(b) it has not issued any unit (other than a unit issued to a person as a payment, or in satisfaction of the person's right to enforce payment, of an amount out of the trust's income determined before the application of subsection 104(6), or out of the trust's capital gains) of the trust after February 20, 1990 and before that time to a person who, after reasonable inquiry, it had reason to believe was non-resident, except where the unit was issued to that person under an agreement in writing entered into before February 21, 1990.
	(8) Subsections (1), (2), (4) and (5) apply to taxation years that end after February 27, 2000 except that, for a taxation year of a mutual fund trust that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000,
	(a) the reference to the percentage ``14.5%'' in paragraph 132(1)(a) of the Act, as enacted by subsection (1), shall be read as a reference to the percentage determined when 29% is multiplied by the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the trust for the year;
	(b) the reference to the fraction ``100/14.5'' in the description of C in the definition ``capital gains redemptions'' in subsection 132(4) of the Act, as enacted by subsection (4), shall be read as a reference to the fraction ``100/29X'', where ``X'' is the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1), that applies to the trust for the year; and
	(c) the reference to the word ``twice'' in the description of E in the definition ``capital gains redemption'' in subsection 132(4) of the Act, as enacted by subsection (5), 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 taxpayer for the year, multiplied by''.
	(9) Subsection (3) applies to taxation years that end after February 27, 2000.
	(10) Subsection (6) applies to the 1990 and subsequent taxation years.
	(11) Paragraph 132(7)(a) of the Act, as enacted by subsection (7), applies after October 1, 1996.
	(12) Paragraph 132(7)(b) of the Act, as enacted by subsection (7), applies after February 20, 1990.
	130. (1) Paragraph 132.11(1)(b) of the Act is replaced by the following:
	(b) where the trust's taxation year ends on December 15 because of paragraph (a), subject to subsection (1.1), each subsequent taxation year of the trust is deemed to be the period that begins at the beginning of December 16 of a calendar year and ends at the end of December 15 of the following calendar year or at such earlier time as is determined under paragraph 132.2(1)(b) or subsection 142.6(1); and
	(2) Section 132.11 of the Act is amended by adding the following after subsection (1):
Revocation of election	(1.1) Where a particular taxation year of a trust ends on December 15 of a calendar year because of an election made under paragraph (1)(a), the trust applies to the Minister in writing before December 15 of that calendar year (or before a later time that is acceptable to the Minister) to have this subsection apply to the trust, with the concurrence of the Minister
	(a) the trust's taxation year following the particular taxation year is deemed to begin immediately after the end of the particular taxation year and end at the end of that calendar year; and
	(b) each subsequent taxation year of the trust is deemed to be determined as if that election had not been made.
	(3) Subsection 132.11(4) of the Act is replaced by the following:
Amounts paid or payable to beneficiaries	(4) For the purposes of subsections (5) and (6) and 104(6) and (13) and notwithstanding subsection 104(24), each amount that is paid, or that becomes payable, by a trust to a beneficiary after the end of a particular taxation year of the trust that ends on December 15 of a calendar year because of subsection (1) and before the end of that calendar year, is deemed to have been paid or to have become payable, as the case may be, to the beneficiary at the end of the particular year and not at any other time.
	(4) Subsection 132.11(6) of the Act is amended by adding the word ``and'' at the end of paragraph (a), by striking out the word ``and'' at the end of paragraph (b) and by repealing paragraph (c).
	(5) Subsections (1) and (2) apply to taxation years that end after 1999.
	(6) Subsections (3) and (4) apply to the 2000 and subsequent taxation years.
	131. (1) Paragraph 133(1)(c) of the Act is replaced by the following:
	(c) the only taxable capital gains and allowable capital losses referred to in paragraph 3(b) were from dispositions of taxable Canadian property,
	(2) Paragraph 133(1)(d) of the Act is amended by replacing the reference to the expression ``4/3 of'' with a reference to the word ``twice''.
