(2) Subsection (1) applies in respect of advertisements placed in an issue dated after May 2000.
	13. (1) Paragraph 20(1)(b) of the Act is replaced by the following:
Cumulative eligible capital amount	(b) such amount as the taxpayer claims in respect of a business, not exceeding 7% of the taxpayer's cumulative eligible capital in respect of the business at the end of the year except that, where the year is less than 12 months, the amount allowed as a deduction under this paragraph shall not exceed that proportion of the maximum amount otherwise allowable that the number of days in the taxation year is of 365;
	(2) The portion of paragraph 20(1)(e) of the Act before subparagraph (i) is replaced by the following:
Expenses re financing	(e) such part of an amount (other than an excluded amount) that is not otherwise deductible in computing the income of the taxpayer and that is an expense incurred in the year or a preceding taxation year
	(3) The portion of paragraph 20(1)(e) of the Act after subparagraph (ii.2) and before subparagraph (iii) is replaced by the following:
	(including a commission, fee, or other amount paid or payable for or on account of services rendered by a person as a salesperson, agent or dealer in securities in the course of the issuance, sale or borrowing) that is the lesser of
	(4) Paragraph 20(1)(e) of the Act is amended by adding the following before subparagraph (v):
	(iv.1) ``excluded amount'' means
	(A) an amount paid or payable as or on account of the principal amount of a debt obligation or interest in respect of a debt obligation,
	(B) an amount that is contingent or dependent on the use of, or production from, property, or
	(C) an amount that is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation,
	(5) Subparagraph 20(1)(f)(ii) of the Act is amended by replacing the reference to the fraction ``3/4'' with a reference to the fraction ``1/2''.
	(6) Paragraph 20(1)(z.1) of the Act is amended by replacing the reference to the fraction ``3/4'' with a reference to the fraction ``1/2''.
	(7) Subparagraph 20(1)(hh)(ii) of the Act is replaced by the following:
	(ii) that is, by reason of subparagraph 12(1)(x)(vi) or subsection 12(2.2), not included under paragraph 12(1)(x) in computing the taxpayer's income for the year or a preceding taxation year, where the particular amount relates to an outlay or expense (other than an outlay or expense that is in respect of the cost of property of the taxpayer or that is or would be, if amounts deductible by the taxpayer were not limited by reason of paragraph 66(4)(b), subsection 66.1(2), subparagraph 66.2(2)(a)(ii), the words ``30% of'' in clause 66.21(4)(a)(ii)(B), clause 66.21(4)(a)(ii)(C) or (D) or subparagraph 66.4(2)(a)(ii), deductible under section 66, 66.1, 66.2, 66.21 or 66.4) that would, if the particular amount had not been received, have been deductible in computing the taxpayer's income for the year or a preceding taxation year;
	(8) Subsection 20(4.2) of the Act is replaced by the following:
Bad debts re eligible capital property	(4.2) Where, in respect of one or more dispositions of eligible capital property by a taxpayer, an amount that is described in paragraph (a) of the description of E in the definition ``cumulative eligible capital'' in subsection 14(5) in respect of the taxpayer is established by the taxpayer to have become a bad debt in a taxation year, there shall be deducted in computing the taxpayer's income for the year the amount determined by the formula
	(A + B) - (C + D + E + F + G + H)
	where
	A is the lesser of
	(a) 1/2 of the total of all amounts each of which is such an amount that was so established to have become a bad debt in the year or a preceding taxation year, and
	(b) the amount that is
	(i) where the year ended after February 27, 2000, the amount, if any, that would be the total of all amounts determined by the formula in paragraph 14(1)(b) (if that formula were read without reference to the description of D) for the year, or for a preceding taxation year that ended after February 27, 2000, and
	(ii) where the year ended before February 28, 2000, nil;
	B is the amount, if any, by which
	(a) 3/4 of the total of all amounts each of which is such an amount that was so established to be a bad debt in the year or a preceding taxation year
	exceeds the total of
	(b) 3/2 of the amount by which
	(i) the value of A
	exceeds
	(ii) the amount included in the value of A because of subparagraph (b)(i) of the description of A in respect of taxation years that ended after February 27, 2000 and before October 18, 2000, and
