Bill C-28

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	(3) Subsections (1) and (2) apply after 1997.
	47. (1) Subsection 180(1) of the Act is amended by striking out the word ``or'' at the end of paragraph (c) and by adding the following after paragraph (c):
	(c.1) the sending of a notice to a promoter of a registered education savings plan under subsection 146.1(12.1), or
	(2) Subsection (1) applies after 1997.
	48. (1) The description of C in subsection 190.1(1.2) of the Act is replaced by the following:
	C is the number of days in the year that are after February 27, 1995 and before November 1998 .
	(2) Subsection (1) applies to taxation years that end after February 27, 1995.
	49. (1) The formula in paragraph 204.2(1.1)(b) of the Act is replaced by the following:
	A + B + R + C + D + E
	(2) Paragraph 204.2(1.1)(b) of the Act is amended by striking out the word ``and'' at the end of the description of D, by adding the word ``and'' at the end of the description of E and by adding the following after the description of E:
	R is the individual's total pension adjustment reversal for the year.
	(3) Subsections (1) and (2) apply to the 1998 and subsequent taxation years.
	50. (1) The heading ``REGISTERED LABOUR-SPONSORED VENTURE CAPITAL CORPORATIONS'' before section 204.8 of the Act is replaced by the following:
	LABOUR-SPONSORED VENTURE CAPITAL CORPORATIONS
	(2) Subsection (1) applies after February 18, 1997.
	51. (1) The portion of the definition ``eligible investment'' in section 204.8 of the Act after paragraph (d) is replaced by the following:
	if the following conditions are satisfied:
	(e) immediately after the time the share or debt obligation was issued, the guarantee was provided or the option or right was granted, as the case may be, the total of the costs to the particular corporation of all shares, options, rights and debt obligations of the eligible business entity and all corporations related to it and 25% of the amount of all guarantees provided by the particular corporation in respect of debt obligations of the eligible business entity and the related corporations does not exceed the lesser of $15,000,000 and 10% of the shareholders' equity in the particular corporation, determined in accordance with generally accepted accounting principles, on a cost basis and without taking into account any unrealized gains or losses on the investments of the particular corporation, and
	(f) immediately before the time the share or debt obligation was issued, the guarantee was provided or the option or right was granted, as the case may be,
	(i) the carrying value of the total assets of the eligible business entity and all corporations (other than prescribed labour-sponsored venture capital corporations) related to it (determined in accordance with generally accepted accounting principles on a consolidated or combined basis, where applicable) did not exceed $50,000,000, and
	(ii) the total of
	(A) the number of employees of the eligible business entity and all corporations related to it who normally work at least 20 hours per week for the entity and the related corporations, and
	(B) 1/2 of the number of other employees of the entity and the related corporations,
	did not exceed 500;
	(2) Subsection (1) applies to property acquired after February 18, 1997.
	52. (1) Clause 204.81(1)(c)(ii)(C) of the Act is replaced by the following:
	(C) any additional classes of shares that are authorized, if the rights, privileges, restrictions and conditions attached to the shares are approved by the Minister of Finance,
	(2) Subsection (1) applies after 1996.
	53. (1) The portion of subsection 204.82(2) of the English version of the Act before paragraph (a) is replaced by the following:
Liability for tax	(2) Where, at any time in a month in a particular taxation year of a corporation that was registered under this Part that began after the end of the corporation's last taxation year referred to in paragraph 204.81(6)(g), 60% of the least of
	(2) Subsection 204.82(2) of the Act is amended by striking out the word ``and'' at the end of paragraph (a) and by adding the following after that paragraph:
	(a.1) the amount of the shareholders' equity in the corporation determined at the end of the second taxation year before the particular taxation year, without taking into account any unrealized gains or losses in respect of eligible investments of the corporation, and


