Branch amounts	(4) Only amounts that are in respect of an authorized foreign bank's Canadian banking business, and that are recorded in the books of account of the business in a manner consistent with the manner in which they are required to be treated for the purposes of the branch financial statements, shall be used to determine
	(a) the amounts in subsection (2); and
	(b) the amounts in subsection (3) of an authorized foreign bank's assets, liabilities to other persons and partnerships, and branch advances.
Notional interest	(5) For the purposes of the description of IBA in subsection (2), a reasonable amount on account of notional interest for a calculation period in respect of a branch advance is the amount that would be payable on account of interest for the period by a notional borrower, having regard to the duration of the advance, the currency in which repayment is required and all other terms, as adjusted by paragraph (c), of the advance, if
	(a) the borrower were a person that dealt at arm's length with the bank, that carried on the bank's Canadian banking business and that had the same credit-worthiness and borrowing capacity as the bank;
	(b) the advance were a loan by the bank to the borrower; and
	(c) any of the terms of the advance (excluding the rate of interest, but including the structure of the interest calculation, such as whether the rate is fixed or floating and the choice of any reference rate referred to) that are not terms that would be made between the bank as lender and the borrower, having regard to all the circumstances, including the nature of the Canadian banking business, the use of the advanced funds in the business and normal risk management practices for banks, were instead terms that would be agreed to by the bank and the borrower.
Weak currency debt - interpretation	20.3 (1) The definitions in this subsection apply in this section.
``exchange date'' « date de l'échange »	``exchange date'' in respect of a debt of a taxpayer that is at any time a weak currency debt means, if the debt is incurred or assumed by the taxpayer
	(a) in respect of borrowed money that is denominated in the final currency, the day that the debt is incurred or assumed by the taxpayer; and
	(b) in respect of borrowed money that is not denominated in the final currency, or in respect of the acquisition of property, the day on which the taxpayer uses the borrowed money or the acquired property, directly or indirectly, to acquire funds that are, or to settle an obligation that is, denominated in the final currency.
``hedge'' « opération de couverture »	``hedge'' in respect of a debt of a taxpayer that is at any time a weak currency debt means any agreement made by the taxpayer
	(a) that can reasonably be regarded as having been made by the taxpayer primarily to reduce the taxpayer's risk, with respect to payments of principal or interest in respect of the debt, of fluctuations in the value of the weak currency; and
	(b) that is identified by the taxpayer as a hedge in respect of the debt in a designation in prescribed form filed with the Minister on or before the 30th day after the day the taxpayer enters into the agreement.
``weak currency debt'' « dette en devise faible »	``weak currency debt'' of a taxpayer at a particular time means a particular debt in a foreign currency (in this section referred to as the ``weak currency''), incurred or assumed by the taxpayer at a time (in this section referred to as the ``commitment time'') after February 27, 2000, in respect of a borrowing of money or an acquisition of property, where
	(a) any of the following applies, namely,
	(i) the borrowed money is denominated in a currency (in this section referred to as the ``final currency'') other than the weak currency, is used for the purpose of earning income from a business or property and is not used to acquire funds in a currency other than the final currency,
	(ii) the borrowed money or the acquired property is used, directly or indirectly, to acquire funds that are denominated in a currency (in this section referred to as the ``final currency'') other than the weak currency, that are used for the purpose of earning income from a business or property and that are not used to acquire funds in a currency other than the final currency,
	(iii) the borrowed money or the acquired property is used, directly or indirectly, to settle an obligation that is denominated in a currency (in this section referred to as the ``final currency'') other than the weak currency, that is incurred or assumed for the purpose of earning income from a business or property and that is not incurred or assumed to acquire funds in a currency other than the final currency, or
	(iv) the borrowed money or the acquired property is used, directly or indirectly, to settle another debt of the taxpayer that is at any time a weak currency debt in respect of which the final currency (which is deemed to be the final currency in respect of the particular debt) is a currency other than the currency of the particular debt;
	(b) the amount of the particular debt (together with any other debt that would, but for this paragraph, be at any time a weak currency debt, and that can reasonably be regarded as having been incurred or assumed by the taxpayer as part of a series of transactions that includes the incurring or assumption of the particular debt) exceeds $500,000; and
	(c) either of the following applies, namely,
	(i) if the rate at which interest is payable at the particular time in the weak currency in respect of the particular debt is determined under a formula based on the value from time to time of a reference rate (other than a reference rate the value of which is established or materially influenced by the taxpayer), the interest rate at the commitment time, as determined under the formula as though interest were then payable, exceeds by more than two percentage points the rate at which interest would have been payable at the commitment time in the final currency if
	(A) the taxpayer had, at the commitment time, instead incurred or assumed an equivalent amount of debt in the final currency on the same terms as the particular debt (excluding the rate of interest but including the structure of the interest calculation, such as whether the rate is fixed or floating) with those modifications that the difference in currency requires, and
	(B) interest on the equivalent amount of debt referred to in clause (A) was payable at the commitment time, or
	(ii) in any other case, the rate at which interest is payable at the particular time in the weak currency in respect of the particular debt exceeds by more than two percentage points the rate at which interest would have been payable at the particular time in the final currency if at the commitment time the taxpayer had instead incurred or assumed an equivalent amount of debt in the final currency on the same terms as the particular debt (excluding the rate of interest but including the structure of the interest calculation, such as whether the rate is fixed or floating), with those modifications that the difference in currency requires.
