| Charitable
donation of
employee
option
securities
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(d.01) subject to subsection (2.1), where the
taxpayer disposes of a security acquired in
the year by the taxpayer under an agreement
referred to in subsection 7(1) by making a
gift of the security to a qualified donee
(other than a private foundation), an
amount in respect of the disposition of the
security equal to 1/4 of the lesser of the
benefit deemed by paragraph 7(1)(a) to
have been received by the taxpayer in the
year in respect of the acquisition of the
security and the amount that would have
been that benefit had the value of the
security at the time of its acquisition by the
taxpayer been equal to the value of the
security at the time of the disposition, if
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(i) the security is a security described in
subparagraph 38(a.1)(i),
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(ii) the taxpayer acquired the security
after February 27, 2000 and before 2002,
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(iii) the gift is made in the year and on or
before the day that is 30 days after the day
on which the taxpayer acquired the
security, and
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(iv) the taxpayer is entitled to a deduction
under paragraph (d) in respect of the
acquisition of the security;
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(4) Paragraphs 110(1)(d.1), (d.2) and (d.3)
of the Act are amended by replacing the
reference to the fraction ``1/4'' with a
reference to the fraction ``1/2''.
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(5) Subsection 110(1.5) of the Act is
replaced by the following:
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| Determination
of amounts
relating to
employee
security
options
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(1.5) For the purpose of paragraph (1)(d),
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(a) the amount payable by a taxpayer to
acquire a security under an agreement
referred to in subsection 7(1) shall be
determined without reference to any change
in the value of a currency of a country other
than Canada, relative to Canadian currency,
occurring after the agreement was made;
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(b) the fair market value of a security at the
time an agreement in respect of the security
was made shall be determined on the
assumption that all specified events
associated with the security that occurred
after the agreement was made and before
the sale or issue of the security or the
disposition of the taxpayer's rights under
the agreement in respect of the security, as
the case may be, had occurred immediately
before the agreement was made; and
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(c) in determining the amount that was
included, in respect of a security that a
qualifying person has agreed to sell or issue
to a taxpayer, in the amount determined
under subparagraph 7(1.4)(c)(ii) for the
purpose of determining if the condition in
paragraph 7(1.4)(c) was satisfied with
respect to a particular disposition, an
assumption shall be made that all specified
events associated with the security that
occurred after the particular disposition and
before the sale or issue of the security or the
taxpayer's subsequent disposition of rights
under the agreement in respect of the
security, as the case may be, had occurred
immediately before the particular
disposition.
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| Meaning of
``specified
event''
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(1.6) For the purpose of subsection (1.5), a
specified event associated with a security is
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(a) where the security is a share of the
capital stock of a corporation,
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(i) a subdivision or consolidation of
shares of the capital stock of the
corporation,
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(ii) a reorganization of share capital of
the corporation, and
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(iii) a stock dividend of the corporation;
and
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(b) where the security is a unit of a mutual
fund trust,
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(i) a subdivision or consolidation of the
units of the trust, and
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(ii) an issuance of units of the trust as
payment, or in satisfaction of a person's
right to enforce payment, out of the
trust's income (determined before the
application of subsection 104(6)) or out
of the trust's capital gains.
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| Definitions in
subsection
7(7)
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(1.7) The definitions in subsection 7(7)
apply for the purposes of subsections (1.5) and
(1.6).
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(6) Section 110 of the Act is amended by
adding the following after subsection (2):
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| Charitable
donation -
proceeds of
disposition of
employee
option
securities
|
(2.1) Where a taxpayer, in exercising a right
to acquire a security that a particular
qualifying person has agreed to sell or issue to
the taxpayer under an agreement referred to in
subsection 7(1), directs a broker or dealer
appointed or approved by the particular
qualifying person (or by a qualifying person
that does not deal at arm's length with the
particular qualifying person) to immediately
dispose of the security and pay all or a portion
of the proceeds of disposition of the security
to a qualified donee,
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(a) if the payment is a gift, the taxpayer is
deemed, for the purpose of paragraph
(1)(d.01), to have disposed of the security
by making a gift of the security to the
qualified donee at the time the payment is
made; and
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(b) the amount deductible under paragraph
(1)(d.01) by the taxpayer in respect of the
disposition of the security is the amount
determined by the formula
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A x B/C
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A is the amount that would be deductible
under paragraph (1)(d.01) in respect of
the disposition of the security if this
subsection were read without reference
to this paragraph,
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B is the amount of the payment, and
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C is the amount of the proceeds of
disposition of the security.