	(c) 9/8 of the amount included in the value of A because of subparagraph (b)(i) of the description of A in respect of taxation years that ended after February 27, 2000 and before October 18, 2000;
	C is the total of all amounts each of which is an amount determined under subsection 14(1) or (1.1) for the year, or a preceding taxation year, that ends after October 17, 2000 and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6 by the taxpayer;
	D is the total of all amounts each of which is an amount determined under subsection 14(1) or (1.1) for the year, or a preceding taxation year, that ended after February 27, 2000 and before October 18, 2000 and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6 by the taxpayer;
	E is the total of all amounts each of which is an amount determined under subsection 14(1) or (1.1) for a preceding taxation year that ended before February 28, 2000 and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6 by the taxpayer;
	F is the total of
	(a) 2/3 of the total of all amounts each of which is the value determined in respect of the taxpayer for D in the formula in paragraph 14(1)(b) for the year, or a preceding taxation year, that ends after October 17, 2000, and
	(b) 8/9 of the total of all amounts each of which is the value determined in respect of the taxpayer for D in the formula in paragraph 14(1)(b) for the year, or a preceding taxation year, that ended after February 27, 2000 and before October 18, 2000;
	G is the total of all amounts each of which is the value determined in respect of the taxpayer for D in the formula in subparagraph 14(1)(a)(v) (as that subparagraph applied for taxation years that ended before February 28, 2000) for a preceding taxation year; and
	H is the total of all amounts deducted by the taxpayer under this subsection for preceding taxation years.
Deemed allowable capital loss	(4.3) Where, in respect of one or more dispositions of eligible capital property by a taxpayer, an amount that is described in paragraph (a) of the description of E in the definition ``cumulative eligible capital'' in subsection 14(5) in respect of the taxpayer is established by the taxpayer to have become a bad debt in a taxation year, the taxpayer is deemed to have an allowable capital loss from a disposition of capital property in the year equal to the lesser of
	(a) the total of the value determined for A and 2/3 of the value determined for B in the formula in subsection (4.2) in respect of the taxpayer for the year; and
	(b) the total of all amounts each of which is
	(i) the value determined for C or paragraph (a) of the description of F in the formula in subsection (4.2) in respect of the taxpayer for the year,
	(ii) 3/4 of the value determined for D or paragraph (b) of the description of F in the formula in subsection (4.2) in respect of the taxpayer for the year, or
	(iii) 2/3 of the value determined for E or G in the formula in subsection (4.2) in respect of the taxpayer for the year.
	(9) Subsection (1) applies to taxation years that begin after December 21, 2000.
	(10) Subsections (2) to (4) apply to expenses incurred by a taxpayer after November 1999, other than expenses incurred pursuant to a written agreement made by the taxpayer before December 1999.
	(11) Subsections (5) and (6) apply in respect of amounts that become payable after February 27, 2000 except that, for amounts that became payable after February 27, 2000 and before October 18, 2000, the reference to the fraction ``1/2'' in subparagraph 20(1)(f)(ii) of the Act, as enacted by subsection (5), and in paragraph 20(1)(z.1) of the Act, as enacted by subsection (6), shall be read as a reference to the fraction ``2/3''.
	(12) Subsection (7) applies to taxation years that begin after 2000.
	(13) Subsection (8) applies to taxation years that end after February 27, 2000 except that, for taxation years that ended after February 27, 2000 and before October 18, 2000,
	(a) the reference to the fraction ``1/2'' in paragraph (a) of the description of A in subsection 20(4.2) of the Act, as enacted by subsection (8), shall be read as a reference to the fraction ``2/3'';
	(b) the reference to the fraction ``3/2'' in paragraph (b) of the description of B in subsection 20(4.2) of the Act, as enacted by subsection (8), shall be read as a reference to the fraction ``9/8'';
	(c) the reference to the fraction ``2/3'' in paragraph 20(4.3)(a) and subparagraph 20(4.3)(b)(iii) of the Act, as enacted by subsection (8), shall be read as a reference to the fraction ``8/9''; and
	(d) subparagraph 20(4.3)(b)(ii) of the Act, as enacted by subsection (8), shall be read without reference to the expression ``3/4 of''.