Interest and gain	(2) Notwithstanding any other provision of this Act, the following rules apply in respect of a particular debt of a taxpayer (other than a corporation described in one or more of paragraphs (a), (b), (c) and (e) of the definition ``specified financial institution'' in subsection 248(1)) that is at any time a weak currency debt:
	(a) no deduction on account of interest that accrues on the debt for any period that begins after the day that is the later of June 30, 2000 and the exchange date during which it is a weak currency debt shall exceed the amount of interest that would, if at the commitment time the taxpayer had instead incurred or assumed an equivalent amount of debt, the principal and interest in respect of which were denominated in the final currency, on the same terms as the particular debt (excluding the rate of interest but including the structure of the interest calculation, such as whether the rate is fixed or floating) have accrued on the equivalent debt during that period, with those modifications that the difference in currency requires;
	(b) the amount, if any, of the taxpayer's gain or loss (in this section referred to as a ``foreign exchange gain or loss'') for a taxation year on the settlement or extinguishment of the debt that arises because of the fluctuation in the value of any currency shall be included or deducted, as the case may be, in computing the taxpayer's income for the year from the business or the property to which the debt relates; and
	(c) the amount of any interest on the debt that was, because of this subsection, not deductible is deemed, for the purpose of computing the taxpayer's foreign exchange gain or loss on the settlement or extinguishment of the debt, to be an amount paid by the taxpayer to settle or extinguish the debt.
Hedges	(3) In applying subsection (2) in circumstances where a taxpayer has entered into a hedge in respect of a debt of the taxpayer that is at any time a weak currency debt, the amount paid or payable in the weak currency for a taxation year on account of interest on the debt, or paid in the weak currency in the year on account of the debt's principal, shall be decreased by the amount of any foreign exchange gain, or increased by the amount of any foreign exchange loss, on the hedge in respect of the amount so paid or payable.
Repayment of principal	(4) If the amount (expressed in the weak currency) outstanding on account of principal in respect of a debt of the taxpayer that is at any time a weak currency debt is reduced before maturity (whether by repayment or otherwise), the amount (expressed in the weak currency) of the reduction is deemed, except for the purposes of determining the rate of interest that would have been charged on an equivalent loan in the final currency and applying paragraph (b) of the definition ``weak currency debt'' in subsection (1), to have been a separate debt from the commitment time.
	(2) Section 20.2, as enacted by subsection (1), applies after June 27, 1999 except that in its application to amounts allocated or provided before the day that is 14 days after August 8, 2000, the definition ``branch advance'' in subsection 20.2(1), as enacted by subsection (1), shall be read as follows:
	``branch advance'' of an authorized foreign bank at a particular time 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, on or before December 31, 2000, 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.
	(3) Section 20.3 of the Act, as enacted by subsection (1), applies to taxation years that end after February 27, 2000.
	(4) A designation described in paragraph (b) of the definition ``hedge'' in subsection 20.3(1) of the Act, as enacted by subsection (1), is deemed to have been filed in a timely manner if it is filed on or before the later of July 31, 2000 and the 30th day after the day the taxpayer agrees to the hedge.
	15. (1) Subsection 21(2) of the Act is replaced by the following:
Borrowed money used for exploration or development	(2) Where in a taxation year a taxpayer has used borrowed money for the purpose of exploration, development or the acquisition of property and the expenses incurred by the taxpayer in respect of those activities are Canadian exploration and development expenses, Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses, foreign resource expenses in respect of a country, or foreign exploration and development expenses, as the case may be, if the taxpayer so elects under this subsection in the taxpayer's return of income for the year,
	(a) in computing the taxpayer's income for the year and for such of the three immediately preceding taxation years as the taxpayer had, paragraphs 20(1)(c), (d), (e) and (e.1) do not apply to the amount or to the part of the amount specified in the taxpayer's election that, but for that election, would be deductible in computing the taxpayer's income (other than exempt income or income that is exempt from tax under this Part) for any such year in respect of the borrowed money used for the exploration, development or acquisition of property, as the case may be; and
	(b) the amount or the part of the amount, as the case may be, described in paragraph (a) is deemed to be Canadian exploration and development expenses, Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses, foreign resource expenses in respect of a country, or foreign exploration and development expenses, as the case may be, incurred by the taxpayer in the year.