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(7) Subsections (1), (3) and (6) apply to
the 2000 and subsequent taxation years
except that, for the 2000 taxation year,
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(a) the reference to the fraction ``1/2'' in
the portion of paragraph 110(1)(d) of the
Act before subparagraph 110(1)(d)(i), as
enacted by subsection (1), shall be read as
a reference to
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(i) the fraction ``1/4'', if the
transaction, event or circumstance as a
result of which a benefit is deemed by
subsection 7(1) of the Act, as enacted
by subsection 2(1), to have been
received by a taxpayer occurred before
February 28, 2000, and
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(ii) the fraction ``1/3'', if the
transaction, event or circumstance as a
result of which a benefit is deemed by
subsection 7(1) of the Act, as enacted
by subsection 2(1), to have been
received by a taxpayer occurred after
February 27, 2000 and before October
18, 2000; and
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(b) the reference to the fraction ``1/4'' in
the portion of paragraph 110(1)(d.01) of
the Act before subparagraph
110(1)(d.01)(i), as enacted by subsection
(3), shall be read as a reference to the
fraction ``1/3'' if the transaction, event or
circumstance as a result of which a
benefit is deemed by subsection 7(1) of
the Act, as enacted by subsection 2(1), to
have been received by a taxpayer
occurred after February 27, 2000 and
before October 18, 2000.
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(8) Subsections (2) and (5) apply to the
1998 and subsequent taxation years.
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(9) Subsection (4) applies in respect of
dispositions and exchanges that occur after
February 27, 2000 except that, for
dispositions and exchanges that occurred
after February 27, 2000 and before October
18, 2000, the reference to the fraction ``1/2''
in paragraphs 110(1)(d.1) to (d.3) of the Act,
as enacted by subsection (4), shall be read as
a reference to the fraction ``1/3''.
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85. (1) The portion of paragraph
110.1(1)(d) of the Act before subparagraph
(i) is replaced by the following:
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| Ecological
gifts
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(d) the total of all amounts each of which is
the fair market value of a gift of land,
including a servitude for the use and benefit
of a dominant land, a covenant or an
easement, the fair market value of which is
certified by the Minister of the
Environment and that is certified by that
Minister, or by a person designated by that
Minister, to be ecologically sensitive land,
the conservation and protection of which is,
in the opinion of that Minister, or that
person, important to the preservation of
Canada's environmental heritage, which
gift was made by the corporation in the year
or in any of the five preceding taxation
years to
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(2) Subsection 110.1(2) of the Act is
replaced by the following:
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| Proof of gift
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(2) A gift shall not be included for the
purpose of determining a deduction under
subsection (1) unless the making of the gift is
proven by filing with the Minister
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(a) a receipt for the gift that contains
prescribed information;
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(b) in the case of a gift described in
paragraph (1)(c), the certificate issued
under subsection 33(1) of the Cultural
Property Export and Import Act; and
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(c) in the case of a gift described in
paragraph (1)(d), both certificates referred
to in that paragraph.
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(3) The portion of subsection 110.1(3) of
the Act after paragraph (b) is replaced by
the following:
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such amount, not greater than the fair market
value otherwise determined and not less than
the adjusted cost base to the corporation of the
property at that time, as the corporation
designates in its return of income under
section 150 for the year in which the gift is
made is, if the making of the gift is proven by
filing with the Minister a receipt containing
prescribed information, deemed to be its
proceeds of disposition of the property and,
for the purposes of subsection (1), the fair
market value of the gift made by the
corporation.
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(4) Subsection 110.1(5) of the Act is
replaced by the following:
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| Ecological
gifts
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(5) For the purposes of applying
subparagraph 69(1)(b)(ii), section 207.31 and
this section in respect of a gift described in
paragraph (1)(d) that is made by a taxpayer
and that is a servitude, covenant or easement
to which land is subject, the greater of
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(a) the fair market value otherwise
determined of the gift, and
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(b) the amount by which the fair market
value of the land is reduced as a result of the
making of the gift
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is deemed to be the fair market value (or, for
the purpose of subsection (3), the fair market
value otherwise determined) of the gift at the
time the gift was made and, subject to
subsection (3), to be the taxpayer's proceeds
of disposition of the gift.
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(5) Subsection 110.1(5) of the Act, as
enacted by subsection (4), is replaced by the
following:
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| Ecological
gifts
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(5) For the purposes of applying
subparagraph 69(1)(b)(ii), this section and
section 207.31 in respect of a gift described in
paragraph (1)(d) that is made by a taxpayer,
the amount that is the fair market value (or, for
the purpose of subsection (3), the fair market
value otherwise determined) of the gift at the
time the gift was made and, subject to
subsection (3), the taxpayer's proceeds of
disposition of the gift, is deemed to be the
amount determined by the Minister of the
Environment to be
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(a) where the gift is land, the fair market
value of the gift; or
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(b) where the gift is a servitude, covenant or
easement to which land is subject, the
greater of
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(i) the fair market value otherwise
determined of the gift, and
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(ii) the amount by which the fair market
value of the land is reduced as a result of
the making of the gift.
