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A - B
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A is the amount that would be the tax
payable under this Part for the year by
the taxpayer if that tax were
determined without reference to
section 120.3 and before making any
deduction under any of sections 121,
122.3, 125 to 127.41 and, if the
taxpayer is a Canadian-controlled
private corporation throughout the
year, section 123.4, and
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B is the amounts deemed by
subsections 120(2) and (2.2) to have
been paid on account of tax payable
under this Part by the taxpayer,
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(b) in subparagraph (2)(c)(i) and
paragraph (2.2)(b), the amount that
would be the tax payable under this Part
for the year by the taxpayer if that tax
were determined without reference to
sections 120.3 and 123.3 and before
making any deduction under any of
sections 121 and 122.3, subsection
123.4(3), and sections 124 to 127.41, and
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(c) in subsection (2.1), the amount that
would be the tax payable under this Part
for the year by the taxpayer if that tax
were determined without reference to
subsection 120(1) and sections 120.3 and
123.3 and before making any deduction
under any of sections 121 and 122.3,
subsection 123.4(3) and sections 124 to
127.41;
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``unused
foreign tax
credit''
« fraction
inutilisée du
crédit pour
impôt
étranger »
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``unused foreign tax credit'' of a taxpayer in
respect of a country for a taxation year
means the amount, if any, by which
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(a) the business-income tax paid by the
taxpayer for the year in respect of
businesses carried on by the taxpayer in
that country
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(b) the amount, if any, deductible under
subsection (2) in respect of that country
in computing the taxpayer's tax payable
under this Part for the year.
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(16) The portion of the definition
``business-income tax'' in subsection 126(7)
of the Act before paragraph (a) is replaced
by the following:
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``business-inc
ome tax''
« impôt sur le
revenu tiré
d'une
entreprise »
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``business-income tax'' paid by a taxpayer for
a taxation year in respect of businesses
carried on by the taxpayer in a country other
than Canada (in this definition referred to as
the ``business country'') means, subject to
subsections (4.1) and (4.2), the portion of
any income or profits tax paid by the
taxpayer for the year to the government of
a country other than Canada that can
reasonably be regarded as tax in respect of
the income of the taxpayer from a business
carried on by the taxpayer in the business
country, but does not include a tax, or the
portion of a tax, that can reasonably be
regarded as relating to an amount that
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(17) Paragraph (b) of the definition
``economic profit'' in subsection 126(7) of
the Act is replaced by the following:
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(b) income or profits taxes payable by the
taxpayer for any year to the government
of a country other than Canada, in respect
of the property for the period or in respect
of a related transaction, or
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(18) The portion of the definition
``non-business-income tax'' in subsection
126(7) of the Act before paragraph (a) is
replaced by the following:
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``non-business
-income tax''
« impôt sur le
revenu ne
provenant pas
d'une
entreprise »
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``non-business-income tax'' paid by a
taxpayer for a taxation year to the
government of a country other than Canada
means, subject to subsections (4.1) and
(4.2), the portion of any income or profits
tax paid by the taxpayer for the year to the
government of that country that
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(19) Subsection 126(7) of the Act is
amended by adding the following in
alphabetical order:
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``commercial
obligation''
« obligation
commerciale »
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``commercial obligation'' in respect of a
taxpayer's foreign oil and gas business in a
country means an obligation of the taxpayer
to a particular person, undertaken in the
course of carrying on the business or in
contemplation of the business, if the law of
the country would have allowed the
taxpayer to undertake an obligation, on
substantially the same terms, to a person
other than the particular person;
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``foreign oil
and gas
business''
« entreprise
pétrolière et
gazière à
l'étranger »
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``foreign oil and gas business'' of a taxpayer
means a business, carried on by the
taxpayer in a taxing country, the principal
activity of which is the extraction from
natural accumulations, or from oil or gas
wells, of petroleum, natural gas or related
hydrocarbons;
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``production
tax amount''
« impôt sur la
production »
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``production tax amount'' of a taxpayer for a
foreign oil and gas business carried on by
the taxpayer in a taxing country for a
taxation year means the total of all amounts
each of which
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(a) became receivable in the year by the
government of the country because of an
obligation (other than a commercial
obligation) of the taxpayer, in respect of
the business, to the government or an
agent or instrumentality of the
government,
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(b) is computed by reference to the
amount by which
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(i) the amount or value of petroleum,
natural gas or related hydrocarbons
produced or extracted by the taxpayer
in the course of carrying on the
business in the year
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(ii) an allowance or other deduction
that
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(A) is deductible, under the
agreement or law that creates the
obligation described in paragraph
(a), in computing the amount
receivable by the government of the
country, and
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(B) is intended to take into account
the taxpayer's operating and capital
costs of that production or
extraction, and can reasonably be
considered to have that effect,
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(c) would not, if this Act were read
without reference to subsection (5), be an
income or profits tax, and
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(d) is not identified as a royalty under the
agreement that creates the obligation or
under any law of the country;
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``taxing
country''
« pays
taxateur »
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``taxing country'' means a country (other than
Canada) the government of which regularly
imposes, in respect of income from
businesses carried on in the country, a levy
or charge of general application that would,
if this Act were read without reference to
subsection (5), be an income or profits tax;
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(20) Subsection 126(8) of the Act is
repealed.
