Bill C-10

Consequential and Related Amendments

An Act to Amend the Income Tax Act (Natural Resources)

196. (1) The portion of subsection 2(5) of An Act to Amend the Income Tax Act (Natural Resources) before paragraph (a) is replaced by the following:

(5) For each taxation year that ends after 2002 and begins before 2008, paragraph 18(1)(m) of the Act applies, notwithstanding paragraph 20(1)(v) of the Act, only to the percentage of each amount described by paragraph 18(1)(m) of the Act that is the total of:

(2) Subsection 2(7) of the Act is replaced by the following:

(7) Subsection (3) applies to taxation years that begin after 2007.

197. Section 9 of the Act is repealed.

Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act

198. (1) Subsections 216(1) and (2) of the Canada-Nova Scotia Offshore Petroleum Resources Accord Implementation Act are replaced by the following:

216. (1) There shall be imposed, levied and collected under this Part in respect of the taxable income earned by, and the taxable capital of, a corporation in a taxation year in the offshore area, in accordance with subsection (3), the taxes, interest, penalties and other sums that would be imposed, levied and collected under the Nova Scotia Income Tax Act in respect of that taxable income and that taxable capital if the offshore area were in the land portion of the Province.

(2) Despite subsection (1), if taxes are imposed under the Nova Scotia Income Tax Act in respect of the taxable income earned by, or the taxable capital of, a corporation in a taxation year in the Province and taxes would, in the absence of this subsection, be imposed under subsection (1) in respect of that taxable income or that taxable capital, no taxes shall be imposed under subsection (1) in respect of that taxable income or that taxable capital.

(2) Subsection 216(4) of the Act is replaced by the following:

(4) For the purpose of this section, the taxable income of a corporation earned in a taxation year in the offshore area or in the Province shall be determined in accordance with Part IV of the Income Tax Regulations as though the offshore area were a province and the Income Tax Act were read without reference to the definition “province” in subsection 124(4) of that Act, and “taxable capital” means taxable capital employed in Canada determined in accordance with Part I.3 of that Act.

(3) Subsections (1) and (2) are deemed to have come into force on April 1, 1997.

Federal-Provincial Fiscal Arrangements Act

199. (1) Paragraph 12.2(1)(b) of the Federal-Provincial Fiscal Arrangements Act is replaced by the following:

(b) the Act of the legislature of the province imposing a tax on the income of corporations provides, in the opinion of the Minister, for a deduction in computing taxable income of a corporation for taxation years ending in the fiscal year of an amount that is not less than the amount deductible by the corporation for the year under paragraph 110(1)(k) of the Income Tax Act.

(2) Subsection (1) applies after 2003.

Income Tax Amendments Act, 2000

200. (1) Subsection 59(2) of the Income Tax Amendments Act, 2000 is replaced by the following:

(2) Subsection (1) applies to taxation years that end after February 27, 2000, except that, for a taxation year of a debtor that includes either February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, the reference to “½” in subsection 80.01(10) of the Act, as enacted by subsection (1), is to be read as a reference to the fraction in paragraph 38(a) of the Act that applied to the debtor for the year in which the commercial debt obligation was deemed to have been settled.

(2) Subsection (1) is deemed to have come into force on June 14, 2001.

201. (1) Subsection 70(11) of the Act is replaced by the following:

(11) Subsections (4), (5) and (7) apply to taxation years that end after February 27, 2000, except that, for a taxation year of a taxpayer that includes February 28, 2000 or October 17, 2000, or began after February 28, 2000 and ended before October 17, 2000, the references to “twice” in subsection 93(1.2) of the Act, as enacted by subsection (4), in subsection 93(2) of the Act, as enacted by subsection (5), and in subsection 93(2.2) of the Act, as enacted by subsection (7), are to be read as references to “the fraction that is the reciprocal of the fraction in paragraph 38(a) of the Act, as enacted by subsection 22(1) of the Income Tax Amendments Act, 2000, that applies to the taxpayer for the year, multiplied by”.

(2) Subsection (1) is deemed to have come into force on June 14, 2001.

PART 3

AMENDMENTS RELATED TO BIJURALISM

Income Tax Act

202. (1) Subclauses 12(1)(o)(ii)(B)(I) to (V) of the Income Tax Act are replaced by the following:

(I) of petroleum, natural gas or related hydrocarbons from a natural accumulation of petroleum or natural gas (other than a mineral resource) located in Canada, or from an oil or gas well located in Canada, in respect of which the taxpayer had an interest, or for civil law a right,

(II) of sulphur from a natural accumulation of petroleum or natural gas located in Canada, from an oil or gas well located in Canada or from a mineral resource located in Canada, in respect of which the taxpayer had an interest, or for civil law a right,

(III) to any stage that is not beyond the prime metal stage or its equivalent, of metal, minerals (other than iron or petroleum or related hydrocarbons) or coal from a mineral resource located in Canada in respect of which the taxpayer had an interest, or for civil law a right,

(IV) to any stage that is not beyond the pellet stage or its equivalent, of iron from a mineral resource located in Canada in respect of which the taxpayer had an interest, or for civil law a right, or

(V) to any stage that is not beyond the crude oil stage or its equivalent, of petroleum or related hydrocarbons from a deposit located in Canada of bituminous sands or oil shales in respect of which the taxpayer had an interest, or for civil law a right;

(2) Subparagraph 12(1)(x)(viii) of the Act is replaced by the following:

(viii) may not reasonably be considered to be a payment made in respect of the acquisition by the payer or the public authority of an interest in the taxpayer, an interest in, or for civil law a right in, the taxpayer’s business or an interest in, or for civil law a real right in, the taxpayer’s property;

(3) Subsection 12(4) of the Act is replaced by the following:

(4) Subject to subsection (4.1), where in a taxation year a taxpayer (other than a taxpayer to whom subsection (3) applies) holds an interest in, or for civil law a right in, an investment contract on any anniversary day of the contract, there shall be included in computing the taxpayer’s income for the year the interest that accrued to the taxpayer to the end of that day with respect to the investment contract, to the extent that the interest was not otherwise included in computing the taxpayer’s income for the year or any preceding taxation year.

(4) Subsections 12(9) and (9.1) of the Act are replaced by the following:

(9) For the purposes of subsections (3), (4) and (11) and 20(14) and (21), where a taxpayer acquires an interest in, or for civil law a right in, a prescribed debt obligation, an amount determined in prescribed manner shall be deemed to accrue to the taxpayer as interest on the obligation in each taxation year during which the taxpayer holds the interest or the right in the obligation.

(9.1) Where a taxpayer disposes of an interest in, or for civil law a right in, a debt obligation that is a debt obligation in respect of which the proportion of the payments of principal to which the taxpayer is entitled is not equal to the proportion of the payments of interest to which the taxpayer is entitled, such portion of the proceeds of disposition received by the taxpayer as can reasonably be considered to represent a recovery of the cost to the taxpayer of the interest or the right in the debt obligation shall, notwithstanding any other provision of this Act, not be included in computing the income of the taxpayer, and for the purpose of this subsection, a debt obligation includes, for greater certainty, all of the issuer’s obligations to pay principal and interest under that obligation.

(5) Paragraph (i) of the definition “investment contract” in subsection 12(11) of the Act is replaced by the following:

(i) an obligation in respect of which the taxpayer has (otherwise than because of subsection (4)) at periodic intervals of not more than one year, included, in computing the taxpayer’s income throughout the period in which the taxpayer held an interest in, or for civil law a right in, the obligation, the income accrued thereon for such intervals,

203. (1) The portion of subsection 13(5.2) of the Act before paragraph (a) is replaced by the following:

(5.2) Where, at any time, a taxpayer has acquired a capital property that is depreciable property or real or immovable property in respect of which, before that time, the taxpayer or any person with whom the taxpayer was not dealing at arm’s length was entitled to a deduction in computing income in respect of any amount paid or payable for the use of, or the right to use, the property and the cost or the capital cost (determined without reference to this subsection) at that time of the property to the taxpayer is less than the fair market value thereof at that time determined without reference to any option with respect to that property, for the purposes of this section, section 20 and any regulations made under paragraph 20(1)(a), the following rules apply:

(2) Subsection 13(5.3) of the Act is replaced by the following:

(5.3) Where, at any time in a taxation year, a taxpayer has disposed of a capital property that is an option with respect to depreciable property or real or immovable property in respect of which the taxpayer or any person with whom the taxpayer was not dealing at arm’s length was entitled to a deduction in computing income in respect of any amount paid for the use of, or the right to use, the property, for the purposes of this section, the amount, if any, by which the proceeds of disposition to the taxpayer of the option exceed the taxpayer’s cost in respect thereof shall be deemed to be an excess referred to in subsection (1) in respect of the taxpayer for the year.

(3) Paragraph 13(7.5)(c) of the Act is replaced by the following:

(c) where a taxpayer acquires an intangible property, or for civil law an incorporeal property, as a consequence of making a payment to which paragraph (a) applies or incurring a cost to which paragraph (b) applies,

(i) the property referred to in paragraph (a) or (b) is deemed to include the intangible or incorporeal property, and

(ii) the portion of the capital cost referred to in paragraph (a) or (b) that applies to the intangible or incorporeal property is deemed to be the amount determined by the formula

A x B/C

where

A      is the lesser of the amount of the payment made or cost incurred and the amount determined for C,

B      is the fair market value of the intangible or incorporeal property at the time the payment was made or the cost was incurred, and

C      is the fair market value at the time the payment was made or the cost was incurred of all intangible or incorporeal properties acquired as a consequence of making the payment or incurring the cost; and

204. (1) Paragraph (c) of the definition “eligible capital expenditure” in subsection 14(5) of the Act is replaced by the following:

(c) that is the cost of, or any part of the cost of,

(i) tangible property, or for civil law corporeal property, of the taxpayer,

(ii) intangible property, or for civil law incorporeal property, that is depreciable property of the taxpayer,

(iii) property in respect of which any deduction (otherwise than under paragraph 20(1)(b)) is permitted in computing the taxpayer’s income from the business or would be so permitted if the taxpayer’s income from the business were sufficient for the purpose, or

(iv) an interest in, or for civil law a right in, or a right to acquire any property described in any of subparagraphs (i) to (iii)

(2) Subparagraph (f)(iv) of the definition “eligible capital expenditure” in subsection 14(5) of the Act is replaced by the following:

(iv) an interest in, or for civil law a right in, or a right to acquire any property described in any of subparagraphs (i) to (iii).