	(2) Subsection 21(4) of the Act is amended by striking out the word ``and'' at the end of paragraph (a) and by replacing the portion after paragraph (a) with the following:
	(b) in each taxation year, if any, after that preceding taxation year and before the particular year, made an election under this subsection covering the total amount that, but for that election, would have been deductible in computing the taxpayer's income (other than exempt income or income that is exempt from tax under this Part) for each such year in respect of the borrowed money used for the exploration, development or acquisition of property, as the case may be, and
	(c) so elects in the taxpayer's return of income for the particular year,
	the following rules apply:
	(d) paragraphs 20(1)(c), (d), (e) and (e.1) do not apply to the amount or to the part of the amount specified in the election that, but for the election, would be deductible in computing the taxpayer's income (other than exempt income or income that is exempt from tax under this Part) for the particular year in respect of the borrowed money used for the exploration, development or acquisition of property, and
	(e) the amount or part of the amount, as the case may be, is deemed to be Canadian exploration and development expenses, Canadian exploration expenses, Canadian development expenses, Canadian oil and gas property expenses, foreign resource expenses in respect of a country, or foreign exploration and development expenses, as the case may be, incurred by the taxpayer in the particular year.
	(3) Subsections (1) and (2) apply to taxation years that begin after 2000.
	16. (1) Paragraph 24(2)(d) of the Act is replaced by the following:
	(d) for the purpose of determining after that time the amount required to be included under paragraph 14(1)(b) in computing the income of the spouse, the common-law partner or the corporation in respect of any subsequent disposition of property of the business, there shall be added to the amount otherwise determined for Q in the definition ``cumulative eligible capital'' in subsection 14(5) the amount, if any, determined for Q in that definition in respect of the business of the individual immediately before the individual ceased to carry on business.
	(2) Subsection (1) applies to taxation years that end after February 27, 2000.
	17. (1) Subsection 27(2) of the Act is replaced by the following:
Presumption	(2) Notwithstanding any other provision of this Act, a prescribed federal Crown corporation and any corporation controlled by such a corporation are each deemed not to be a private corporation and paragraphs 149(1)(d) to (d.4) do not apply to those corporations.
	(2) Subsection (1) applies to taxation years and fiscal periods that begin after 1998.
	18. (1) Paragraphs 28(4)(a) and (b) of the Act are replaced by the following:
	(a) for the year, if the taxpayer was non-resident throughout the year; and
	(b) for the part of the year throughout which the taxpayer was resident in Canada, if the taxpayer was resident in Canada at any time in the year.
	(2) Subsection 28(4.1) of the Act is repealed.
	(3) Subsection (1) applies to the 1998 and subsequent taxation years.
	(4) Subsection (2) applies after December 23, 1998.
	19. (1) The definition ``foreign bank'' in subsection 33.1(1) of the Act is replaced by the following:
``foreign bank'' « banque étrangère »	``foreign bank'' has the meaning assigned by the definition ``foreign bank'' in section 2 of the Bank Act (read without reference to paragraph (g)), except that an authorized foreign bank is not considered to be a foreign bank in respect of its Canadian banking business;
	(2) Subsection (1) applies after June 27, 1999.
	20. (1) The definition ``mining property'' in subsection 35(2) of the Act is replaced by the following:
``mining property'' « bien minier »	``mining property'' means
	(a) a right, licence or privilege to prospect, explore, drill or mine for minerals in a mineral resource in Canada, or
	(b) real property in Canada (other than depreciable property) the principal value of which depends on its mineral resource content;
	(2) Subsection (1) applies to shares received after December 21, 2000.
	21. (1) Subsection 37(1) of the Act is amended by adding the following after paragraph (d):
	(d.1) the total of all amounts each of which is the super-allowance benefit amount (within the meaning assigned by subsection 127(9)) for the year or for a preceding taxation year in respect of the taxpayer in respect of a province,
	(2) Subsection (1) applies to taxation years that begin after February 2000 except that, if a taxpayer's first taxation year that begins after February 2000 ends before 2001, subsection (1) applies to the taxpayer's taxation years that begin after 2000.
	22. (1) Paragraph 38(a) of the Act is replaced by the following:
	(a) subject to paragraphs (a.1) and (a.2), a taxpayer's taxable capital gain for a taxation year from the disposition of any property is 1/2 of the taxpayer's capital gain for the year from the disposition of the property;
	(2) Paragraph 38(a.1) of the Act is amended by replacing the reference to the fraction ``3/8'' with a reference to the fraction ``1/4''.
	(3) Section 38 of the Act is amended by adding the following after paragraph (a.1):
	(a.2) a taxpayer's taxable capital gain for a taxation year from the disposition of a property is 1/4 of the taxpayer's capital gain for the year from the disposition of the property where
	(i) the disposition is the making of a gift to a qualified donee (other than a private foundation) of a property described, in respect of the taxpayer, in paragraph 110.1(1)(d) or in the definition ``total ecological gifts'' in subsection 118.1(1), or
	(ii) the disposition is deemed by section 70 to have occurred and the taxpayer is deemed by subsection 118.1(5) to have made a gift described in subparagraph (i) of the property;