	(3) Paragraph (a) of the definition ``Canadian property'' in subsection 133(8) of the Act is replaced by the following:
	(a) taxable Canadian property, and
	(4) The description of M in paragraph (c) of the definition ``capital gains dividend account'' in subsection 133(8) of the Act is replaced by the following:
	M is the total of the corporation's capital gains for taxation years ending in the period from dispositions in the period of taxable Canadian property, and
	(5) The portion of the definition ``non-resident-owned investment corporation'' in subsection 133(8) of the Act after paragraph (d) is replaced by the following:
	(e) it has, on or before the earlier of February 27, 2000 and the day that is 90 days after the beginning of its first taxation year that begins after 1971, elected in prescribed manner to be taxed under this section, and
	(f) it has not, before the end of the last taxation year in the period, revoked in prescribed manner its election,
	except that
	(g) a new corporation (within the meaning assigned by section 87) formed as a result of an amalgamation after June 18, 1971 of two or more predecessor corporations is not a non-resident-owned investment corporation unless each of the predecessor corporations was, immediately before the amalgamation, a non-resident-owned investment corporation,
	(h) where a corporation is a new corporation described in paragraph (g), and each of the predecessor corporations elected in a timely manner under paragraph (e), paragraph (e) shall be read, in its application to the new corporation, without reference to the words ``the earlier of February 27, 2000 and'', and
	(i) subject to section 134.1, a corporation is not a non-resident-owned investment corporation in any taxation year that ends after the earlier of,
	(i) the first time, if any, after February 27, 2000 at which the corporation effects an increase in capital, and
	(ii) the corporation's last taxation year that begins before 2003;
	(6) Subsection 133(8) of the Act is amended by adding the following in alphabetical order:
``increase in capital'' « augmentatio n de capital »	``increase in capital'' in respect of a corporation means a transaction (other than a transaction carried out pursuant to an agreement in writing made before February 28, 2000, referred to in this definition as a ``specified transaction'') in the course of which the corporation issues additional shares of its capital stock or incurs indebtedness, if the transaction has the effect of increasing the total of
	(a) the corporation's liabilities, and
	(b) the fair market value of all the shares of its capital stock
	to an amount that is substantially greater than that total would have been on February 27, 2000 if all specified transactions had been carried out immediately before that day;
	(7) Subsections (1), (3) and (4) apply after October 1, 1996.
	(8) Subsection (2) applies to taxation years that end after February 27, 2000 except that, for the taxation year of a corporation that 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 paragraph 133(1)(d) 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 taxpayer for the year, multiplied by''.
	(9) Subsections (5) and (6) apply after February 27, 2000.
	132. (1) The Act is amended by adding the following after section 134:
NRO - transition	134.1 (1) This section applies to a corporation that
	(a) was a non-resident-owned investment corporation in a taxation year;
	(b) is not a non-resident-owned investment corporation in the following taxation year (in this section referred to as the corporation's ``first non-NRO year''); and
	(c) elects in writing filed with the Minister on or before the corporation's filing-due date for its first non-NRO year to have this section apply.
Application	(2) A corporation to which this section applies is deemed to be a non-resident-owned investment corporation in its first non-NRO year for the purposes of applying, in respect of dividends paid on shares of its capital stock in its first non-NRO year to a non-resident person or a non-resident-owned investment corporation, subsections 133(6) to (9) (other than the definition ``non-resident-owned investment corporation'' in subsection 133(8)) and section 212 and any tax treaty.
Revocation	134.2 (1) This section applies to a corporation that
	(a) revokes at any time (in this section described as the ``revocation time'') its election to be taxed under section 133;
	(b) elects to have this section apply, by filing an election in writing with the Minister on or before the corporation's filing-due date for the taxation year of the corporation (in this section referred to as the ``revocation year'') that would have included the revocation time if the corporation had not so elected; and
	(c) specifies in the election a time (in this section referred to as the ``elected time'') that is in the revocation year and is not after the revocation time.
Consequences	(2) Where this section applies to a corporation,
	(a) the corporation's taxation year that would have included the elected time, if the corporation had not elected to have this section apply, is deemed to end immediately before the elected time;
	(b) a new taxation year of the corporation is deemed to begin at the elected time; and
	(c) notwithstanding paragraph (f) of the definition ``non-resident-owned investment corporation'' in subsection 133(8), the corporation is deemed to be a non-resident-owned investment corporation for the period that begins at the beginning of the revocation year and ends immediately before the elected time.
	(2) Section 134.1 of the Act, as enacted by subsection (1), applies to a corporation that ceases to be a non-resident-owned investment corporation because of a transaction or event that occurs, or a circumstance that arises, in a taxation year of the corporation that ends after February 27, 2000.
	(3) Section 134.2 of the Act, as enacted by subsection (1), applies to revocations made after February 27, 2000.
	(4) An election under paragraph 134.1(1)(c) or 134.2(1)(b) of the Act, as enacted by subsection (1), is deemed to have been made in a timely manner if it is made on or before the electing corporation's filing-due date for its first taxation year that ends after this Act receives royal assent.