205. The portion of subsection 16.1(1) of the Act before paragraph (a) is replaced by the following:

16.1 (1) Where a taxpayer (in this section referred to as the “lessee”) leases tangible property, or for civil law corporeal property, that is not prescribed property and that would, if the lessee acquired the property, be depreciable property of the lessee, from a person resident in Canada other than a person whose taxable income is exempt from tax under this Part, or from a non-resident person who holds the lease in the course of carrying on a business through a permanent establishment in Canada, as defined by regulation, any income from which is subject to tax under this Part, who owns the property and with whom the lessee was dealing at arm’s length (in this section referred to as the “lessor”) for a term of more than one year, if the lessee and the lessor jointly elect in prescribed form filed with their returns of income for their respective taxation years that include the particular time when the lease began, the following rules apply for the purpose of computing the income of the lessee for the taxation year that includes the particular time and for all subsequent taxation years:

206. (1) Paragraph 18(2)(f) of the Act is replaced by the following:

(f) in the case of a corporation whose principal business is the leasing, rental or sale, or the development for lease, rental or sale, or any combination thereof, of real or immovable property owned by it, to or for a person with whom the corporation is dealing at arm’s length, the corporation’s base level deduction for the particular year.

(2) Paragraphs 18(3.4)(a) and (b) of the Act are replaced by the following:

(a) a corporation whose principal business is throughout the year the leasing, rental or sale, or the development for lease, rental or sale, or any combination thereof, of real or im- movable property owned by it, to or for a person with whom the corporation is dealing at arm’s length, or

(b) a partnership

(i) each member of which is a corporation described in paragraph (a), and

(ii) the principal business of which is throughout the year the leasing, rental or sale, or the development for lease, rental or sale, or any combination thereof, of real or immovable property held by it, to or for a person with whom each member of the partnership is dealing at arm’s length,

207. (1) Paragraph 18.1(9)(b) of the French version of the Act is replaced by the following:

(2) Subparagraph 18.1(10)(b)(v) of the French version of the Act is replaced by the following:

208. (1) Subparagraph 20(1)(m)(iii) of the Act is replaced by the following:

(iii) periods for which rent or other amounts for the possession or use of land or of chattels or movables have been paid in advance, or

(2) Paragraph 20(1)(n) of the Act is replaced by the following:

(n) where an amount included in computing the taxpayer’s income from the business for the year or for a preceding taxation year in respect of property sold in the course of the business is payable to the taxpayer after the end of the year and, except where the property is real or immovable property, all or part of the amount was, at the time of the sale, not due until at least 2 years after that time, a reasonable amount as a reserve in respect of such part of the amount as can reasonably be regarded as a portion of the profit from the sale;

(3) The portion of subsection 20(11) of the Act before paragraph (a) is replaced by the following:

(11) In computing the income of an individ- ual from a property other than real or immovable property for a taxation year after 1975 that is income from a source outside Canada, there may be deducted the amount, if any, by which,

(4) Subsections 20(17) and (18) of the Act are repealed.

(5) The portion of subsection 20(21) of the Act before paragraph (a) is replaced by the following:

(21) Where a taxpayer has in a particular taxation year disposed of a property that is an interest in, or for civil law a right in, a debt obligation for consideration equal to its fair market value at the time of disposition, there may be deducted in computing the taxpayer’s income for the particular year the amount, if any, by which

209. (1) The portion of subsection 20.1(1) of the French version of the Act before paragraph (a) is replaced by the following:

(2) Paragraph 20.1(1)(a) of the English version of the Act is replaced by the following:

(a) at any time after 1993 borrowed money ceases to be used by a taxpayer for the purpose of earning income from a capital property (other than real or immovable property or depreciable property), and

210. (1) Paragraph 35(1)(a) of the Act is replaced by the following:

(a) is received in a taxation year by an individual as consideration for the disposition by the individual to the corporation of a mining property or an interest, or for civil law a right, therein acquired by the individual as a result of the individual’s efforts as a pros- pector, either alone or with others, or

(2) Subparagraph 35(1)(b)(ii) of the Act is replaced by the following:

(ii) as consideration for the disposition by the person referred to in subparagraph (i) to the corporation of a mining property or an interest, or for civil law a right, therein acquired under the arrangement under which that person made the advance or paid the expenses, or if the prospector’s employee, acquired by the person through the employee’s efforts,

(3) Paragraphs 35(1)(e) and (f) of the Act are replaced by the following:

(e) notwithstanding subdivision c, in computing the cost to the individual, person or partnership, as the case may be, of the share, no amount shall be included in respect of the disposition of the mining property or the interest, or for civil law the right, therein, as the case may be,

(f) notwithstanding sections 66 and 66.2, in computing the cost to the corporation of the mining property or the interest, or for civil law the right, therein, as the case may be, no amount shall be included in respect of the share, and

(4) Paragraph (b) of the definition “mining property” in subsection 35(2) of the Act is replaced by the following:

(b) real property or an immovable in Canada (other than depreciable property) the principal value of which depends on its mineral resource content;

211. (1) Clause 37(8)(d)(iii)(B) of the French version of the Act is replaced by the following:

(2) Clause 37(8)(d)(iii)(E) of the English version of the Act is replaced by the following:

(E) in the case of a payment to a person described in clause (C), to the extent that the amount of the payment may reasonably be considered to have been made to enable the recipient to acquire a building, or a leasehold interest in a building, in which the taxpayer has, or may reasonably be expected to acquire, an interest or, for civil law, a right.

212. Paragraph (h) of the definition “flow-through entity” in subsection 39.1(1) of the Act is replaced by the following:

(h) a trust maintained primarily for the benefit of employees of a corporation or 2 or more corporations that do not deal at arm’s length with each other, where one of the main purposes of the trust is to hold interests in, or for civil law rights in, shares of the capital stock of the corporation or corporations, as the case may be, or any corporation not dealing at arm’s length therewith,

213. Subparagraph (i) of the description of D in paragraph 40(2)(b) of the Act is replaced by the following:

(i) where the acquisition date is before February 23, 1994 and the taxpayer or a spouse or common-law partner of the taxpayer elected under subsection 110.6(19) in respect of the property or an interest, or for civil law a right, therein that was owned, immediately before the disposition, by the taxpayer, 4/3 of the lesser of

(A) the total of all amounts each of which is the taxable capital gain of the taxpayer or of a spouse or common-law partner of the taxpayer that would have resulted from an election by the taxpayer or spouse or common-law partner under subsection 110.6(19) in respect of the property or the interest or right if

(I) this Act were read without reference to subsection 110.6(20), and

(II) the amount designated in the election were equal to the amount, if any, by which the fair market value of the property or the interest or right at the end of February 22, 1994 exceeds the amount determined by the formula

E - 1.1F

where

E      is the amount designated in the election that was made in respect of the property or the interest or right, and

F      is the fair market value of the property or the interest or right at the end of February 22, 1994, and

(B) the total of all amounts each of which is the taxable capital gain of the taxpayer or of a spouse or common-law partner of the taxpayer that would have resulted from an election that was made under subsection 110.6(19) in respect of the property or the interest or right if the property were the principal residence of neither the taxpayer nor the spouse or common-law partner for each particular taxation year unless the property was designated, in a return of income for the taxation year that includes February 22, 1994 or for a preceding taxation year, to be the principal residence of either of them for the particular taxation year, and

214. The portion of paragraph 43.1(2)(b) of the French version of the Act before subparagraph (i) is replaced by the following:

215. The portion of subsection 44(6) of the Act before paragraph (a) is replaced by the following:

(6) Where a taxpayer has disposed of property that was a former business property and was in part a building and in part the land (or an interest, or for civil law a right, therein) subjacent to, or immediately contiguous to and necessary for the use of, the building, for the purposes of this subdivision, the amount if any, by which

216. Paragraphs 44.1(10)(c) and (d) of the Act are replaced by the following:

(c) a corporation the principal business of which is the leasing, rental, development or sale, or any combination of those activities, of real or immovable property owned by it; or

(d) a corporation more than 50 per cent of the fair market value of the property of which (net of debts incurred to acquire the property) is attributable to real or immovable property.