	(3) Subsection 204.82(2) of the Act, as amended by subsections (1) and (2), is replaced by the following:
Liability for tax	(2) Each corporation that has been registered under this Part shall, in respect of each month that ends in a particular taxation year of the corporation that begins after the end of the corporation's last taxation year referred to in paragraph 204.81(6)(g), pay a tax under this Part equal to the amount obtained when the greatest investment shortfall at any time that is in the month and in the particular year (in this section and sections 204.81 and 204.83 referred to as the ``monthly deficiency'') is multiplied by 1/60 of the prescribed rate of interest during the month.
Determi- nation of investment shortfall	(2.1) Subject to subsection (2.2), a corporation's investment shortfall at any time in a particular taxation year is the amount determined by the formula
	A - B
	where
	A is 60% of the lesser of
	(a) the amount of the shareholders' equity in the corporation at the end of the preceding taxation year, and
	(b) the amount of the shareholders' equity in the corporation at the end of the particular year; and
	B is the greater of
	(a) the total of all amounts each of which is the adjusted cost to the corporation of an eligible investment of the corporation at that time, and
	(b) 50% of the total of all amounts each of which is
	(i) the adjusted cost to the corporation of an eligible investment of the corporation at the beginning of the particular year, or
	(ii) the adjusted cost to the corporation of an eligible investment of the corporation at the end of the particular year.
Investment shortfall	(2.2) For the purpose of computing a corporation's investment shortfall under subsection (2.1) at any time in a taxation year (in this subsection referred to as the ``relevant year''),
	(a) unrealized gains and losses in respect of its eligible investments shall not be taken into account in computing the amount of the shareholders' equity in the corporation;
	(b) where
	(i) the relevant year ends after 1998, and
	(ii) it is expected that a redemption of its Class A shares will occur after the end of a particular taxation year and, as a consequence, the amount of the shareholders' equity in the corporation at the end of the particular year would otherwise be reduced to take into account the expected redemption,
	subject to paragraph (c), the amount (or, where the relevant year ends in 1999, 2000, 2001 or 2002, 20%, 40%, 60% or 80%, respectively of the amount) expected to be redeemed shall not be taken into account in determining the amount of the shareholders' equity in the corporation at the end of the particular year;
	(c) paragraph (b) does not apply to a redemption expected to be made after the end of a taxation year where
	(i) the redemption is made within 60 days after the end of the year, and
	(ii) either
	(A) tax under Part XII.5 became payable as a consequence of the redemption, or
	(B) tax under Part XII.5 would not have become payable as a consequence of the redemption if the redemption had occurred at the end of the year; and
	(d) the adjusted cost to the corporation of an eligible investment of the corporation at any time is
	(i) where the eligible investment is a property acquired by the corporation after February 18, 1997 that would be an eligible investment of the corporation if the reference to ``$50,000,000'' in paragraph (f) of the definition ``eligible investment'' in section 204.8 were read as ``$10,000,000'', 150% of the cost to the corporation of the eligible investment of the corporation at that time, and
	(ii) in any other case, the cost to the corporation of the eligible investment of the corporation at that time.
	(4) Section 204.82 of the Act is amended by adding the following after subsection (4):
Provincially registered LSVCCs	(5) Where
	(a) an amount (other than interest on an amount to which this subsection applies or an amount payable under or as a consequence of a prescribed provision of a law of a province) is payable to the government of a province by a corporation,
	(b) the amount is payable as a consequence of a failure to acquire sufficient properties of a character described in the law of the province,
	(c) the corporation has been prescribed for the purpose of the definition ``approved share'' in subsection 127.4(1), and
	(d) the corporation is not a registered labour-sponsored venture capital corporation or a revoked corporation,
	the corporation shall pay a tax under this Part for the taxation year in which the amount became payable equal to that amount.
	(5) Subsections (1) and (2) apply to taxation years that end after 1994 and before March 1997.
	(6) Subsection (3) applies to taxation years that end after February 1997 except that, for taxation years that end before 1999, the amount determined under paragraph (b) of the description of B in subsection 204.82(2.1) of the Act, as enacted by subsection (3), is deemed to be nil.
	(7) Subsection (4) applies to liabilities arising after February 18, 1997.
	54. (1) Section 204.83 of the Act is replaced by the following:
Refunds for federally registered LSVCCs	204.83 (1) If a corporation is required, under subsections 204.82(3) and (4), to pay a tax and a penalty under this Part for a taxation year and, throughout any period of 12 consecutive months (in this section referred to as the ``second period'') that begins after the 12-month period in respect of which the tax became payable (in this section referred to as the ``first period''), the corporation has no monthly deficiency and files with the Minister the return required under this Part for the taxation year in which the second period ends, the Minister shall refund to the corporation an amount equal to the total of the amount that was paid under subsection 204.82(3) and 80% of the amount that was paid under subsection 204.82(4) in respect of the first period.
Refunds for other LSVCCs	(2) Where
	(a) the government of a province refunds, at any time, an amount to a corporation,
	(b) the refund is of an amount that had been paid in satisfaction of a particular amount payable in a taxation year of the corporation, and
	(c) tax was payable under subsection 204.82(5) by the corporation for a taxation year because the particular amount became payable,
	the corporation is deemed to have paid at that time an amount equal to the refund on account of its tax payable under this Part for the year.
	(2) Subsection (1) applies after February 18, 1997.
	55. (1) Section 204.85 of the Act is replaced by the following:
Dissolution of federally registered LSVCCs	204.85 (1) If a registered labour-sponsored venture capital corporation or a revoked corporation has issued any Class A shares, it shall not be amalgamated or merged with another corporation, or be liquidated or dissolved, except with the written permission of the Minister of Finance and on any terms and conditions that are specified by that Minister.
Dissolution of other LSVCCs	(2) Where
	(a) an amount (other than interest on an amount to which this subsection applies or an amount payable under or as a consequence of a prescribed provision of a law of a province) is payable to the government of a province by a corporation,
	(b) the amount is payable as a consequence of the amalgamation or merger of the corporation with another corporation, the winding-up or dissolution of the corporation or the corporation ceasing to be registered under a law of the province,
	(c) the corporation has been prescribed for the purpose of the definition ``approved share'' in subsection 127.4(1), and
	(d) the corporation is not a registered labour-sponsored venture capital corporation or a revoked corporation,
	the corporation shall pay a tax under this Part for the taxation year in which the amount became payable equal to that amount.
	(2) Subsection 204.85(1) of the Act, as enacted by subsection (1), applies after July 1997.
	(3) Subsection 204.85(2) of the Act, as enacted by subsection (1), applies after February 18, 1997.
	56. (1) Section 204.86 of the Act is replaced by the following:
Return and payment of tax for federally- registered LSVCCs	204.86 (1) Every registered labour-sponsored venture capital corporation and every revoked corporation shall
	(a) on or before its filing-due date for a taxation year, file with the Minister a return for the year under this Part in prescribed form and containing prescribed information, without notice or demand therefor;
	(b) estimate in the return the amount of tax and penalties, if any, payable under this Part by it for the year; and

Bill C-28

LABOUR-SPONSORED VENTURE CAPITAL CORPORATIONS