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(21) Section 126 of the Act is amended by
adding the following after subsection (8):
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| Computation
of qualifying
incomes and
losses
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(9) The qualifying incomes and qualifying
losses for a taxation year of a taxpayer from
sources in a country shall be determined
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(i) any portion of income that was
deductible under subparagraph
110(1)(f)(i) in computing the taxpayer's
taxable income,
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(ii) for the purpose of subparagraph
(1)(b)(i), any portion of income in
respect of which an amount was deducted
under section 110.6 in computing the
taxpayer's income, or
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(iii) any income or loss from a source in
the country if any income of the taxpayer
from the source would be tax-exempt
income; and
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(b) as if the total of all amounts each of
which is that portion of an amount deducted
under subsection 66(4), 66.21(4), 66.7(2) or
66.7(2.3) in computing those qualifying
incomes and qualifying losses for the year
that applies to those sources were the
greater of
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(i) the total of all amounts each of which
is that portion of an amount deducted
under subsection 66(4), 66.21(4), 66.7(2)
or 66.7(2.3) in computing the taxpayer's
income for the year that applies to those
sources, and
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(A) the portion of the maximum
amount that would be deductible under
subsection 66(4) in computing the
taxpayer's income for the year that
applies to those sources if the amount
determined under subparagraph
66(4)(b)(ii) for the taxpayer in respect
of the year were equal to the amount,
if any, by which the total of
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(I) the taxpayer's foreign resource
income (within the meaning
assigned by subsection 66.21(1)) for
the year in respect of the country,
determined as if the taxpayer had
claimed the maximum amounts
deductible for the year under
subsections 66.7(2) and (2.3), and
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(II) all amounts each of which
would have been an amount
included in computing the
taxpayer's income for the year
under subsection 59(1) in respect of
a disposition of a foreign resource
property in respect of the country,
determined as if each amount
determined under subparagraph
59(1)(b)(ii) were nil,
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(III) the total of all amounts each of
which is a portion of an amount
(other than a portion that results in a
reduction of the amount otherwise
determined under subclause (I)) that
applies to those sources and that
would be deducted under subsection
66.7(2) in computing the taxpayer's
income for the year if the maximum
amounts deductible for the year
under that subsection were
deducted,
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(B) the maximum amount that would
be deductible under subsection
66.21(4) in respect of those sources in
computing the taxpayer's income for
the year if
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(I) the amount deducted under
subsection 66(4) in respect of those
sources in computing the taxpayer's
income for the year were the amount
determined under clause (A),
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(II) the amounts deducted under
subsections 66.7(2) and (2.3) in
respect of those sources in
computing the taxpayer's income
for the year were the maximum
amounts deductible under those
subsections,
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(III) for the purposes of the
definition ``cumulative foreign
resource expense'' in subsection
66.21(1), the total of the amounts
designated under subparagraph
59(1)(b)(ii) for the year in respect of
dispositions by the taxpayer of
foreign resource properties in
respect of the country in the year
were the maximum total that could
be so designated without any
reduction in the maximum amount
that would be determined under
clause (A) in respect of the taxpayer
for the year in respect of the country
if no assumption had been made
under subclause (A)(II) in respect of
designations made under
subparagraph 59(1)(b)(ii), and
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(IV) the amount determined under
paragraph 66.21(4)(b) were nil, and
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(C) the total of all amounts each of
which is the maximum amount,
applicable to one of those sources, that
is deductible under subsection 66.7(2)
or (2.3) in computing the taxpayer's
income for the year.
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(22) Subsections (1), (3), (5), (8) and (9)
apply to the 1998 and subsequent taxation
years except that, in their application to the
1998 and 1999 taxation years, subclauses
126(1)(b)(ii)(A)(I) and (2.1)(a)(ii)(A)(I) and
subparagraph 126(3)(b)(i) of the Act, as
enacted by subsections (1), (3) and (9),
respectively, shall be read without
reference to the expression ``computed
without reference to paragraph
20(1)(ww)''.