217. (1) Paragraph 53(1)(o) of the French version of the Act is replaced by the following:

(2) The portion of paragraph 53(2)(e) of the Act before subparagraph (i) is replaced by the following:

(e) where the property is a share, or an interest in or a right to — or, for civil law, a right in or to — a share, of the capital stock of a corporation acquired before August, 1976, an amount equal to any expense incurred by the taxpayer in consideration therefor, to the extent that the expense was, by virtue of

218. The portion of the definition “listed personal property” in section 54 of the Act before paragraph (a) is replaced by the following:

“listed personal property” of a taxpayer means the taxpayer’s personal-use property that is all or any portion of, or any interest in or right to — or, for civil law, any right in or to — any

219. The portion of the description of A in subsection 56.1(2) of the Act before paragraph (a) is replaced by the following:

A      is the total of all amounts each of which is an amount (other than an amount that is otherwise a support amount) that became payable by a person in a taxation year, under an order of a competent tribunal or under a written agreement, in respect of an expense (other than an expenditure in respect of a self-contained domestic establishment in which the person resides or an expenditure for the acquisition of tangible property, or for civil law corporeal property, that is not an expenditure on account of a medical or education expense or in respect of the acquisition, improvement or maintenance of a self-contained domestic establishment in which the taxpayer described in paragraph (a) or (b) resides) incurred in the year or the preceding taxation year for the maintenance of a taxpayer, children in the taxpayer’s custody or both the taxpayer and those children, where the taxpayer is

220. The portion of the description of A in subsection 60.1(2) of the Act before paragraph (a) is replaced by the following:

A      is the total of all amounts each of which is an amount (other than an amount that is otherwise a support amount) that became payable by a taxpayer in a taxation year, under an order of a competent tribunal or under a written agreement, in respect of an expense (other than an expenditure in respect of a self-contained domestic establishment in which the taxpayer resides or an expenditure for the acquisition of tangible property, or for civil law corporeal property, that is not an expenditure on account of a medical or education expense or in respect of the acquisition, improvement or maintenance of a self-contained domestic establishment in which the person described in paragraph (a) or (b) resides) incurred in the year or the preceding taxation year for the maintenance of a person, children in the person’s custody or both the person and those children, where the person is

221. Subparagraph 65(2)(a)(i) of the Act is replaced by the following:

(i) natural accumulations of petroleum or natural gas, oil or gas wells or mineral resources in which the taxpayer has any interest or, for civil law, right, or

222. (1) Paragraphs 66(12.1)(a) and (b) of the Act are replaced by the following:

(a) where as a result of a transaction occurring after May 6, 1974 an amount has become receivable by a taxpayer at a particular time in a taxation year and the consideration given by the taxpayer therefor was property (other than a share or a Canadian resource property, or an interest in or a right to — or, for civil law, a right in or to — the share or the property) or services, the original cost of which to the taxpayer may reasonably be regarding as having been primarily Canadian exploration and development expenses of the taxpayer (or would have been so regarded if they had been incurred by the taxpayer after 1971 and before May 7, 1974) or a Canadian exploration expense, there shall at that time be included in the amount determined for G in the definition “cumulative Canadian exploration expense” in subsection 66.1(6) in respect of the taxpayer the amount that became receivable by the taxpayer at that time; and

(b) where as a result of a transaction occurring after May 6, 1974 an amount has become receivable by a taxpayer at a particular time in a taxation year and the consideration given by the taxpayer therefor was property (other than a share or a Canadian resource property, or an interest in or a right to — or, for civil law, a right in or to — the share or the property) or services, the original cost of which to the taxpayer may reasonably be regarded as having been primarily a Canadian development expense, there shall at that time be included in the amount determined for G in the definition “cumulative Canadian development expense” in subsection 66.2(5) in respect of the taxpayer the amount that became receivable by the taxpayer at that time.

(2) Paragraph (c) of the definition “Canadian resource property” in subsection 66(15) of the Act is replaced by the following:

(c) any oil or gas well in Canada or any real property or immovable in Canada the principal value of which depends on its petroleum or natural gas content (but not including any depreciable property),

(3) Paragraphs (f) and (g) of the definition “Canadian resource property” in subsection 66(15) of the Act are replaced by the following:

(f) any real property or immovable in Canada the principal value of which depends on its mineral resource content (but not including any depreciable property),

(g) any right to or interest in — or, for civil law, any right to or in — any property described in any of paragraphs (a) to (e), other than a right or an interest that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership, or

(h) an interest in real property described in paragraph (f) or a real right in an immovable described in that paragraph, other than an interest or a right that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership;

223. (1) Paragraph (i) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act is replaced by the following:

(i) any expense referred to in any of paragraphs (a) to (g) incurred by the taxpayer pursuant to an agreement in writing with a corporation, entered into before 1987, under which the taxpayer incurred the expense solely as consideration for shares, other than prescribed shares, of the capital stock of the corporation issued to the taxpayer or any interest in or right to — or, for civil law, any right in or to — such shares,

(2) Paragraph (j) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act is replaced by the following:

(j) any consideration given by the taxpayer for any share or any interest in or right to — or, for civil law, any right in or to — a share, except as provided by paragraph (i),

224. (1) Clause 66.2(2)(b)(ii)(A) of the Act is replaced by the following:

(A) an amount included in the taxpayer’s income for the year by virtue of a disposition in the year of inventory described in section 66.3 that was a share or any interest in or right to — or, for civil law, any right in or to — a share, acquired by the taxpayer under circumstances described in paragraph (g) of the definition “Canadian development expense” in subsection (5) or paragraph (i) of the definition “Canadian exploration expense” in subsection 66.1(6), or

(2) Paragraph (e) of the definition “Canadian development expense” in subsection 66.2(5) of the Act is replaced by the following:

(e) notwithstanding paragraph 18(1)(m), the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (b), (e) or (f) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — such property (other than such a right or interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership) but not including any payment made to any of the persons referred to in subparagraph 18(1)(m)(i) for the preservation of a taxpayer’s rights in respect of a Canadian resource property nor a payment to which paragraph 18(1)(m) applied because of clause 18(1)(m)(ii)(B),

(3) Paragraph (e) of the definition “Canadian development expense” in subsection 66.2(5) of the Act is replaced by the following:

(e) the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (b), (e) or (f) of the definition “Canadian resource property” in subsection 66(15), or any right to or interest in — or, for civil law, any right in or to — such property (other than a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership),

(4) Paragraph (g) of the definition “Canadian development expense” in subsection 66.2(5) of the Act is replaced by the following:

(g) any cost or expense referred to in any of paragraphs (a) to (e) incurred by the taxpayer pursuant to an agreement in writing with a corporation, entered into before 1987, under which the taxpayer incurred the cost or expense solely as consideration for shares, other than prescribed shares, of the capital stock of the corporation issued to the taxpayer or any interest in or right to — or, for civil law, any right in or to — such shares,

(5) Paragraph (h) of the definition “Canadian development expense” in subsection 66.2(5) of the Act is replaced by the following:

(h) any consideration given by the taxpayer for any share or any interest in or right to — or, for civil law, any right in or to — a share, except as provided by paragraph (g),

(6) The portion of the description of F in the definition “cumulative Canadian development expense” in subsection 66.2(5) of the Act before paragraph (a) is replaced by the following:

F      is the total of all amounts each of which is an amount in respect of property described in paragraph (b), (e) or (f) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — such a property, other than such a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership, (in this description referred to as “the particular property”) disposed of by the taxpayer before that time equal to the amount, if any, by which

(7) Subsection (3) applies to taxation years that begin after 2006.

225. The portion of subsection 66.3(2) of the Act before paragraph (a) is replaced by the following:

(2) Where, at any time after May 23, 1985, a corporation has issued a share of its capital stock under circumstances described in paragraph (i) of the definition “Canadian exploration expense” in subsection 66.1(6), paragraph (g) of the definition “Canadian development expense” in subsection 66.2(5) or paragraph (c) of the definition “Canadian oil and gas property expense” in subsection 66.4(5) or has issued a share of its capital stock on the exercise of an interest in or right to — or, for civil law, a right in or to — such a share granted under circumstances described in any of those paragraphs, in computing, at any particular time after that time, the paid-up capital in respect of the class of shares of the capital stock of the corporation that included that share

226. (1) Clause 66.4(2)(a)(ii)(A) of the Act is replaced by the following:

(A) an amount included in the taxpayer’s income for the year by virtue of a disposition in the year of inventory described in section 66.3 that was a share or any interest in or right to — or, for civil law, any right in or to — a share acquired by the taxpayer under circumstances described in paragraph (c) of the definition “Canadian oil and gas property expense” in subsection (5), or

(2) Paragraph (a) of the definition “Canadian oil and gas property expense” in subsection 66.4(5) of the Act is replaced by the following:

(a) notwithstanding paragraph 18(1)(m), the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (a), (c) or (d) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — such property (other than such a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership) or an amount paid or payable to Her Majesty in right of the Province of Saskatchewan as a net royalty payment pursuant to a net royalty petroleum and natural gas lease that was in effect on March 31, 1977 to the extent that it can reasonably be regarded as a cost of acquiring the lease, but not including any payment made to any of the persons referred to in subparagraph 18(1)(m)(i) for the preservation of a taxpayer’s rights in respect of a Canadian resource property nor a payment (other than a net royalty payment referred to in this paragraph) to which paragraph 18(1)(m) applied because of clause 18(1)(m)(ii)(B),

(3) Paragraph (a) of the definition “Canadian oil and gas property expense” in subsection 66.4(5) of the Act is replaced by the following:

(a) the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (a), (c) or (d) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — such property (other than a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership), or an amount paid to Her Majesty in right of the Province of Saskatchewan as a net royalty payment pursuant to a net royalty petroleum and natural gas lease that was in effect on March 31, 1977 to the extent that it can reasonably be regarded as a cost of acquiring the lease,

(4) Paragraph (c) of the definition “Canadian oil and gas property expense” in subsection 66.4(5) of the Act is replaced by the following:

(c) any cost or expense referred to in paragraph (a) incurred by the taxpayer pursuant to an agreement in writing with a corporation, entered into before 1987, under which the taxpayer incurred the cost or expense solely as consideration for shares, other than prescribed shares, of the capital stock of the corporation issued to the taxpayer or any interest in or right to — or, for civil law, any right in or to — such shares,

(5) The portion of the description of F in the definition “cumulative Canadian oil and gas property expense” in subsection 66.4(5) of the Act before paragraph (a) is replaced by the following:

F      is the total of all amounts each of which is an amount in respect of property described in paragraph (a), (c) or (d) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — such a property, other than such a right or interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership, (in this description referred to as “the particular property”) disposed of by the taxpayer before that time equal to the amount, if any, by which

(6) Subsection (3) applies to taxation years that begin after 2006.

