(ii) in any other case, 1,
	(4) Paragraph 110.6(2.1)(a) of the Act is replaced by the following:
	(a) the amount determined by the formula in paragraph (2)(a) in respect of the individual for the year,
	(5) Subsection 110.6(4) of the Act is replaced by the following:
Maximum capital gains deduction	(4) Notwithstanding subsection (2) and (2.1), the total amount that may be deducted under this section in computing an individual's income for a taxation year shall not exceed the amount determined by the formula in paragraph (2)(a) in respect of the individual for the year.
	(6) The portion of subsection 110.6(12) of the Act before paragraph (a) is replaced by the following:
Trust deduction	(12) Notwithstanding any other provision of this Act, a trust described in paragraph 104(4)(a) or (a.1) (other than a trust that elected under subsection 104(5.3), an alter ego trust or a joint spousal or common-law partner trust) may, in computing its taxable income for its taxation year that includes the day determined under paragraph 104(4)(a) or (a.1), as the case may be, in respect of the trust, deduct under this section an amount equal to the least of
	(7) Paragraph 110.6(12)(c) of the Act is replaced by the following:
	(c) the amount, if any, by which the amount determined by the formula in paragraph (2)(a) in respect of the taxpayer's spouse or common-law partner for the taxation year in which that spouse or common-law partner died exceeds the amount deducted under this section for that taxation year by that spouse or common-law partner.
	(8) Subsections (1) and (2) apply to taxation years that begin after 2000.
	(9) Subsections (3) to (5) apply to taxation years that end after February 27, 2000.
	(10) Subsection (6) applies to the 2000 and subsequent taxation years.
	(11) Subsection (7) applies to taxation years that end after February 27, 2000, except that the amount determined under paragraph 110.6(12)(c) of the Act, as enacted by subsection (7), in computing a trust's taxable income for its particular taxation year that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, is deemed to be equal to the amount determined under that paragraph (without reference to this subsection) multiplied by the quotient obtained when the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the trust for its particular year is divided by the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the taxpayer's spouse or common-law partner for the taxation year in which the spouse or common-law partner died.
	87. (1) Subclause 111(1)(e)(ii)(C)(I) of the Act is replaced by the following:
	(I) the foreign resource pool expenses, if any, incurred by the partnership in that fiscal period,
	(2) The description of E in the definition ``non-capital loss'' in subsection 111(8) of the Act is replaced by the following:
	E is the total of all amounts each of which is the taxpayer's loss for the year from an office, employment, business or property, the taxpayer's allowable business investment loss for the year, an amount deducted under paragraph (1)(b) or section 110.6 in computing the taxpayer's taxable income for the year or an amount that may be deducted under any of paragraphs 110(1)(d) to (d.3), (f), (j) and (k), section 112 and subsections 113(1) and 138(6) in computing the taxpayer's taxable income for the year, and
	(3) The description of B in the definition ``non-capital loss'' in subsection 111(8) of the Act is replaced by the following:
	B is the amount, if any, determined in respect of the taxpayer for the year under section 110.5 or subparagraph 115(1)(a)(vii),
	(4) The first formula in the definition ``pre-1986 capital loss balance'' in subsection 111(8) of the Act is replaced by the following:
	(A + B) - (C + D + E + E.1)
	(5) The portion of the definition ``pre-1986 capital loss balance'' in subsection 111(8) of the Act after the description of B is replaced by the following:
	C is the total of all amounts deducted under section 110.6 in computing the individual's taxable income for taxation years that end before 1988 or after October 17, 2000,
	D is 3/4 of the total of all amounts each of which is an amount deducted under section 110.6 in computing the individual's taxable income for a taxation year, preceding the particular year, that
	(a) ended after 1987 and before 1990, or
	(b) began after February 27, 2000 and ended before October 18, 2000,
	E is 2/3 of the total of all amounts deducted under section 110.6 in computing the individual's taxable income for taxation years, preceding the particular year, that ended after 1989 and before February 28, 2000, and
	E.1 is the amount determined by the formula
	J x (0.5/K)
	where
	J is the amount deducted by the individual under section 110.6 for a taxation year of the individual, preceding the particular year, that includes February 28, 2000 or October 17, 2000, and
	K is the fraction in paragraph 38(a) that applies to the individual for the individual's taxation year referred to in the description of J.