	133. (1) Subparagraph 138(5)(b)(i) of the Act is replaced by the following:
	(i) interest on borrowed money used to acquire designated insurance property for the year, or to acquire property for which designated insurance property for the year was substituted property, for the period in the year during which the designated insurance property was held by the insurer in respect of the business,
	(2) Paragraph 138(5)(b) of the Act is amended by adding the word ``or'' at the end of subparagraph (ii), by striking out the word ``or'' at the end of subparagraph (iii) and by repealing subparagraph (iv).
	(3) The portion of subsection 138(11.3) of the Act after paragraph (b) is replaced by the following:
	the following rules apply:
	(c) the insurer is deemed to have disposed of the property at the beginning of the year for proceeds of disposition equal to its fair market value at that time and to have reacquired the property immediately after that time at a cost equal to that fair market value,
	(d) where paragraph (a) applies, any gain or loss arising from the disposition is deemed not to be a gain or loss from designated insurance property of the insurer in the year, and
	(e) where paragraph (b) applies, any gain or loss arising from the disposition is deemed to be a gain or loss from designated insurance property of the insurer in the year.
	(4) Paragraph 138(11.5)(b) of the Act is replaced by the following:
	(b) the transferor has, at that time or within 60 days after that time, transferred all or substantially all of the property (in this subsection referred to as the ``transferred property) that is owned by it at that time and that was designated insurance property in respect of the business for the taxation year that, because of paragraph (h), ended immediately before that time
	(i) to a corporation (in this subsection referred to as the ``transferee'') that is a qualified related corporation (within the meaning assigned by subsection 219(8)) of the transferor that began immediately after that time to carry on that insurance business in Canada, and
	(ii) for consideration that includes shares of the capital stock of the transferee,
	(5) Paragraph 138(11.91)(e) of the Act is replaced by the following:
	(e) the insurer is deemed to have disposed, immediately before the beginning of the particular taxation year, of each property owned by it at that time that is designated insurance property in respect of the business referred to in paragraph (a) for the particular taxation year, for proceeds of disposition equal to the fair market value at that time and to have reacquired, at the beginning of the particular taxation year, the property at a cost equal to that fair market value, and
	(6) Paragraph 138(11.94)(b) of the Act is replaced by the following:
	(b) the transferor has, at that time or within 60 days after that time,
	(i) in the case of a transferor that is a life insurer and that carries on an insurance business in Canada and in a country other than Canada in the year, transferred all or substantially all of the property (in subsection (11.5) referred to as the ``transferred property'') that is owned by it at that time and that was designated insurance property in respect of the business for the taxation year that, because of paragraph (11.5)(h), ended immediately before that time, or
	(ii) in any other case, transferred all or substantially all of the property owned by it at that time and used by it in the year in, or held by it in the year in the course of, carrying on that insurance business in Canada in that year (in subsection (11.5) referred to as the ``transferred property'')
	to a corporation resident in Canada (in this subsection referred to as the ``transferee'') that is a subsidiary wholly-owned corporation of the transferor that, immediately after that time, began to carry on that insurance business in Canada for consideration that includes shares of the capital stock of the transferee,
	(7) The definition ``designated insurance property'' in subsection 138(12) of the Act is replaced by the following:
``designated insurance property'' « bien d'assurance désigné »	``designated insurance property'' for a taxation year of an insurer (other than an insurer resident in Canada that at no time in the year carried on a life insurance business) that, at any time in the year, carried on an insurance business in Canada and in a country other than Canada, means property determined in accordance with prescribed rules except that, in its application to any taxation year, ``designated insurance property'' for the 1998 or a preceding taxation year means property that was, under this subsection as it read in its application to taxation years that ended in 1996, property used by it in the year in, or held by it in the year in the course of, carrying on an insurance business in Canada;
	(8) Subsections (1) to (3) and (7) apply to the 1997 and subsequent taxation years.
	(9) Subsections (4) to (6) apply to the 1999 and subsequent taxation years except that, where a taxpayer or a taxpayer's legal representative so elects in writing and files with the Minister of National Revenue before 2002 its election in respect of one or more of paragraph 138(11.5)(b) of the Act, as enacted by subsection (4), paragraph 138(11.91)(e) of the Act, as enacted by subsection (5), or paragraph 138(11.94)(b) of the Act, as enacted by subsection (6), each of the subsections in respect of which the election was made applies to the taxpayer's 1997 and subsequent taxation years.
	134. (1) Section 138.1 of the Act is amended by adding the following after subsection (3):