227. (1) Clause 66.7(1)(b)(i)(A) of the Act is replaced by the following:

(A) the amount included in computing its income for the year under paragraph 59(3.2)(c) that may reasonably be regarded as attributable to the disposition by it in the year or a preceding taxation year of any interest in or right to — or, for civil law, any right in or to — the particular property to the extent that the proceeds of the disposition have not been included in determining an amount under clause 29(25)(d)(i)(A) of the Income Tax Application Rules, this clause, clause (3)(b)(i)(A) or paragraph (10)(g) for a preceding taxation year,

(2) Clause 66.7(2)(b)(i)(A) of the Act is replaced by the following:

(A) the amount included under subsection 59(1) in computing its income for the year that can reasonably be regarded as attributable to the disposition by it of any interest in or right to — or, for civil law, any right in or to — the particular property, or

(3) Clause 66.7(3)(b)(i)(A) of the Act is replaced by the following:

(A) the amount included in computing its income for the year under paragraph 59(3.2)(c) that may reasonably be regarded as being attributable to the disposition by it in the year or a preceding taxation year of any interest in or right to — or, for civil law, any right in or to — the particular property to the extent that the proceeds have not been included in determining an amount under clause 29(25)(d)(i)(A) of the Income Tax Application Rules, this clause, clause (1)(b)(i)(A) or paragraph (10)(g) for a preceding taxation year,

228. The portion of paragraph 79.1(6)(b) of the Act before subparagraph (i) is replaced by the following:

(b) all amounts each of which is an outlay or expense made or incurred, or a specified amount at that time of a debt that is assumed, by the creditor at or before that time to protect the creditor’s interest, or for civil law the creditor’s right, in the particular property, except to the extent the outlay or expense

229. Paragraph 80(2)(o) of the Act is replaced by the following:

(o) notwithstanding paragraph (n), where a commercial debt obligation, for which a particular person is liable with one or more other persons, is settled at any time in respect of the particular person but not in respect of all of the other persons, the portion of the obligation that can reasonably be considered to be the particular person’s share of the obligation shall be considered to have been issued by the particular person and settled at that time and not at any subsequent time;

230. Subsection 80.04(11) of the English version of the Act is replaced by the following:

(11) Where taxes, interest and penalties are payable under this Act by a person for a taxation year and those taxes, interest and penalties are payable by a debtor because of subsection (10), the debtor and the person are jointly and severally, or solidarily, liable to pay those amounts.

231. (1) Paragraphs 85(1.1)(a) and (b) of the Act are replaced by the following:

(a) a capital property (other than real or immovable property, an option in respect of such property, or an interest in real property or a real right in an immovable, owned by a non-resident person);

(b) a capital property that is real or immov- able property, an option in respect of such property, or an interest in real property or a real right in an immovable, owned by a non-resident insurer where that property and the property received as consideration for that property are designated insurance property for the year;

(2) Paragraph 85(1.1)(f) of the Act is replaced by the following:

(f) an inventory (other than real or immovable property, an option in respect of such property, or an interest in real property or a real right in an immovable);

(3) Paragraph 85(1.1)(h) of the Act is replaced by the following:

(h) a capital property that is real or immov- able property, an option in respect of such property, or an interest in real property or a real right in an immovable, owned by a non-resident person (other than a non-resident insurer) and used in the year in a business carried on in Canada by that person; or

(4) Subparagraph 85(2)(a)(i) of the Act is replaced by the following:

(i) a capital property (other than real or immovable property, an option in respect of such property, or an interest in real property or a real right in an immovable, where the partnership was not a Canadian partnership at the time of the disposition),

232. (1) Subparagraph (a)(ii) of the definition “investment business” in subsection 95(1) of the Act is replaced by the following:

(ii) the development of real property or immovables for sale, the lending of money, the leasing or licensing of property or the insurance or reinsurance of risks, and

(2) Paragraph (g) of the definition “investment property” in subsection 95(1) of the Act is replaced by the following:

(g) real property or immovables,

(3) Paragraph (j) of the definition “investment property” in subsection 95(1) of the Act is replaced by the following:

(j) interests in, or for civil law rights in, or options in respect of, property that is included in any of paragraphs (a) to (i);

233. (1) The portion of subsection 98(3) of the Act before paragraph (a) is replaced by the following:

(3) Where at any particular time after 1971 a Canadian partnership has ceased to exist and all the partnership property has been distributed to persons who were members of the partnership immediately before that time so that immediately after that time each such person has, in each such property, an undivided interest, or for civil law an undivided right (which undivided interest or undivided right is referred to in this subsection as an “undivided interest or right”, as the case may be) that, when expressed as a percentage (referred to in this subsection as that person’s “percentage”) of all undivided interests or rights in the property, is equal to the person’s undivided interest or right, when so expressed, in each other such property, if each such person has jointly so elected in respect of the property in prescribed form and within the time referred to in subsection 96(4), the following rules apply:

(2) The portion of paragraph 98(3)(b) before subparagraph (i) of the Act is replaced by the following:

(b) the cost to each such person of that person’s undivided interest or right in each such property shall be deemed to be an amount equal to the total of

(3) Subparagraph 98(3)(b)(ii) of the Act is replaced by the following:

(ii) where the amount determined under subparagraph (a)(i) exceeds the amount determined under subparagraph (a)(ii), the amount determined under paragraph (c) in respect of the person’s undivided interest or right in the property;

(4) Paragraph 98(3)(c) of the Act is replaced by the following:

(c) the amount determined under this paragraph in respect of each such person’s undivided interest or right in each such property that was a capital property (other than depreciable property) of the partnership is such portion of the excess, if any, described in subparagraph (b)(ii) as is designated by the person in respect of the property, except that

(i) in no case shall the amount so designated in respect of the person’s undivided interest or right in any such property exceed the amount, if any, by which the person’s percentage of the fair market value of the property immediately after its distribution exceeds the person’s percentage of the cost amount to the partnership of the property immediately before its distribution, and

(ii) in no case shall the total of amounts so designated in respect of the person’s undivided interest or right in all such capital properties (other than depreciable property) exceed the excess, if any, described in subparagraph (b)(ii);

(5) Paragraph 98(3)(e) of the Act is replaced by the following:

(e) where the property so distributed by the partnership was depreciable property of the partnership of a prescribed class and any such person’s percentage of the amount that was the capital cost to the partnership of that property exceeds the amount determined under paragraph (b) to be the cost to the person of the person’s undivided interest or right in the property, for the purposes of sections 13 and 20 and any regulations made under paragraph 20(1)(a)

(i) the capital cost to the person of the person’s undivided interest or right in the property shall be deemed to be the person’s percentage of the amount that was the capital cost to the partnership of the property, and

(ii) the excess shall be deemed to have been allowed to the person in respect of the property under regulations made under paragraph 20(1)(a) in computing income for taxation years before the acquisition by the person of the undivided interest or right;

(6) Subparagraph 98(3)(g)(i) of the Act is replaced by the following:

(i) for the purposes of determining under this Act any amount relating to cumulative eligible capital, an eligible capital amount, an eligible capital expenditure or eligible capital property, each such person shall be deemed to have continued to carry on the business, in respect of which the property was eligible capital property and that was previously carried on by the partnership, until the time that the person disposes of the person’s undivided interest or right in the property,

234. (1) Clauses 108(2)(b)(ii)(A) and (B) of the Act are replaced by the following:

(A) the investing of its funds in property (other than real property or an interest in real property or an immovable or a real right in an immovable),

(B) the acquiring, holding, maintaining, improving, leasing or managing of any real property or an interest in real property, or of any immovable or a real right in immovables, that is capital property of the trust, or

(2) Clauses 108(2)(b)(iii)(F) and (G) of the Act are replaced by the following:

(F) real property situated in Canada, and interests in such real property, or immovables situated in Canada and real rights in such immovables, and

(G) rights to and interests in — or, for civil law, rights in or to — any rental or royalty computed by reference to the amount or value of production from a natural accumulation of petroleum or natural gas in Canada, from an oil or gas well in Canada or from a mineral resource in Canada,

(3) Paragraph 108(2)(c) of the Act is replaced by the following:

(c) the fair market value of the property of the trust at the end of 1993 was primarily attributable to real property or an interest in real property — or to immovables or a real right in immovables — and the trust was a unit trust throughout any calendar year that ended before 1994 and the fair market value of the property of the trust at the particular time is primarily attributable to property described in paragraph (a) or (b) of the definition “qualified investment” in section 204, real property or an interest in real property — or immovables or a real right in immovables — or any combination of those properties.

235. Clause (a)(ii)(A) of the definition “qualified investment” in subsection 115.2(1) of the Act is replaced by the following:

(A) real or immovable property situated in Canada,

236. (1) Paragraph 116(6)(a.1) of the Act is replaced by the following:

(a.1) a property (other than real or immovable property situated in Canada, a Canadian resource property or a timber resource property) that is described in an inventory of a business carried on in Canada by the person;

(2) Paragraph 116(6)(h) of the Act is replaced by the following:

(h) an interest, or for civil law a right, in property referred to in any of paragraphs (a) to (g).