	(6) Paragraph 111(9)(a) of the Act is replaced by the following:
	(a) in the part of the year throughout which the taxpayer was non-resident, if section 114 applies to the taxpayer in respect of the year, and
	(7) Subsection (1) applies to taxation years that begin after 2000.
	(8) Subsection (2) applies to the 2000 and subsequent taxation years.
	(9) Subsection (3) applies after June 27, 1999.
	(10) Subsections (4) and (5) apply to taxation years that end after February 27, 2000.
	(11) Subsection (6) applies to the 1998 and subsequent taxation years.
	88. (1) Subsection 112(2.2) of the Act is replaced by the following:
Guaranteed shares	(2.2) No deduction may be made under subsection (1), (2) or 138(6) in computing the taxable income of a particular corporation in respect of a dividend received on a share of the capital stock of a corporation that was issued after 8:00 p.m. Eastern Daylight Saving Time, June 18, 1987 where
	(a) a person or partnership (in this subsection and subsection (2.21) referred to as the ``guarantor'') that is a specified financial institution or a specified person in relation to any such institution, but that is not the issuer of the share or an individual other than a trust, is, at or immediately before the time the dividend is paid, obligated, either absolutely or contingently and either immediately or in the future, to effect any undertaking (in this subsection and subsections (2.21) and (2.22) referred to as a ``guarantee agreement''), including any guarantee, covenant or agreement to purchase or repurchase the share and including the lending of funds to or the placing of amounts on deposit with, or on behalf of, the particular corporation or any specified person in relation to the particular corporation given to ensure that
	(i) any loss that the particular corporation or a specified person in relation to the particular corporation may sustain by reason of the ownership, holding or disposition of the share or any other property is limited in any respect, or
	(ii) the particular corporation or a specified person in relation to the particular corporation will derive earnings by reason of the ownership, holding or disposition of the share or any other property; and
	(b) the guarantee agreement was given as part of a transaction or event or a series of transactions or events that included the issuance of the share.
Exceptions	(2.21) Subsection (2.2) does not apply to a dividend received by a particular corporation on
	(a) a share that is at the time the dividend is received a share described in paragraph (e) of the definition ``term preferred share'' in subsection 248(1);
	(b) a grandfathered share, a taxable preferred share issued before December 16, 1987 or a prescribed share;
	(c) a taxable preferred share issued after December 15, 1987 and of a class of the capital stock of a corporation that is listed on a prescribed stock exchange where all guarantee agreements in respect of the share were given by one or more of the issuer of the share and persons that are related (otherwise than because of a right referred to in paragraph 251(5)(b)) to the issuer unless, at the time the dividend is paid to the particular corporation, dividends in respect of more than 10 per cent of the issued and outstanding shares to which the guarantee agreement applies are paid to the particular corporation or the particular corporation and specified persons in relation to the particular corporation; or
	(d) a share
	(i) that was not acquired by the particular corporation in the ordinary course of its business,
	(ii) in respect of which the guarantee agreement was not given in the ordinary course of the guarantor's business, and
	(iii) the issuer of which is, at the time the dividend is paid, related (otherwise than because of a right referred to in paragraph 251(5)(b)) to both the particular corporation and the guarantor.
Interpretation	(2.22) For the purposes of subsections (2.2) and (2.21),
	(a) where a guarantee agreement in respect of a share is given at any particular time after 8:00 p.m. Eastern Daylight Saving Time, June 18, 1987, otherwise than under a written arrangement to do so entered into before 8:00 p.m. Eastern Daylight Saving Time, June 18, 1987, the share is deemed to have been issued at the particular time and the guarantee agreement is deemed to have been given as part of a series of transactions that included the issuance of the share; and
	(b) ``specified person'' has the meaning assigned by paragraph (h) of the definition ``taxable preferred share'' in subsection 248(1).
	(2) Subparagraphs 112(3.2)(a)(iii) and (3.3)(a)(iii) of the Act are amended by replacing the reference to the fraction ``1/4'' with a reference to the fraction ``1/2''.
	(3) Subsection (1) applies in respect of dividends received after 1998.
	(4) Subsection (2) applies to dispositions that occur after February 27, 2000 except that, for dispositions that occurred before October 18, 2000, the reference to the fraction ``1/2'' in subparagraphs 112(3.2)(a)(iii) and (3.3)(a)(iii) of the Act, as enacted by subsection (2), shall be read as a reference to the fraction ``1/3''.