	14. (1) The Act is amended by adding the following after section 20.1:
Interest - authorized foreign bank - interpretation	20.2 (1) The following definitions apply in this section.
``branch advance'' « avance de succursale »	``branch advance'' of an authorized foreign bank means an amount allocated or provided by, or on behalf of, the bank to, or for the benefit of, its Canadian banking business under terms that were documented, before the amount was so allocated or provided, to the same extent as, and in a form similar to the form in which, the bank would ordinarily document a loan by it to a person with whom it deals at arm's length.
``branch financial statements'' « états financiers de succursale »	``branch financial statements'' of an authorized foreign bank for a taxation year means the unconsolidated statements of assets and liabilities and of income and expenses for the year, in respect of its Canadian banking business,
	(a) that form part of the bank's annual report for the year filed with the Superintendent of Financial Institutions as required under section 601 of the Bank Act, and accepted by the Superintendent, and
	(b) if no filing is so required for the taxation year, that are prepared in a manner consistent with the statements in the annual report or reports so filed and accepted for the period or periods in which the taxation year falls,
	except if the Minister demonstrates that the statements are not prepared in accordance with generally-accepted accounting principles in Canada as modified by any specifications applicable to the bank made by the Superintendent of Financial Institutions under subsection 308(4) of the Bank Act (in this definition referred to as ``modified GAAP''), in which case it means the statements subject to such modifications as are required to make them comply with modified GAAP.
``calculation period'' « période de calcul »	``calculation period'' of an authorized foreign bank for a taxation year means any one of a series of regular periods into which the year is divided in a designation by the bank in its return of income for the year or, in the absence of such a designation, by the Minister,
	(a) none of which is longer than 31 days;
	(b) the first of which commences at the beginning of the year and the last of which ends at the end of the year; and
	(c) that are, unless the Minister otherwise agrees in writing, consistent with the calculation periods designated for the bank's preceding taxation year.
Formula elements	(2) The following descriptions apply for the purposes of the formulae in subsection (3) for any calculation period in a taxation year of an authorized foreign bank:
	A is the amount of the bank's assets at the end of the period;
	BA is the amount of the bank's branch advances at the end of the period;
	IBA is the total of all amounts each of which is a reasonable amount on account of notional interest for the period, in respect of a branch advance, that would be deductible in computing the bank's income for the year if it were interest payable by, and the advance were indebtedness of, the bank to another person and if this Act were read without reference to paragraph 18(1)(v) and this section;
	IL is the total of all amounts each of which is an amount on account of interest for the period in respect of a liability of the bank to another person or partnership that would be deductible in computing the bank's income for the year if this Act were read without reference to paragraph 18(1)(v) and this section; and
	L is the amount of the bank's liabilities to other persons and partnerships at the end of the period.
Interest deduction	(3) In computing the income of an authorized foreign bank from its Canadian banking business for a taxation year, there may be deducted on account of interest for each calculation period of the bank for the year,
	(a) where the total amount at the end of the period of its liabilities to other persons and partnerships and branch advances is 95% or more of the amount of its assets at that time, an amount not exceeding
	(i) if the amount of liabilities to other persons and partnerships at that time is less than 95% of the amount of its assets at that time, the amount determined by the formula
	IL + IBA x (0.95 x A - L)/BA
	and
	(ii) if the amount of those liabilities at that time is greater than or equal to 95% of the amount of its assets at that time, the amount determined by the formula
	IL x (0.95 x A)/L
	and
	(b) in any other case, the total of
	(i) the amount determined by the formula
	IL + IBA
	and
	(ii) the product of
	(A) the amount claimed by the bank, in its return of income for the year, not exceeding the amount determined by the formula
	(0.95 x A) - (L + BA)
	and
	(B) the average, based on daily observations, of the Bank of Canada bank rate for the period.