237. The portion of the definition “specified investment business” in subsection 125(7) of the Act before paragraph (a) is replaced by the following:

“specified investment business”, carried on by a corporation in a taxation year, means a business (other than a business carried on by a credit union or a business of leasing property other than real or immovable property) the principal purpose of which is to derive income (including interest, dividends, rents and royalties) from property but, except where the corporation was a prescribed labour-sponsored venture capital corporation at any time in the year, does not include a business carried on by the corporation in the year where

238. (1) The portion of subparagraph 126(2.21)(a)(i) of the Act before clause (A) is replaced by the following:

(i) where the property is real or immovable property situated in a country other than Canada,

(2) Subparagraph 126(2.21)(a)(ii) of the Act is replaced by the following:

(ii) where the property is not real or immovable property, to the government of a country with which Canada has a tax treaty at the particular time and in which the individual is resident at the particular time,

(3) The portion of subparagraph 126(2.22)(a)(i) of the Act before clause (A) is replaced by the following:

(i) where the property is real or immovable property situated in a country other than Canada,

(4) Subparagraph 126(2.22)(a)(ii) of the Act is replaced by the following:

(ii) where the property is not real or immovable property, to the government of a country with which Canada has a tax treaty at the particular time and in which the individual is resident at the particular time,

239. Paragraph (d) of the description of A in the definition “scientific research and experimental development tax credit” in subsection 127.3(2) of the English version of the Act is replaced by the following:

(d) a bond, debenture, bill, note, mortgage, hypothecary claim or similar obligation (in this section referred to as a “debt obligation”) acquired by the taxpayer in the year where the taxpayer is the first person, other than a broker or dealer in securities, to be a registered holder of that debt obligation, or

240. (1) The portion of paragraph 128(1)(e) of the English version of the Act before subparagraph (i) is replaced by the following:

(e) where, in the case of any taxation year of the corporation ending during the period the corporation is a bankrupt, the corporation fails to pay any tax payable by the corporation under this Act for any such year, the corporation and the trustee in bankruptcy are jointly and severally, or solidarily, liable to pay the tax, except that

(2) Subparagraph 128(1)(e)(ii) of the Act is replaced by the following:

(ii) payment by either of them discharges the liability to the extent of the amount paid;

241. (1) Subparagraph 128.1(4)(b)(i) of the Act is replaced by the following:

(i) real or immovable property situated in Canada, a Canadian resource property or a timber resource property,

(2) Subparagraph 128.1(7)(h)(ii) of the English version of the Act is replaced by the following:

(ii) if the individual alone makes such an election or specification, the individual and the trust are jointly and severally, or solidarily, liable for any amount payable under this Act by the trust as a result of the election or specification, and

242. (1) Paragraphs 130.1(6)(b) and (c) of the Act are replaced by the following:

(b) its only undertaking was the investing of funds of the corporation and it did not manage or develop any real or immovable property;

(c) none of the property of the corporation consisted of

(i) debts owing to the corporation that were secured on real or immovable property situated outside Canada,

(ii) debts owing to the corporation by non-resident persons, except any such debts that were secured on real or immovable property situated in Canada,

(iii) shares of the capital stock of corporations not resident in Canada, or

(iv) real or immovable property situated outside Canada, or any leasehold interest in such property;

(2) Paragraph 130.1(6)(g) of the Act is replaced by the following:

(g) the cost amount to the corporation of all real or immovable property of the corporation, including leasehold interests in such property (except real or immovable property acquired by the corporation by foreclosure or otherwise after default made on a mortgage, hypothec or agreement of sale of real or immovable property) did not exceed 25% of the cost amount to it of all its property;

243. Subparagraphs 131(8)(b)(i) and (ii) of the Act are replaced by the following:

(i) the investing of its funds in property (other than real property or an interest in real property or an immovable or a real right in an immovable),

(ii) the acquiring, holding, maintaining, improving, leasing or managing of any real property (or interest in real property) or of any immovable (or real right in immovables) that is capital property of the corporation, or

244. Subparagraphs 132(6)(b)(i) and (ii) of the Act are replaced by the following:

(i) the investing of its funds in property (other than real property or an interest in real property or an immovable or a real right in an immovable),

(ii) the acquiring, holding, maintaining, improving, leasing or managing of any real property (or interest in real property) or of any immovable (or real right in immovables) that is capital property of the trust, or

245. (1) Subparagraph (b)(i) of the definition “non-resident-owned investment corporation” in subsection 133(8) of the Act is replaced by the following:

(i) ownership of, or trading or dealing in, bonds, shares, debentures, mortgages, hypothecary claims, bills, notes or other similar property or any interest, or for civil law any right, therein,

(2) Subparagraph (b)(iii) of the definition “société de placement appartenant à des non-résidents” in subsection 133(8) of the French version of the Act is replaced by the following:

(3) Paragraph (c) of the definition “société de placement appartenant à des non-résidents” in subsection 133(8) of the French version of the Act is replaced by the following:

246. (1) Subsection 138(4.4) of the Act is replaced by the following:

(4.4) Where, for a period of time in a taxation year, a life insurer

(a) owned land (other than land referred to in paragraph (c) or (d)) or an interest, or for civil law a right, therein that was not held primarily for the purpose of gaining or producing income from the land for the period,

(b) had an interest, or for civil law a right, in a building that was being constructed, renovated or altered,

(c) owned land subjacent to the building referred to in paragraph (b) or an interest, or for civil law a right, therein, or

(d) owned land immediately contiguous to the land referred to in paragraph (c) or an interest, or for civil law a right, therein that was used or was intended to be used for a parking area, driveway, yard, garden or other use necessary for the use or intended use of the building referred to in paragraph (b),

there shall be included in computing the insurer’s income for the year, where the land, building, or interest or right, was designated insurance property of the insurer for the year, or property used or held by it in the year in the course of carrying on an insurance business in Canada, the total of all amounts each of which is the amount prescribed in respect of the insurer’s cost or capital cost, as the case may be, of the land, building, or interest or right, for the period, and the amount prescribed shall, at the end of the period, be included in computing

(e) where the land, or interest or right therein, is property described in paragraph (a), the cost to the insurer of the land, or of the interest or right therein, and

(f) where the land, building, or interest or right therein, is property described in paragraphs (b) to (d), the capital cost to the insurer of the interest or right in the building described in paragraph (b).

(2) Clauses 138(4.5)(b)(ii)(A) and (B) of the French version of the Act are replaced by the following:

(3) Clauses 138(4.5)(e)(ii)(A) and (B) of the English version of the Act are replaced by the following:

(A) where the property is land or an interest, or for civil law a right, therein of the transferee described in paragraph (4.4)(a), the cost to the transferee of the land, or of the interest or right therein, and

(B) where the property is land or a building, or an interest therein or for civil law a right therein, described in paragraphs (4.4)(b) to (d), the capital cost to the transferee of the interest or of the right in the building described in paragraph (4.4)(b).

247. (1) Subparagraph 142.7(7)(a)(ii) of the Act is replaced by the following:

(ii) the entrant bank assumes an obligation of the Canadian affiliate that is an instrument or commitment described in paragraph 20(1)(l.1) or an obligation in respect of goods, services, land, or chattels or movable property, described in subparagraph 20(1)(m)(i), (ii) or (iii),

(2) Subparagraph 142.7(7)(f)(ii) of the Act is replaced by the following:

(ii) in applying paragraph 20(1)(m), an amount in respect of the goods, services, land, chattels or movable property, that was included under paragraph 12(1)(a) in computing the Canadian affiliate’s income from a business is deemed to have been so included in computing the entrant bank’s income from its Canadian banking business for a preceding taxation year,

248. (1) Subparagraph (a)(iii) of the definition “earned income” in subsection 146(1) of the Act is replaced by the following:

(iii) property, where the income is derived from the rental of real or immovable property or from royalties in respect of a work or invention of which the taxpayer was the author or inventor,

(2) Subparagraph (e)(ii) of the definition “earned income” in subsection 146(1) of the Act is replaced by the following:

(ii) property, where the loss is sustained from the rental of real or immovable property,

249. Clauses 149(1)(o.2)(ii)(A) to (C) of the Act are replaced by the following:

(A) limited its activities to

(I) acquiring, holding, maintaining, improving, leasing or managing capital property that is real property or an interest in real property — or immovables or a real right in immovables — owned by the corporation, another corporation described by this subparagraph and subparagraph (iv) or a registered pension plan, and

(II) investing its funds in a partnership that limits its activities to acquiring, holding, maintaining, improving, leasing or managing capital property that is real property or an interest in real property — or immovables or a real right in immovables — owned by the partnership,

(B) made no investments other than in real property or an interest in real property — or immovables or a real right in immovables — or investments that a pension plan is permitted to make under the Pension Benefits Standards Act, 1985 or a similar law of a province, and

(C) borrowed money solely for the purpose of earning income from real property or an interest in real property or from immovables or a real right in immovables,

250. Paragraph 153(6)(c) of the Act is replaced by the following:

(c) is authorized under the laws of Canada or a province to accept deposits from the public and carries on the business of lending money on the security of real property or immovables or investing in indebtedness on the security of mortgages on real property or of hypothecs on immovables.

251. The portion of paragraph 159(1)(a) of the English version of the Act before subparagraph (i) is replaced by the following:

(a) the legal representative is jointly and severally, or solidarily, liable with the taxpayer

252. (1) Paragraph 160(1)(d) of the English version of the Act is replaced by the following:

(d) the transferee and transferor are jointly and severally, or solidarily, liable to pay a part of the transferor’s tax under this Part for each taxation year equal to the amount by which the tax for the year is greater than it would have been if it were not for the operation of sections 74.1 to 75.1 of this Act and section 74 of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, in respect of any income from, or gain from the disposition of, the property so transferred or property substituted therefor, and

(2) The portion of paragraph 160(1)(e) of the English version of the Act before subparagraph (i) is replaced by the following:

(e) the transferee and transferor are jointly and severally, or solidarily, liable to pay under this Act an amount equal to the lesser of

(3) The portion of subsection 160(1.1) of the English version of the Act before the formula is replaced by the following:

(1.1) Where a particular person or partnership is deemed by subsection 69(11) to have disposed of a property at any time, the person referred to in that subsection to whom a benefit described in that subsection was available in respect of a subsequent disposition of the property or property substituted for the property is jointly and severally, or solidarily, liable with each other taxpayer to pay a part of the other taxpayer’s liabilities under this Act in respect of each taxation year equal to the amount determined by the formula

(4) The portion of subsection 160(1.2) of the English version of the Act before paragraph (a) is replaced by the following:

(1.2) A parent of a specified individual is jointly and severally, or solidarily, liable with the individual for the amount required to be added because of subsection 120.4(2) in computing the specified individual’s tax payable under this Part for a taxation year if, during the year, the parent

(5) Paragraph 160(3)(a) of the Act is replaced by the following:

(a) a payment by the particular taxpayer on account of that taxpayer’s liability shall to the extent of the payment discharge their liability; but

(6) Paragraph 160(3)(b) of the English version of the Act is replaced by the following:

(b) a payment by the other taxpayer on account of that taxpayer’s liability discharges the particular taxpayer’s liability only to the extent that the payment operates to reduce that other taxpayer’s liability to an amount less than the amount in respect of which the particular taxpayer is, by this section, made jointly and severally, or solidarily, liable.