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(23) Subsections (2), (10), (11), (13), (16)
to (18) and (20) apply after June 27, 1999.
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(24) Subsections (4) and (6) apply to the
1996 and subsequent taxation years.
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(25) Subsections (7) and (15) apply to the
2001 and subsequent taxation years.
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(26) Subsections (12), (14), (19) and (21)
apply to taxation years of a taxpayer that
begin after the earlier of
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(a) December 31, 1999; and
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(b) where, for the purposes of this
subsection, a date is designated in writing
by the taxpayer and the designation is
filed with the Minister of National
Revenue on or before the taxpayer's
filing-due date for the taxpayer's
taxation year that includes the day on
which this Act receives royal assent, the
later of
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(i) the date so designated, and
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118. (1) Subparagraph 127(5)(a)(i) of the
Act is replaced by the following:
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(i) the taxpayer's investment tax credit at
the end of the year in respect of property
acquired before the end of the year, of the
taxpayer's flow-through mining
expenditure for the year or a preceding
taxation year or of the taxpayer's
SR&ED qualified expenditure pool at the
end of the year or of a preceding taxation
year, and
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(2) Clause 127(5)(a)(ii)(A) of the Act is
replaced by the following:
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(A) the taxpayer's investment tax
credit at the end of the year in respect
of property acquired in a subsequent
taxation year, of the taxpayer's
flow-through mining expenditure for a
subsequent taxation year or of the
taxpayer's SR&ED qualified
expenditure pool at the end of a
subsequent taxation year to the extent
that an investment tax credit was not
deductible under this subsection for
the subsequent year, and
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(3) Paragraph 127(5)(b) of the Act is
replaced by the following:
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(b) where Division E.1 applies to the
taxpayer for the year, the amount, if any, by
which
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(i) the taxpayer's tax otherwise payable
under this Part for the year
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(ii) the taxpayer's minimum amount for
the year determined under section
127.51.
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(4) Paragraph (a.1) of the definition
``investment tax credit'' in subsection
127(9) of the Act is replaced by the
following:
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(a.1) 20% of the amount by which the
taxpayer's SR&ED qualified
expenditure pool at the end of the year
exceeds the total of all amounts each of
which is the super-allowance benefit
amount for the year in respect of the
taxpayer in respect of a province,
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(a.2) where the taxpayer is an individual
(other than a trust), 15% of the taxpayer's
flow-through mining expenditures for
the year,
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(5) Paragraph (c) of the definition
``investment tax credit'' in subsection
127(9) of the Act is replaced by the
following:
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(c) the total of all amounts each of which
is an amount determined under paragraph
(a), (a.1), (a.2) or (b) in respect of the
taxpayer for any of the 10 taxation years
immediately preceding or the 3 taxation
years immediately following the year,
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(6) Paragraph (l) of the definition
``investment tax credit'' in subsection
127(9) of the Act is replaced by the
following:
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(l) any of the income is exempt income or
is exempt from tax under this Part,
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(7) Subsection 127(9) of the Act is
amended by adding the following in
alphabetical order:
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``flow-throug
h mining
expenditure''
« dépense
minière
déterminée »
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``flow-through mining expenditure'' of a
taxpayer for a taxation year means an
expense deemed by subsection 66(12.61)
(or by subsection 66(18) as a consequence
of the application of subsection 66(12.61)
to the partnership, referred to in paragraph
(c) of this definition, of which the taxpayer
is a member) to be incurred by the taxpayer
in the year
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(a) that is a Canadian exploration
expense incurred after October 17, 2000
and before 2004 by a corporation in
conducting mining exploration activity
from or above the surface of the earth for
the purpose of determining the existence,
location, extent or quality of a mineral
resource described in paragraph (a) or (d)
of the definition ``mineral resource'' in
subsection 248(1),
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(i) is an expense described in
paragraph (f) of the definition
``Canadian exploration expense'' in
subsection 66.1(6), and
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(ii) is not an expense in respect of
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(A) trenching, if one of the purposes
of the trenching is to carry out
preliminary sampling (other than
specified sampling),
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(B) digging test pits (other than
digging test pits for the purpose of
carrying out specified sampling),
and
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(C) preliminary sampling (other
than specified sampling),
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(c) an amount in respect of which is
renounced in accordance with subsection
66(12.6) by the corporation to the
taxpayer (or a partnership of which the
taxpayer is a member) under an
agreement described in that subsection
and made after October 17, 2000,
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