(a) a loan made by a corporation resident in Canada where the interest rate charged on the loan is not less than the interest rate that a lender and a borrower would have been willing to agree to if they were dealing at arm's length with each other at the time the loan was made;
	(b) a transfer of property (other than a transfer of property made for the purpose of acquiring shares of the capital stock of a foreign affiliate of a corporation or a foreign affiliate of a person resident in Canada with whom the corporation was not dealing at arm's length) or payment of an amount owing by a corporation resident in Canada pursuant to an agreement made on terms and conditions that persons who were dealing at arm's length at the time the agreement was entered into would have been willing to agree to;
	(c) a dividend paid by a corporation resident in Canada on shares of a class of its capital stock; and
	(d) a payment made by a corporation resident in Canada on a reduction of the paid-up capital in respect of shares of a class of its capital stock (not exceeding the total amount of the reduction).
	(3) Subsections (1) and (2) apply to taxation years that begin after February 23, 1998.
	9. (1) Subsection 18(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (t), by adding the word ``and'' at the end of paragraph (u) and by adding the following after paragraph (u):
Interest - authorized foreign bank	(v) where the taxpayer is an authorized foreign bank, an amount in respect of interest that would otherwise be deductible in computing the taxpayer's income from a business carried on in Canada, except as provided in section 20.2.
	(2) Paragraph 18(3.1)(b) of the Act is replaced by the following:
	(b) the amount of such an outlay or expense shall, to the extent that it would otherwise be deductible in computing the taxpayer's income for the year, be included in computing the cost or capital cost, as the case may be, of the building to the taxpayer, to the person with whom the taxpayer does not deal at arm's length, to the corporation of which the taxpayer is a specified shareholder or to the partnership of which the taxpayer's share of any income or loss is 10% or more, as the case may be.
	(3) Paragraph 18(4)(a) of the Act is replaced by the following:
	(a) the amount, if any, by which
	(i) the average of all amounts each of which is, in respect of a calendar month that ends in the year, the greatest total amount at any time in the month of the corporation's outstanding debts to specified non-residents,
	exceeds
	(ii) two times the total of
	(A) the retained earnings of the corporation at the beginning of the year, except to the extent that those earnings include retained earnings of any other corporation,
	(B) the average of all amounts each of which is the corporation's contributed surplus at the beginning of a calendar month that ends in the year, to the extent that it was contributed by a specified non-resident shareholder of the corporation, and
	(C) the average of all amounts each of which is the corporation's paid-up capital at the beginning of a calendar month that ends in the year, excluding the paid-up capital in respect of shares of any class of the capital stock of the corporation owned by a person other than a specified non-resident shareholder of the corporation,
	(4) Paragraph (b) of the definition ``outstanding debts to specified non-residents'' in subsection 18(5) of the Act is replaced by the following:
	(b) an amount outstanding at the particular time as or on account of a debt or other obligation to pay an amount to
	(i) a non-resident insurance corporation to the extent that the obligation was, for the non-resident insurance corporation's taxation year that included the particular time, designated insurance property in respect of an insurance business carried on in Canada through a permanent establishment as defined by regulation, or
	(ii) an authorized foreign bank, if the bank uses or holds the obligation at the particular time in its Canadian banking business;
	(5) Subsection 18(8) of the Act is repealed.
	(6) Subparagraph 18(9)(a)(ii) of the Act is replaced by the following:
	(ii) as, on account of, in lieu of payment of or in satisfaction of, interest, taxes (other than taxes imposed on an insurer in respect of insurance premiums of a non-cancellable or guaranteed renewable accident and sickness insurance policy, or a life insurance policy other than a group term life insurance policy that provides coverage for a period of 12 months or less), rent or royalties in respect of a period that is after the end of the year, or
	(7) Section 18 of the Act is amended by adding the following after subsection (9.01):
Application of subsection (9) to insurers	(9.02) For the purpose of subsection (9), an outlay or expense made or incurred by an insurer on account of the acquisition of an insurance policy (other than a non-cancellable or guaranteed renewable accident and sickness insurance policy or a life insurance policy other than a group term life insurance policy that provides coverage for a period of 12 months or less) is deemed to be an expense incurred as consideration for services rendered consistently throughout the period of coverage of the policy.
