragraph by the affiliate if
	(i) where there is only one taxpayer resident in Canada in respect of whom the affiliate is a controlled foreign affiliate, the election is filed by the taxpayer with the taxpayer's return of income for the taxpayer's taxation year in which the particular year of the affiliate ends, and
	(ii) where there is more than one taxpayer resident in Canada in respect of whom the affiliate is a controlled foreign affiliate, all of those taxpayers jointly elect in writing and each of them files the joint election with the Minister with their return of income for their taxation year in which the particular year of the affiliate ends;
	(8) Paragraph 95(2)(h) of the Act is repealed.
	(9) The portion of subsection 95(2.2) of the Act before paragraph (a) is replaced by the following:
Rule for subsection (2)	(2.2) For the purpose of subsection (2),
	(10) Subsection 95(2.5) of the Act is amended by adding the following in alphabetical order:
``excluded income'' and ``excluded revenue'' « revenu exclu »	``excluded income'' and ``excluded revenue'' for a taxation year in respect of a foreign affiliate of a taxpayer mean, respectively, income or revenue, that is
	(a) derived directly or indirectly from a specified deposit with a prescribed financial institution,
	(b) derived directly or indirectly from a lease obligation of a person (other than the taxpayer or a person that does not deal at arm's length with the taxpayer) relating to the use of property outside Canada, or
	(c) included in computing the affiliate's income for the year from carrying on a business through a permanent establishment in Canada;
	(11) The portion of paragraph 95(6)(a) of the Act before subparagraph (i) is replaced by the following:
	(a) where any person or partnership has a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to, or to acquire, shares of the capital stock of a corporation or interests in a partnership and
	(12) Subparagraph 95(6)(a)(ii) of the Act is replaced by the following:
	(ii) it can reasonably be considered that the principal purpose for the existence of the right is to permit any person to avoid, reduce or defer the payment of tax or any other amount that would otherwise be payable under this Act, those shares or partnership interests, as the case may be, are deemed to be owned by that person or partnership; and
	(13) Paragraph 95(6)(b) of the Act is replaced by the following:
	(b) where a person or partnership acquires or disposes of shares of the capital stock of a corporation or interests in a partnership, either directly or indirectly, and it can reasonably be considered that the principal purpose for the acquisition or disposition is to permit a person to avoid, reduce or defer the payment of tax or any other amount that would otherwise be payable under this Act, that acquisition or disposition is deemed not to have taken place, and where the shares or partnership interests were unissued by the corporation or partnership immediately before the acquisition, those shares or partnership interests, as the case may be, are deemed not to have been issued.
	(14) Subsections (1), (4) and (11) to (13) apply after November 1999.
	(15) Subsection (2) applies to taxation years that end after February 27, 2000 except that, where a taxation year of a foreign affiliate of a taxpayer includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, the reference to the word ``twice'' in the description of A.1 in the definition ``foreign accrual property income'' in subsection 95(1) 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 foreign affiliate for the year, multiplied by''.
	(16) Subsection (3) applies to taxation years of foreign affiliates that begin after November 1999.
	(17) Subsections (5) and (10) apply to taxation years of foreign affiliates that begin after 1999 except that, where a taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the taxpayer's filing-due date for the taxation year that includes the day on which this Act receives royal assent, paragraph 95(2)(a.3) of the Act, as enacted by subsection (5), and subsection 95(2.5) of the Act, as enacted by subsection (10), apply to taxation years, of all of the taxpayer's foreign affiliates, that begin after 1994 except that, where there has been a change in the taxation year of a particular foreign affiliate of a taxpayer in 1994 and after February 22, 1994, the enacted provisions apply to taxation years of the particular foreign affiliate of the taxpayer that end after 1994, unless
	(a) the particular foreign affiliate had requested that change in the taxation year in writing before February 22, 1994 from the income taxation authority of the country in which it was resident and subject to income taxation; or
	(b) the first taxation year of the particular foreign affiliate that began after 1994 began at a time in 1995 that is earlier than the time that it would have begun if there had not been that change in the taxation year of the particular foreign affiliate,
	and, notwithstanding subsections 152(4) to (5) of the Act, any assessment of a taxpayer's tax payable under the Act for any of those taxation years shall be made that is necessary to take into account the application of subsections (5) and (10).
	(18) Subsections (6), (8) and (9) apply to taxation years of a foreign affiliate of a taxpayer that begin after November 1999 except that, where the taxpayer so elects in writing and files the election with the Minister of National Revenue on or before the day of the taxpayer's filing-due date for the taxation year that includes the day on which this Act receives royal assent, those subsections apply to taxation years, of all of its foreign affiliates, that began after 1994 and, notwithstanding subsections 152(4) to (5) of the Act, any assessment of a taxpayer's tax payable under the Act for any of those taxation years shall be made that is necessary to take into account the application of subsections (6), (8) and (9).