(7) Subsection 160(3.1) of the Act is replaced by the following:

(3.1) For the purposes of this section and section 160.4, the fair market value at any time of an undivided interest, or for civil law an undivided right, in a property, expressed as a proportionate interest or right in that property, is, subject to subsection (4), deemed to be equal to the same proportion of the fair market value of that property at that time.

253. Subsections 160.1(2.1) and (2.2) of the English version of the Act are replaced by the following:

(2.1) Where a person was a cohabiting spouse or common-law partner (within the meaning assigned by section 122.6) of an individual at the end of a taxation year, the person and the individual are jointly and severally, or solidarily, liable to pay any excess described in subsection (1) that was refunded in respect of the year to, or applied to a liability of, the individual as a consequence of the operation of section 122.61 if the person was the individual’s cohabiting spouse or common-law partner at the time the excess was refunded, but nothing in this subsection shall be deemed to limit the liability of any person under any other provision of this Act.

(2.2) Every taxpayer who, on the day on which an amount has been refunded to, or applied to the liability of, a member of a partnership as a consequence of the operation of subsection 126.1(7) or (13) in excess of the amount to which the member was so entitled, is a member of that partnership is jointly and severally, or solidarily, liable with each other taxpayer who on that day is a member of the partnership to pay the excess and to pay interest on the excess, but nothing in this subsection shall be deemed to limit the liability of any person under any other provision of this Act.

254. (1) The portion of subsection 160.2(4) of the English version of the Act before paragraph (a) is replaced by the following:

(4) Where a taxpayer and an annuitant have, by virtue of subsection (1) or (2), become jointly and severally, or solidarily, liable in respect of part or all of a liability of the annuitant under this Act, the following rules apply:

(2) Paragraph 160.2(4)(a) of the Act is replaced by the following:

(a) a payment by the taxpayer on account of the taxpayer’s liability shall to the extent thereof discharge their liability; but

(3) Paragraph 160.2(4)(b) of the English version of the Act is replaced by the following:

(b) a payment by the annuitant on account of the annuitant’s liability discharges the taxpayer’s liability only to the extent that the payment operates to reduce the annuitant’s liability to an amount less than the amount in respect of which the taxpayer was, by subsection (1) or (2), as the case may be, made jointly and severally, or solidarily, liable.

255. (1) The portion of subsection 160.3(3) of the English version of the Act before paragraph (a) is replaced by the following:

(3) Where a taxpayer and another person have, by virtue of subsection (1), become jointly and severally, or solidarily, liable in respect of part or all of a liability of the taxpayer under this Act, the following rules apply:

(2) Paragraph 160.3(3)(a) of the Act is replaced by the following:

(a) a payment by the other person on account of the other person’s liability shall to the extent thereof discharge their liability; but

(3) Paragraph 160.3(3)(b) of the English version of the Act is replaced by the following:

(b) a payment by the taxpayer on account of the taxpayer’s liability discharges the other person’s liability only to the extent that the payment operates to reduce the taxpayer’s liability to an amount less than the amount in respect of which the other person was, by subsection (1), made jointly and severally, or solidarily, liable.

256. (1) The portion of subsection 160.4(4) of the English version of the Act before paragraph (a) is replaced by the following:

(4) Where a corporation and another person have, because of subsection (1) or (2), become jointly and severally, or solidarily, liable in respect of part or all of a liability of the corporation under this Act

(2) Paragraph 160.4(4)(a) of the Act is replaced by the following:

(a) a payment by the other person on account of that person’s liability shall to the extent thereof discharge their liability; and

(3) Paragraph 160.4(4)(b) of the English version of the Act is replaced by the following:

(b) a payment by the corporation on account of the corporation’s liability discharges the other person’s liability only to the extent that the payment operates to reduce the corporation’s liability to an amount less than the amount in respect of which the other person was, by subsection (1) or (2), as the case may be, made jointly and severally, or solidarily, liable.

257. Subparagraph 163.2(8)(b)(i) of the French version of the Act is replaced by the following:

258. Paragraph (d) of the definition “financial institution” in subsection 181(1) of the Act is replaced by the following:

(d) authorized under the laws of Canada or a province to accept deposits from the public and carries on the business of lending money on the security of real property or immovables or investing in indebtedness on the security of mortgages on real property or of hypothecs on immovables,

259. (1) Paragraph 181.3(1)(a) of the Act is replaced by the following:

(a) the total of all amounts each of which is the carrying value at the end of the year of an asset of the financial institution (other than property held by the institution primarily for the purpose of resale that was acquired by the financial institution, in the year or the preceding taxation year, as a consequence of another person’s default, or anticipated default, in respect of a debt owed to the institution) that is tangible, or for civil law corporeal, property used in Canada and, in the case of a financial institution that is an insurance corporation, that is non-segregated property, within the meaning assigned by subsection 138(12),

(2) Subparagraph 181.3(1)(b)(i) of the Act is replaced by the following:

(i) the total of all amounts each of which is the carrying value of an asset of the partnership, at the end of its last fiscal period ending at or before the end of the year, that is tangible, or for civil law corporeal, property used in Canada

260. Subparagraph 181.4(d)(i) of the Act is replaced by the following:

(i) is a ship or aircraft operated by the corporation in international traffic or is personal or movable property used in its business of transporting passengers or goods by ship or aircraft in international traffic, and

261. (1) The portion of subsection 185(4) of the English version of the Act before paragraph (a) is replaced by the following:

(4) Each person who has received a dividend from a corporation in respect of which the corporation elected under subsection 83(2), 130.1(4) or 131(1) is jointly and severally, or solidarily, liable with the corporation to pay that proportion of the corporation’s tax payable under this Part because of the election that

(2) The portion of subsection 185(6) of the English version of the Act before paragraph (a) is replaced by the following:

(6) Where under subsection (4) a corporation and another person have become jointly and severally, or solidarily, liable to pay part or all of the corporation’s tax payable under this Part in respect of a dividend described in subsection (4),

(3) Paragraph 185(6)(a) of the Act is replaced by the following:

(a) a payment at any time by the other person on account of the liability shall, to the extent of the payment, discharge their liability after that time; and

262. Subsection 188(4) of the English version of the Act is replaced by the following:

(4) Where property has been transferred to a charitable organization in circumstances described in subsection (3) and it may reasonably be considered that the organization acted in concert with a charitable foundation for the purpose of reducing the disbursement quota of the foundation, the organization is jointly and severally, or solidarily, liable with the foundation for the tax imposed on the foundation by that subsection in an amount not exceeding the net value of the property.

263. Paragraph (c) of the definition “financial institution” in subsection 190(1) of the Act is replaced by the following:

(c) is authorized under the laws of Canada or a province to accept deposits from the public and carries on the business of lending money on the security of real property or immovables or investing in indebtedness on the security of mortgages on real property or of hypothecs on immovables,

264. (1) Paragraph 191.3(1)(e) of the English version of the Act is replaced by the following:

(e) the transferor corporation and the transferee corporation are jointly and severally, or solidarily, liable to pay the amount of tax specified in the agreement and any interest or penalty in respect thereof.

(2) Subsection 191.3(5) of the English version of the Act is replaced by the following:

(5) The Minister may at any time assess a transferor corporation in respect of any amount for which it is jointly and severally, or solidarily, liable by reason of paragraph (1)(e) and the provisions of Division I of Part I are applicable in respect of the assessment as though it had been made under section 152.

(3) The portion of subsection 191.3(6) of the English version of the Act before paragraph (a) is replaced by the following:

(6) Where a transferor corporation and a transferee corporation are by reason of paragraph (1)(e) jointly and severally, or solidarily, liable in respect of tax payable by the transferee corporation under subparagraph 191.1(1)(a)(iv) and any interest or penalty in respect thereof, the following rules apply:

(4) Paragraph 191.3(6)(a) of the Act is replaced by the following:

(a) a payment by the transferor corporation on account of the liability shall, to the extent thereof, discharge their liability; and

(5) Paragraph 191.3(6)(b) of the English version of the Act is replaced by the following:

(b) a payment by the transferee corporation on account of its liability discharges the transferor corporation’s liability only to the extent that the payment operates to reduce the transferee corporation’s liability under this Act to an amount less than the amount in respect of which the transferor corporation was, by paragraph (1)(e), made jointly and severally, or solidarily, liable.