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(6) Subsections (1), (2) and (5) apply in
respect of gifts made after February 27,
2000, except that subsection 110.1(2) of the
Act, as enacted by subsection (2), shall be
read without reference to paragraph
110.1(2)(b) in respect of gifts made before
December 21, 2000.
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(7) Subsection (3) applies in respect of
gifts made after February 27, 1995.
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(8) Subsection (4) applies in respect of
gifts made after February 27, 1995 and
before February 28, 2000.
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86. (1) Subparagraph (a)(ii) of the
definition ``investment expense'' in
subsection 110.6(1) of the Act is replaced by
the following:
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(ii) paragraph 20(1)(j) or subsection
65(1), 66(4), 66.1(3), 66.2(2), 66.21(4)
or 66.4(2),
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(2) Paragraph (d) of the definition
``investment expense'' in subsection
110.6(1) of the Act is replaced by the
following:
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(d) 50% of the total of all amounts each
of which is an amount deducted under
subsection 66(4), 66.1(3), 66.2(2),
66.21(4) or 66.4(2) in computing the
individual's income for the year in
respect of expenses
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(i) incurred and renounced under
subsection 66(12.6), (12.601), (12.62)
or (12.64) by a corporation, or
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(ii) incurred by a partnership of which
the individual was a specified member
in the fiscal period of the partnership in
which the expense was incurred, and
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(3) Paragraph 110.6(2)(a) of the Act is
replaced by the following:
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(a) the amount determined by the formula
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[$250,000 - (A + B + C + D)] x E
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A is the total of all amounts each of which
is an amount deducted under this
section in computing the individual's
taxable income for a preceding taxation
year that ended before 1988,
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B is the total of all amounts each of which
is
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(i) 3/4 of an amount deducted under
this section in computing the
individual's taxable income for a
preceding taxation year that ended
after 1987 and before 1990 (other than
amounts deducted under this section
for a taxation year in respect of an
amount that was included in
computing an individual's income for
that year because of subparagraph
14(1)(a)(v) as that subparagraph
applied for taxation years that ended
before February 28, 2000), or
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(ii) 3/4 of an amount deducted under
this section in computing the
individual's taxable income for a
preceding taxation year that began
after February 27, 2000 and ended
before October 18, 2000,
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C is 2/3 of the total of all amounts each of
which is an amount deducted under this
section in computing the individual's
taxable income
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(i) for a preceding taxation year that
ended after 1989 and before February
28, 2000, or
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(ii) in respect of an amount that was
included because of subparagraph
14(1)(a)(v) (as that subparagraph
applied for taxation years that ended
before February 28, 2000) in
computing the individual's income for
a taxation year that began after 1987
and ended before 1990,
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D is the product obtained when the
reciprocal of the fraction determined for
E that applied to the taxpayer for a
preceding taxation year that began
before and included February 28, 2000
or October 17, 2000 is multiplied by the
amount deducted under this subsection
in computing the individual's taxable
income for that preceding year, and
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(i) in the case of a taxation year that
includes February 28, 2000 or October
17, 2000, the amount determined by
the formula
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2 x (F + G)/H
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F is the amount deemed by
subsection 14(1.1) to be a taxable capital gain
of the taxpayer for the taxation year,
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G is the amount by which the
amount determined in respect of the taxpayer
for the year under paragraph 3(b) exceeds the
amount determined for F, and
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H is the total of
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(A) the amount deemed by
subsection 14(1.1) to be a taxable
capital gain of the taxpayer for the
taxation year multiplied by
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(I) where that amount is
determined by reference to
paragraph 14(1.1)(a), the
reciprocal of the fraction
obtained by multiplying the
fraction 3/4 by the fraction in
paragraph 14(1)(b) that applies to
the taxpayer for the taxation year,
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(II) where that amount is
determined by reference to
paragraph 14(1.1)(b), and the
taxation year does not end after
February 27, 2000 and before
October 18, 2000, 2, and
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(III) where that amount is
determined by reference to
paragraph 14(1.1)(b), and the
taxation year ends after February
27, 2000 and before October 18,
2000, 3/2, and
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(B) the amount determined for G
multiplied by the reciprocal of the
fraction in paragraph 38(a) that
applies to the taxpayer for the
taxation year, and
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