	(19) Subsection (7) applies to distributions received after 1997 except that the election referred to in paragraph 95(2)(g.2) of the Act, as enacted by subsection (7), is deemed to be filed on a timely basis if it is filed with the Minister of National Revenue before the day that is 90 days after the day on which this Act receives royal assent.
	74. (1) Paragraph 96(1)(d) of the Act is replaced by the following:
	(d) each income or loss of the partnership for a taxation year were computed as if
	(i) this Act were read without reference to paragraphs 12(1)(z.5) and 20(1)(v.1), section 34.1, subsection 59(1), paragraph 59(3.2)(c.1) and subsections 66.1(1), 66.2(1) and 66.4(1), and
	(ii) no deduction were permitted under any of section 29 of the Income Tax Application Rules, subsections 34.2(4) and 65(1) and sections 66, 66.1, 66.2, 66.21 and 66.4;
	(2) The portion of subsection 96(1.7) of the Act before the formula is replaced by the following:
Gains and losses	(1.7) Notwithstanding subsection (1) or section 38, where in a particular taxation year of a taxpayer, the taxpayer is a member of a partnership with a fiscal period that ends in the particular year, the amount of a taxable capital gain (other than that part of the amount that can reasonably be attributed to an amount deemed under subsection 14(1.1) to be a taxable capital gain of the partnership), allowable capital loss or allowable business investment loss of the taxpayer for the particular year determined in respect of the partnership is the amount determined by the formula
	(3) The descriptions of A and B in subsection 96(1.7) of the Act are replaced by the following:
	A is the amount of the taxpayer's taxable capital gain (other than that part of the amount that can be attributed to an amount deemed under subsection 14(1.1) to be a taxable capital gain of the partnership), allowable capital loss or allowable business investment loss, as the case may be, for the particular year otherwise determined under this section in respect of the partnership;
	B is the relevant fraction that applies under paragraph 38(a), (a.1), (a.2), (b) or (c) for the particular year in respect of the taxpayer; and
	(4) Section 96 of the Act is amended by adding the following after subsection (1.7):
Application	(1.71) Where the fraction referred to in the description of C in subsection (1.7) cannot be determined by a taxpayer in respect of a fiscal period of a partnership that ended before February 28, 2000, or includes February 28, 2000 or October 17, 2000, for the purposes of subsection (1.7), the fraction is deemed to be
	(a) where the fiscal period ended before or began before February 28, 2000, 3/4;
	(b) where the fiscal period began after February 27, 2000 and before October 18, 2000, 2/3; and
	(c) in any other case, 1/2.
	(5) Clause 96(2.1)(b)(iv)(A) of the Act is replaced by the following:
	(A) the foreign resource pool expenses, if any, incurred by the partnership in the fiscal period,
	(6) Paragraph 96(2.4)(a) of the Act is replaced by the following:
	(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);
	(7) The portion of subsection 96(3) of the Act before paragraph (a) is replaced by the following:
Agreement or election of partnership members	(3) Where a taxpayer who was a member of a partnership at any time in a fiscal period has, for any purpose relevant to the computation of the taxpayer's income from the partnership for the fiscal period, made or executed an agreement, designation or election under or in respect of the application of any of subsections 13(4) and (16) and 14(6), section 15.2, subsections 20(9) and 21(1) to (4), section 22, subsection 29(1), section 34, clause 37(8)(a)(ii)(B), subsections 44(1) and (6), 50(1) and 80(5), (9), (10) and (11), section 80.04, subsections 86.1(2), 97(2), 139.1(16) and (17) and 249.1(4) and (6) that, but for this subsection, would be a valid agreement, designation or election,
	(8) Subsections (1), (3), (4) and (5) apply to fiscal periods that begin after 2000.
	(9) Subsection (2) applies to taxation years that end after February 27, 2000.
	(10) Subsection (6) applies after 1997.
	(11) Subsection (7) applies after 1999.
	75. (1) Subparagraph 98(3)(g)(iii) of the Act is replaced by the following:
	(iii) for the purpose of determining after the particular time the amount required by paragraph 14(1)(b) to be included in computing the person's income in respect of any subsequent disposition of property of the business, the value determined for Q in the definition ``cumulative eligible capital'' in subsection 14(5) is deemed to be the amount, if any, of that person's percentage of the value determined for Q in that definition in respect of the partnership's business immediately before the particular time.
	(2) Subparagraph 98(5)(h)(ii) of the Act is replaced by the following:
	(ii) for the purpose of determining after the particular time the amount required by paragraph 14(1)(b) to be included in computing the proprietor's income in respect of any subsequent disposition of property of the business, the value determined for Q in the definition ``cumulative eligible capital'' in subsection 14(5) is deemed to be the value, if any, determined for Q in that definition in respect of the partnership's business immediately before the particular time.
	(3) Subsections (1) and (2) apply in respect of taxation years that end after February 27, 2000.
	76. (1) Paragraph 100(1)(a) of the Act is amended by replacing the reference to the fraction ``3/4'' with a reference to the fraction ``1/2''.