	(8) Subsections (1) and (4) apply after June 27, 1999.
	(9) Subsection (2) applies to outlays and expenses made or incurred after December 21, 2000.
	(10) Subsections (3) and (5) apply to taxation years that begin after 2000.
	(11) Subsections (6) and (7) apply to taxation years 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 taxpayer's taxation year in which this Act receives royal assent, they apply to taxation years that end after 1997.
	10. (1) Subsection 18.1(15) of the Act is replaced by the following:
Non-applicabi lity of section 18.1	(15) Subject to subsections (1) and (14), this section does not apply to a taxpayer's matchable expenditure in respect of a right to receive production if
	(a) no portion of the expenditure can reasonably be considered to have been paid to another taxpayer, or to a person with whom the other taxpayer does not deal at arm's length, to acquire the right from the other taxpayer and
	(i) the taxpayer's expenditure cannot reasonably be considered to relate to a tax shelter or tax shelter investment (within the meaning assigned by subsection 143.2(1)) and none of the main purposes for making the expenditure is that the taxpayer, or a person with whom the taxpayer does not deal at arm's length, obtain a tax benefit, or
	(ii) before the end of the taxation year in which the expenditure is made, the total of all amounts each of which is included in computing the taxpayer's income for the year (other than any portion of such an amount that is the subject of a reserve claimed by the taxpayer for the year under this Act) in respect of the right to receive production to which the matchable expenditure relates exceeds 80% of the expenditure; or
	(b) the expenditure is in respect of commissions or other expenses related to the issuance of an insurance policy for which all or a portion of a risk has been ceded to the taxpayer (in this paragraph referred to as the ``reinsurer'') and both the reinsurer and the person to whom the expenditure is made or is to be made are insurers subject to the supervision of
	(i) the Superintendent of Financial Institutions, in the case of an insurer that is required by law to report to the Superintendent of Financial Institutions, or
	(ii) in any other case, the Superintendent of Insurance or other similar officer or authority of the province under whose laws the insurer is incorporated.
	(2) Subsection (1) applies to expenditures made after November 17, 1996.
	11. (1) The portion of subsection 19(1) of the Act before subparagraph (b)(i) is replaced by the following:
Limitation re advertising expense - newspapers	19. (1) In computing income, no deduction shall be made in respect of an otherwise deductible outlay or expense of a taxpayer for advertising space in an issue of a newspaper for an advertisement directed primarily to a market in Canada unless
	(a) the issue is a Canadian issue of a Canadian newspaper; or
	(b) the issue is an issue of a newspaper that would be a Canadian issue of a Canadian newspaper except that
	(2) The definition ``substantially the same'' in subsection 19(5) of the Act is repealed.
	(3) The definition ``Canadian issue'' in subsection 19(5) of the Act is replaced by the following:
``Canadian issue'' « édition canadienne »	``Canadian issue'' of a newspaper means an issue, including a special issue,
	(a) the type of which, other than the type for advertisements or features, is set in Canada,
	(b) all of which, exclusive of any comics supplement, is printed in Canada,
	(c) that is edited in Canada by individuals resident in Canada, and
	(d) that is published in Canada;
	(4) The portion of the definition ``Canadian newspaper or periodical'' in subsection 19(5) of the Act before paragraph (a) is replaced by the following:
``Canadian newspaper'' « journal canadien »	``Canadian newspaper'' means a newspaper the exclusive right to produce and publish issues of which is held by one or more of the following:
	(5) Section 19 of the Act is amended by adding the following after subsection (5):
Interpretation	(5.1) In this section, each of the following is deemed to be a Canadian citizen:
	(a) a trust or corporation described in paragraph 149(1)(o) or (o.1) formed in connection with a pension plan that exists for the benefit of individuals a majority of whom are Canadian citizens;
	(b) a trust described in paragraph 149(1)(r) or (x), the annuitant in respect of which is a Canadian citizen;
	(c) a mutual fund trust, within the meaning assigned by subsection 132(6), other than a mutual fund trust the majority of the units of which are held by citizens or subjects of a country other than Canada;
	(d) a trust, each beneficiary of which is a person, partnership, association or society described in any of paragraphs (a) to (e) of the definition ``Canadian newspaper'' in subsection (5); and
	(e) a person, association or society described in paragraph (c) or (d) of the definition ``Canadian newspaper'' in subsection (5).