265. (1) The portion of subparagraph 204.4(2)(a)(ii) of the Act after clause (A) is replaced by the following:

(B) the amount by which the fair market value at the time of acquisition of its real or immovable property that may reasonably be regarded as being held for the purpose of producing income from property exceeds the total of all amounts each of which is owing by it on account of its acquisition of the real or immov- able property

is not less than 80% of the amount by which the fair market value at the time of acquisition of all its property exceeds the total of all amounts each of which is owing by it on account of its acquisition of real or immovable property,

(2) Subparagraphs 204.4(2)(a)(iii) and (iv) of the Act are replaced by the following:

(iii) the fair market value at the time of acquisition of its shares, bonds, mortgages, hypothecary claims and other securities of any one corporation or debtor (other than bonds, mortgages, hypothecary claims and other securities of or guaranteed by Her Majesty in right of Canada or a province or Canadian municipality) is not more than 10% of the amount by which the fair market value at the time of acquisition of all its property exceeds the total of all amounts each of which is an amount owing by it on account of its acquisition of real or immovable property,

(iv) the amount by which

(A) the fair market value at the time of acquisition of any one of its real or immovable properties

exceeds

(B) the total of all amounts each of which is owing by it on account of its acquisition of the real or immovable property

is not more than 10% of the amount by which the fair market value at the time of acquisition of all its property exceeds the total of all amounts each of which is owing by it on account of its acquisition of real or immovable property,

(3) Clause 204.4(2)(a)(viii)(A) of the Act is replaced by the following:

(A) a mortgage or hypothecary claim (other than a mortgage or hypothecary claim insured under the National Housing Act or by a corporation that offers its services to the public in Canada as an insurer of mortgages or hypothecary claims and that is approved as a private insurer of mortgages or hypothecary claims by the Superintendent of Financial Institutions pursuant to the powers assigned to the Superintendent under subsection 6(1) of the Office of the Superintendent of Financial Institutions Act), or an interest therein, or for civil law a right therein, in respect of which the mortgagor or hypothecary debtor is the annuitant under a registered retirement savings plan or registered retirement income fund, or a person with whom the annuitant is not dealing at arm’s length, if any of the funds of a trust governed by such a plan or fund have been used to acquire an interest in the applicant, or

266. (1) Subparagraph 204.6(2)(b)(ii) of the Act is replaced by the following:

(ii) the total of all amounts each of which is an amount owing by the trust at the end of the month in respect of the acquisition of real property or immovables.

(2) Subsection 204.6(3) of the Act is replaced by the following:

(3) Where at the end of any month a taxpayer that is a registered investment described in paragraph 204.4(2)(a) holds real or immovable property, it shall, in respect of that month, pay a tax under this Part equal to 1% of the total of all amounts each of which is the amount by which the excess of

(a) the fair market value at the time of its acquisition of any one real or immovable property of the taxpayer

over

(b) the total of all amounts each of which was an amount owing by it at the end of the month on account of its acquisition of the real or immovable property

was greater than 10% of the amount by which the total of all amounts each of which is the fair market value at the time of its acquisition of a property held by it at the end of the month exceeds the total of all amounts each of which was an amount owing by it at the end of the month on account of its acquisition of real or immovable property.

267. Paragraphs (c) and (c.1) of the definition “carved-out property” in subsection 209(1) of the Act are replaced by the following:

(c) an interest, or for civil law a right, in respect of a property that was acquired by the person solely in consideration of the person’s undertaking under an agreement to incur Canadian exploration expense or Canadian development expense in respect of the property and, where the agreement so provides, to acquire gas or oil well equipment (as defined in subsection 1104(2) of the Income Tax Regulations) in respect of the property,

(c.1) an interest, or for civil law a right, in respect of a property that was retained by the person under an agreement under which another person obtained an absolute or conditional right to acquire another interest, or for civil law another right, in respect of the property, if the other interest or right is not carved-out property of the other person because of paragraph (c),

268. (1) Subparagraph 212(1)(b)(viii) of the Act is replaced by the following:

(viii) interest payable on a mortgage, hypothecary claim or similar obligation secured by, or on an agreement for sale or similar obligation with respect to real property situated outside Canada or an interest in any such real property, or to immovables situated outside Canada or a real right in any such immovable, except to the extent that the interest payable on the obligation is deductible in computing the income of the payer under Part I from a business carried on by the payer in Canada or from property other than real or immovable property situated outside Canada,

(2) Subparagraphs 212(1)(d)(viii) and (ix) of the Act are replaced by the following:

(viii) a payment made under a bona fide cost-sharing arrangement under which the person making the payment shares on a reasonable basis with one or more non-resident persons research and development expenses in exchange for an interest, or for civil law a right, in any or all property or other things of value that may result therefrom,

(ix) a rental payment for the use of or the right to use outside Canada any tangible, or for civil law corporeal, property,

(3) Paragraph 212(13)(f) of the Act is replaced by the following:

(f) interest on any mortgage, hypothecary claim or other indebtedness entered into or issued or modified after March 31, 1977 and secured by real property situated in Canada or an interest therein, or by immovables situated in Canada or real rights therein, to the extent that the amount so paid or credited is deductible in computing the non-resident person’s taxable income earned in Canada or the amount on which the non-resident person is liable to pay tax under Part I,

269. (1) Paragraph 216(1)(b) of the Act is replaced by the following:

(b) the non-resident person’s income from the non-resident person’s interest in real property, or real right in immovables, in Canada and interest in, or for civil law right in, timber resource properties and timber limits in Canada, and the non-resident person’s share of the income of a partnership of which the non-resident person was a member from its interest in real property, or real right in immovables, in Canada and interest in, or for civil law right in, timber resource properties and timber limits in Canada, were the non-resident person’s only income;

(2) Paragraphs 216(2)(a) and (b) of the Act are replaced by the following:

(a) rent on real or immovable property or from timber royalties paid to the person, and

(b) the person’s share of the rent on real or immovable property or from timber royalties paid to a partnership of which the person is a member

(3) The portion of subsection 216(4) of the Act before paragraph (a) is replaced by the following:

(4) Where a non-resident person or, in the case of a partnership, each non-resident person who is a member of the partnership files with the Minister an undertaking in prescribed form to file within 6 months after the end of a taxation year a return of income under Part I for the year as permitted by this section, a person who is otherwise required by subsection 215(3) to remit in the year, in respect of the non-resident person or the partnership, an amount to the Receiver General in payment of tax on rent on real or immovable property or on a timber royalty may elect under this section not to remit under that subsection, and if that election is made, the elector shall,

(4) Paragraph 216(5)(b) of the Act is replaced by the following:

(b) the person’s income from the person’s interest in real property, or real right in immovables, in Canada or interest in, or for civil law right in, timber resource properties and timber limits in Canada, and the person’s share of the income of a partnership of which the person was a member from its interest in real property, or real right in immovables, in Canada or interest in, or for civil law right in, timber resource properties and timber limits in Canada, were the person’s only income;

270. Subsection 219(1.1) of the Act is replaced by the following:

(1.1) For the purpose of subsection (1), the definition “taxable Canadian property” in subsection 248(1) shall be read without reference to paragraphs (a) and (c) to (k) of that definition and as if the only options, interests or rights referred to in paragraph (l) of that definition were those in respect of property described in paragraph (b) of that definition.

271. (1) The portion of subsection 223(5) of the Act before paragraph (a) is replaced by the following:

(5) A document issued by the Federal Court evidencing a certificate in respect of a debtor registered under subsection (3), a writ of that Court issued pursuant to the certificate or any notification of the document or writ (such document, writ or notification in this section referred to as a “memorial”) may be filed, registered or otherwise recorded for the purpose of creating a charge, lien or priority on, or a binding interest in, property in a province, or any interest in, or for civil law any right in, such property, held by the debtor in the same manner as a document evidencing

(2) Subsection 223(6) of the Act is replaced by the following:

(6) If a memorial has been filed, registered or otherwise recorded under subsection (5),

(a) a charge, lien or priority is created on, or a binding interest is created in, property in the province, or any interest in, or for civil law any right in, such property, held by the debtor, or

(b) such property, or interest or right in the property, is otherwise bound,

in the same manner and to the same extent as if the memorial were a document evidencing a judgment referred to in paragraph (5)(a) or an amount referred to in paragraph (5)(b), and the charge, lien, priority or binding interest created shall be subordinate to any charge, lien, priority or binding interest in respect of which all steps necessary to make it effective against other creditors were taken before the time the memorial was filed, registered or otherwise recorded.

(3) Paragraphs 223(7)(c) and (d) of the Act are replaced by the following:

(c) to cancel or withdraw the memorial wholly or in respect of any of the property, or interests or rights, affected by the memo- rial, or

(d) to postpone the effectiveness of the filing, registration or other recording of the memo- rial in favour of any right, charge, lien or priority that has been or is intended to be filed, registered or otherwise recorded in respect of any property, or interest or right, affected by the memorial,

(4) Paragraph 223(8)(a) of the English version of the Act is replaced by the following:

(a) a memorial is presented for filing, registration or other recording under subsection (5) or a document relating to the memorial is presented for filing, registration or other recording for the purpose of any proceeding described in subsection (7) to any official in the land registry system, personal property or movable property registry system, or other registry system, of a province, it shall be accepted for filing, registration or other recording, or

(5) Subsection 223(8) of the French version of the Act is replaced by the following:

272. The definition “security interest” in subsection 224(1.3) of the Act is replaced by the following:

“security interest” means any interest in, or for civil law any right in, property that secures payment or performance of an obligation and includes an interest, or for civil law a right, created by or arising out of a debenture, mortgage, hypothec, lien, pledge, charge, deemed or actual trust, assignment or encumbrance of any kind whatever, however or whenever arising, created, deemed to arise or otherwise provided for;

273. Section 224.2 of the Act is replaced by the following:

224.2 For the purpose of collecting debts owed by a person to Her Majesty under this Act or under an Act of a province with which the Minister of Finance has entered into an agreement for the collection of taxes payable to the province under that Act, the Minister may purchase or otherwise acquire any interest in, or for civil law any right in, the person’s property that the Minister is given a right to acquire in legal proceedings or under a court order or that is offered for sale or redemption and may dispose of any interest or right so acquired in such manner as the Minister considers reasonable.

274. (1) Subsection 225(1) of the Act is replaced by the following:

225. (1) Where a person has failed to pay an amount as required by this Act, the Minister may give 30 days notice to the person by registered mail addressed to the person’s latest known address of the Minister’s intention to direct that the person’s goods and chattels, or movable property, be seized and sold, and, if the person fails to make the payment before the expiration of the 30 days, the Minister may issue a certificate of the failure and direct that the person’s goods and chattels, or movable property, be seized.