	89. (1) Sections 114 and 114.1 of the Act are replaced by the following:
Individual resident in Canada for only part of year	114. Notwithstanding subsection 2(2), the taxable income for a taxation year of an individual who is resident in Canada throughout part of the year and non-resident throughout another part of the year is the amount, if any, by which
	(a) the amount that would be the individual's income for the year if the individual had no income or losses, for the part of the year throughout which the individual was non-resident, other than
	(i) income or losses described in paragraphs 115(1)(a) to (c), and
	(ii) income that would have been included in the individual's taxable income earned in Canada for the year under subparagraph 115(1)(a)(v) if the part of the year throughout which the individual was non-resident were the whole taxation year,
	exceeds the total of
	(b) the deductions permitted by subsection 111(1) and, to the extent that they relate to amounts included in computing the amount determined under paragraph (a), the deductions permitted by any of paragraphs 110(1)(d) to (d.2) and (f), and
	(c) any other deduction permitted for the purpose of computing taxable income to the extent that
	(i) it can reasonably be considered to be applicable to the part of the year throughout which the individual was resident in Canada, or
	(ii) if all or substantially all of the individual's income for the part of the year throughout which the individual was non-resident is included in the amount determined under paragraph (a), it can reasonably be considered to be applicable to that part of the year.
	(2) Subsection (1) applies to the 1998 and subsequent taxation years.
	90. (1) Subparagraph 115(1)(a)(i) of the Act is replaced by the following:
	(i) incomes from the duties of offices and employments performed by the non-resident person in Canada and, if the person was resident in Canada at the time the person performed the duties, outside Canada,
	(2) Subparagraph 115(1)(a)(ii) of the Act is replaced by the following:
	(ii) incomes from businesses carried on by the non-resident person in Canada which, in the case of the Canadian banking business of an authorized foreign bank, is, subject to this Part, the profit from that business computed using the bank's branch financial statements (within the meaning assigned by subsection 20.2(1),
	(3) Paragraph 115(1)(a) of the Act is amended by striking out the word ``and'' at the end of subparagraph (v), by adding the word ``and'' at the end of subparagraph (vi) and by adding the following after subparagraph (vi):
	(vii) in the case of an authorized foreign bank, the amount claimed by the bank to the extent that the inclusion of the amount in income
	(A) increases any amount deductible by the bank under subsection 126(1) for the year, and
	(B) does not increase an amount deductible by the bank under section 127 for the year,
	(4) Paragraphs 115(1)(b) and (b.1) of the Act are replaced by the following:
	(b) the only taxable capital gains and allowable capital losses referred to in paragraph 3(b) were taxable capital gains and allowable capital losses from dispositions of taxable Canadian properties (other than treaty-protected properties), and
	(5) Paragraph 115(1)(d) of the Act is replaced by the following:
	(d) the deductions permitted by subsection 111(1) and, to the extent that they relate to amounts included in computing the amount determined under any of paragraphs (a) to (c), the deductions permitted by any of paragraphs 110(1)(d) to (d.2) and (f) and subsection 110.1(1),
	(6) Subsection 115(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (e) and by adding the following after paragraph (e):
	(e.1) the deduction permitted by subsection (4.1), and
	(7) Paragraphs 115(2)(b) and (b.1) of the Act are replaced by the following:
	(b) a student attending, or a teacher teaching at, an educational institution outside Canada that is a university, college or other educational institution providing courses at a post-secondary school level, who in any preceding taxation year ceased to be resident in Canada in the course of or subsequent to moving to attend or to teach at the institution,
	(b.1) an individual who in any preceding taxation year ceased to be resident in Canada in the course of or subsequent to moving to carry on research or any similar work under a grant received by the individual to enable the individual to carry on the research or work,
	(8) Section 115 of the Act is amended by adding the following after subsection (2):
Non-resident actors	(2.1) Notwithstanding subsection (1), where a non-resident person is liable to tax under subsection 212(5.1), or would if this Act were read without reference to subsection 212(5.2) be so liable, in respect of an amount paid, credited or provided in a particular taxation year, the amount shall not be included in computing the non-resident person's taxable income earned in Canada for any taxation year unless a valid election is made under subsection 216.1(1) in respect of the non-resident person for the particular year.