	(6) Subsections 19(6) to (8) of the Act are replaced by the following:
Trust property	(6) Where the right that is held by any person, partnership, association or society described in the definition ``Canadian newspaper'' in subsection (5) to produce and publish issues of a newspaper is held as property of a trust or estate, the newspaper is not a Canadian newspaper unless each beneficiary under the trust or estate is a person, partnership, association or society described in that definition.
Grace period	(7) A Canadian newspaper that would, but for this subsection, cease to be a Canadian newspaper, is deemed to continue to be a Canadian newspaper until the end of the 12th month that follows the month in which it would, but for this subsection, have ceased to be a Canadian newspaper.
Non-Canadian newspaper	(8) Where at any time one or more persons or partnerships that are not described in any of paragraphs (a) to (e) of the definition ``Canadian newspaper'' in subsection (5) have any direct or indirect influence that, if exercised, would result in control in fact of a person or partnership that holds a right to produce or publish issues of a newspaper, the newspaper is deemed not to be a Canadian newspaper at that time.
	(7) Subsections (1) to (4) and (6) apply in respect of advertisements placed in an issue dated after May 2000.
	(8) Subsection (5) applies in respect of advertisements placed in an issue dated after June 1996 except that, in applying subsection 19(5.1) of the Act, as enacted by subsection (5), to advertisements placed in an issue dated after June 1996 and before June 2000, the references in that subsection 19(5.1) to ``Canadian newspaper'' shall be read as references to ``Canadian newspaper or periodical''.
	12. (1) The Act is amended by adding the following after section 19:
Definitions	19.01 (1) The definitions in this subsection apply in this section.
``advertiseme nt directed at the Canadian market'' « annonce destinée au marché canadien »	``advertisement directed at the Canadian market'' has the same meaning as the expression ``directed at the Canadian market'' in section 2 of the Foreign Publishers Advertising Services Act and includes a reference to that expression made by or under that Act.
``original editorial content'' « contenu rédactionnel original »	``original editorial content'' in respect of an issue of a periodical means non-advertising content
	(a) the author of which is a Canadian citizen or a permanent resident of Canada within the meaning assigned by the Immigration Act and, for this purpose, ``author'' includes a writer, a journalist, an illustrator and a photographer; or
	(b) that is created for the Canadian market and has not been published in any other edition of that issue of the periodical published outside Canada.
``periodical'' « périodique »	``periodical'' has the meaning assigned by section 2 of the Foreign Publishers Advertising Services Act.
Limitation re advertising expenses - periodicals	(2) Subject to subsections (3) and (4), in computing income, no deduction shall be made by a taxpayer in respect of an otherwise deductible outlay or expense for advertising space in an issue of a periodical for an advertisement directed at the Canadian market.
100% deduction	(3) A taxpayer may deduct in computing income an outlay or expense of the taxpayer for advertising space in an issue of a periodical for an advertisement directed at the Canadian market if
	(a) the original editorial content in the issue is 80% or more of the total non-advertising content in the issue; and
	(b) the outlay or expense would, but for subsection (2), be deductible in computing the taxpayer's income.
50% deduction	(4) A taxpayer may deduct in computing income 50% of an outlay or expense of the taxpayer for advertising space in an issue of a periodical for an advertisement directed at the Canadian market if
	(a) the original editorial content in the issue is less than 80% of the total non-advertising content in the issue; and
	(b) the outlay or expense would, but for subsection (2), be deductible in computing the taxpayer's income.
Application	(5) For the purposes of subsections (3) and (4),
	(a) the percentage that original editorial content is of total non-advertising content is the percentage that the total space occupied by original editorial content in the issue is of the total space occupied by non-advertising content in the issue; and
	(b) the Minister may obtain the advice of the Department of Canadian Heritage for the purpose of
	(i) determining the result obtained under paragraph (a), and
	(ii) interpreting any expression defined in this section that is defined in the Foreign Publishers Advertising Services Act.
Editions of issues	(6) For the purposes of this section,
	(a) where an issue of a periodical is published in several versions, each version is an edition of that issue; and
	(b) where an issue of a periodical is published in only one version, that version is an edition of that issue.