(2) Subsection 225(5) of the Act is replaced by the following:

(5) Such goods and chattels, or movable property, of any person in default as would be exempt from seizure under a writ of execution issued out of a superior court of the province in which the seizure is made are exempt from seizure under this section.

275. Subsection 226(2) of the Act is replaced by the following:

(2) Where a taxpayer fails to pay, as required, any tax, interest or penalties demanded under this section, the Minister may direct that the goods and chattels, or movable property, of the taxpayer be seized and subsections 225(2) to (5) apply, with respect to the seizure, with such modifications as the circumstances require.

276. (1) The portion of paragraph 227(5)(b) of the English version of the Act before subparagraph (i) is replaced by the following:

(b) is jointly and severally, or solidarily, liable with the payer to pay to the Receiver General

(2) Subsection 227(8.1) of the English version of the Act is replaced by the following:

(8.1) Where a particular person has failed to deduct or withhold an amount as required under subsection 153(1) or section 215 in respect of an amount that has been paid to a non-resident person, the non-resident person is jointly and severally, or solidarily, liable with the particular person to pay any interest payable by the particular person pursuant to subsection (8.3) in respect thereof.

(3) Subsection 227(10.2) of the English version of the Act is replaced by the following:

(10.2) Where a non-resident person fails to deduct, withhold or remit an amount as required by subsection 153(1) in respect of a contribution under a retirement compensation arrangement that is paid on behalf of the employees or former employees of an employer with whom the non-resident person does not deal at arm’s length, the employer is jointly and severally, or solidarily, liable with the non-resident person to pay any amount payable under subsection (8), (8.2), (8.3), (9), (9.2) or (9.4) by the non-resident person in respect of the contribution.

277. (1) Paragraphs (a) and (b) of the definition “specified foreign property” in subsection 233.3(1) of the English version of the Act are replaced by the following:

(a) funds or intangible property, or for civil law incorporeal property, situated, deposited or held outside Canada,

(b) tangible property, or for civil law corpo- real property, situated outside Canada,

(2) Paragraph (h) of the definition “specified foreign property” in subsection 233.3(1) of the English version of the Act is replaced by the following:

(h) an interest in, or for civil law a right in, or a right — under a contract in equity or otherwise either immediately or in the future and either absolutely or contingently — to, any property (other than any property owned by a corporation or trust that is not the person) that is specified foreign property, and

(3) Paragraph (q) of the definition “specified foreign property” in subsection 233.3(1) of the English version of the Act is replaced by the following:

(q) an interest in, or for civil law a right in, or a right to acquire, a property that is described in any of paragraphs (j) to (p).

(4) Subparagraphs (a)(i) and (ii) of the definition “bien étranger déterminé” in subsection 233.3(1) of the French version of the Act are replaced by the following:

(5) Subparagraph (a)(viii) of the definition “bien étranger déterminé” in subsection 233.3(1) of the French version of the Act is replaced by the following:

(6) Subparagraph (b)(viii) of the definition “bien étranger déterminé” in subsection 233.3(1) of the French version of the Act is replaced by the following:

278. (1) Paragraph (c) of the definition “foreign resource property” in subsection 248(1) of the Act is replaced by the following:

(c) an oil or gas well in that country or real or immovable property in that country the principal value of which depends on its petroleum or natural gas content (but not including depreciable property),

(2) Paragraphs (f) and (g) of the definition “foreign resource property” in subsection 248(1) of the Act are replaced by the following:

(f) a real or immovable property in that country the principal value of which depends upon its mineral resource content (but not including depreciable property),

(g) a right to or an interest in — or for civil law a right to or in — any property described in any of paragraphs (a) to (e), other than a right or an interest that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership, or

(h) an interest in real property described in paragraph (f) or a real right in an immovable described in that paragraph, other than an interest or a right that the taxpayer has because the taxpayer is a beneficiary under a trust or a member of a partnership;

(3) The portion of the definition “former business property” in subsection 248(1) of the Act after paragraph (d) is replaced by the following:

and for the purpose of this definition, “rental property” of a taxpayer means real or immov- able property owned by the taxpayer, whether jointly with another person or otherwise, and used by the taxpayer in the taxation year in respect of which the expression is being applied principally for the purpose of gaining or producing gross revenue that is rent (other than property leased by the taxpayer to a person related to the taxpayer and used by that related person principally for any other purpose), but, for greater certainty, does not include a property leased by the taxpayer or the related person to a lessee, in the ordinary course of a business of the taxpayer or the related person of selling goods or rendering services, under an agreement by which the lessee undertakes to use the property to carry on the business of selling or promoting the sale of the goods or services of the taxpayer or the related person;

(4) The portion of the definition “property” in subsection 248(1) of the Act before paragraph (a) is replaced by the following:

“property” means property of any kind whatever whether real or personal, immovable or movable, tangible or intangible, or corporeal or incorporeal and, without restricting the generality of the foregoing, includes

(5) Paragraph (a) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(a) real or immovable property situated in Canada,

(6) Subparagraph (b)(ii) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(ii) where the taxpayer is non-resident, ships and aircraft used principally in international traffic and personal or movable property pertaining to their operation if the country in which the taxpayer is resident does not impose tax on gains of persons resident in Canada from dispositions of such property,

(7) Clause (e)(i)(E) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(E) an option in respect of, or an interest in, or for civil law a right in, a property described in any of clauses (B) to (D), whether or not the property exists,

(8) Clause (e)(ii)(A) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(A) real or immovable property situated in Canada,

(9) Subparagraph (g)(v) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(v) an option in respect of, or an interest in, or for civil law a right in, a property described in any of subparagraphs (ii) to (iv), whether or not that property exists,

(10) Clause (k)(i)(E) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(E) an option in respect of, or an interest in, or for civil law a right in, a property described in any of clauses (B) to (D), whether or not that property exists

(11) Clause (k)(ii)(A) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(A) real or immovable property situated in Canada,

(12) Paragraph (l) of the definition “taxable Canadian property” in subsection 248(1) of the Act is replaced by the following:

(l) an option in respect of, or an interest in, or for civil law a right in, a property described in any of paragraphs (a) to (k), whether or not that property exists,

(13) Subsection 248(4) of the Act is replaced by the following:

(4) In this Act, an interest in real property includes a leasehold interest in real property but does not include an interest as security only derived by virtue of a mortgage, agreement for sale or similar obligation.

(4.1) In this Act, a real right in an immovable includes a lease but does not include a security right derived by virtue of a hypothec, agreement for sale or similar obligation.

(14) Subsections 248(20) and (21) of the Act are replaced by the following:

(20) Subject to subsections (21) to (23), for the purposes of this Act, where at any time a property owned by two or more persons is the subject of a partition, the following rules apply, notwithstanding any retroactive or declaratory effect of the partition:

(a) each such person who had, immediately before that time, an interest in, or for civil law a right in, the property (which interest or right in the property is referred to in this subsection and subsection (21) as an “interest” or a “right”, as the case may be) shall be deemed not to have disposed at that time of that proportion, not exceeding 100%, of the interest or right that the fair market value of that person’s interest or right in the property immediately after that time is of the fair market value of that person’s interest or right in the property immediately before that time,

(b) each such person who has an interest or right in the property immediately after that time shall be deemed not to have acquired at that time that proportion of the interest or right that the fair market value of that person’s interest or right in the property immediately before that time is of the fair market value of that person’s interest or right in the property immediately after that time,

(c) each such person who had an interest or a right in the property immediately before that time shall be deemed to have had until that time, and to have disposed at that time of, that proportion of the person’s interest or right to which paragraph (a) does not apply,

(d) each such person who has an interest or a right in the property immediately after that time shall be deemed not to have had before that time, and to have acquired at that time, that proportion of the person’s interest or right to which paragraph (b) does not apply, and

(e) paragraphs (a) to (d) do not apply where the interest or right of the person is an interest or a right in fungible tangible property, or for civil law fungible corporeal property described in that person’s inventory,

and, for the purposes of this subsection, where an interest or a right in the property is an undivided interest or right, the fair market value of the interest or right at any time shall be deemed to be equal to that proportion of the fair market value of the property at that time that the interest or right is of all the undivided interests or rights in the property.

(21) Where a property that was owned by two or more persons is the subject of a partition among those persons and, as a consequence thereof, each such person has, in the property, a new interest or right the fair market value of which immediately after the partition, expressed as a percentage of the fair market value of all the new interests or rights in the property immediately after the partition, is equal to the fair market value of that person’s undivided interest or right immediately before the partition, expressed as a percentage of the fair market value of all the undivided interests or rights in the property immediately before the partition,

(a) subsection (20) does not apply to the property, and

(b) the new interest or right of each such person shall be deemed to be a continuation of that person’s undivided interest or right in the property immediately before the partition,

and, for the purposes of this subsection,

(c) subdivisions of a building or of a parcel of land that are established in the course of, or in contemplation of, a partition and that are co-owned by the same persons who co-owned the building or the parcel of land, or by their assignee, shall be regarded as one property, and

(d) where an interest or a right in the property is or includes an undivided interest or right, the fair market value of the interest or right shall be determined without regard to any discount or premium that applies to a minority or majority interest or right in the property.

(15) The portion of subsection 248(23.1) of the Act before paragraph (a) is replaced by the following:

(23.1) Where, as a consequence of the laws of a province relating to spouses’ or common-law partners’ interests or rights in respect of property as a result of marriage or common-law partnership, property is, after the death of a taxpayer:

279. Subparagraphs 253(c)(ii) and (iii) of the Act are replaced by the following:

(ii) property (other than depreciable property) that is a timber resource property, an option in respect of a timber resource property or an interest in, or for civil law a right in, a timber resource property, or

(iii) property (other than capital property) that is real or immovable property situated in Canada, including an option in respect of such property or an interest in, or for civil law a real right in, such property, whether or not the property is in existence,

PART 4