Bill C-28

Working Income Tax Benefit

122.7 (1) The following definitions apply in this section.

“adjusted net income” of an individual for a taxation year means the amount that would be the individual’s income for the taxation year if

(a) this Act were read without reference to paragraph 81(1)(a) and subsection 81(4);

(b) in computing that income, no amount were included under paragraph 56(1)(q.1) or subsection 56(6), or in respect of any gain from a disposition of property to which section 79 applies; and

(c) in computing that income, no amount were deductible under paragraph 60(y) or (z).

“cohabiting spouse or common-law partner” of an individual at any time has the meaning assigned by section 122.6.

“designated educational institution” has the meaning assigned by subsection 118.6(1).

“eligible dependant” of an individual for a taxation year means a child of the individual who, at the end of the year,

(a) resided with the individual;

(b) was under the age of 19 years; and

(c) was not an eligible individual.

“eligible individual” for a taxation year means an individual (other than an ineligible individ-ual) who was resident in Canada throughout the taxation year and who was, at the end of the taxation year,

(a) 19 years of age or older;

(b) the cohabiting spouse or common-law partner of another individual; or

(c) the parent of a child with whom the individual resides.

“eligible spouse” of an eligible individual for a taxation year means an individual (other than an ineligible individual) who was resident in Canada throughout the taxation year and who was, at the end of the taxation year, the cohabiting spouse or common-law partner of the eligible individual.

“ineligible individual” for a taxation year means an individual

(a) who is described in paragraph 149(1)(a) or (b) at any time in the taxation year;

(b) who, except where the individual has an eligible dependant for the taxation year, was enrolled as a full-time student at a designated educational institution for a total of more than 13 weeks in the taxation year; or

(c) who was confined to a prison or similar institution for a period of at least 90 days during the taxation year.

“return of income” filed by an individual for a taxation year means a return of income (other than a return of income filed under subsection 70(2) or 104(23), paragraph 128(2)(e) or subsection 150(4)) that is required to be filed for the taxation year or that would be required to be filed if the individual had tax payable under this Part for the taxation year.

“working income” of an individual for a taxation year means the total of

(a) the total of all amounts each of which would, if this Act were read without reference to section 8, paragraph 81(1)(a) and subsection 81(4), be the individual’s income for the taxation year from an office or employment;

(b) all amounts that are included, or that would, but for paragraph 81(1)(a), be included, because of paragraph 56(1)(n) or (o) in computing the individual’s income for the taxation years; and

(c) the total of all amounts each of which would, if this Act were read without reference to paragraph 81(1)(a), be the individual’s income for the taxation year from a business carried on by the individual otherwise than as a specified member of a partnership.

(2) Subject to subsections (4) and (5), an eligible individual for a taxation year who files a return of income for the taxation year and who makes a claim under this subsection, is deemed to have paid, at the end of the taxation year, on account of tax payable under this Part for the taxation year, an amount equal to the amount, if any, determined by the formula

A - B

where

A      is

(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, the lesser of $500 and 20% of the amount, if any, by which the individual’s working income for the taxation year exceeds $3,000, or

(b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, the lesser of $1,000 and 20% of the amount, if any, by which the total of the working incomes of the individual and, if applicable, of the eligible spouse of the individual, for the taxation year, exceeds $3,000; and

B      is

(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 15% of the amount, if any, by which the individual’s adjusted net income for the taxation year exceeds $9,500, or

(b) if the individual had an eligible spouse or an eligible dependant, for the taxation year, 15% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if appli-cable, of the eligible spouse of the individual, for the taxation year, exceeds $14,500.

(3) An eligible individual for a taxation year who files a return of income for the taxation year and who may deduct an amount under subsection 118.3(1) in computing tax payable under this Part for the taxation year is deemed to have paid, at the end of the taxation year, on account of tax payable under this Part for the taxation year, an amount equal to the amount, if any, determined by the formula

C - D

where

C      is the lesser of $250 and 20% of the amount, if any, by which the individual’s working income for the taxation year exceeds $1,750, and

D      is

(a) if the individual had neither an eligible spouse nor an eligible dependant, for the taxation year, 15% of the amount, if any, by which the individual’s adjusted net income for the taxation year exceeds $12,833,

(b) if the individual had an eligible spouse for the taxation year who was not entitled to deduct an amount under subsection 118.3(1) for the taxation year, or had an eligible dependant for the taxation year, 15% of the amount, if any, by which the total of the adjusted net incomes of the individual and, if appli-cable, of the eligible spouse, for the taxation year, exceeds $21,167, or

(c) if the individual had an eligible spouse for the taxation year who was entitled to deduct an amount under subsection 118.3(1) for the taxation year, 7.5% of the amount, if any, by which the total of the adjusted net incomes of the individual and of the eligible spouse, for the taxation year, exceeds $21,167.

(4) An eligible spouse of an eligible individ-ual for a taxation year is deemed, for the purpose of subsection (2), not to be an eligible individual for the taxation year if the eligible spouse made a joint application described in subsection (6) with the eligible individual and the eligible individual received an amount under subsection (7) in respect of the taxation year.

(5) If an eligible individual had an eligible spouse for a taxation year and both the eligible individual and the eligible spouse make a claim for the taxation year under subsection (2), the amount deemed to have been paid under that subsection by each of them on account of tax payable under this Part for the taxation year, is nil.

(6) Subsection (7) applies to an individual for a taxation year if,

(a) at any time after January 1 and before September 1 of the taxation year, the individual makes an application (or in the case of an individual who has, at that time, a cohabiting spouse or common-law partner, the two of them make a joint application designating the individual for the purpose of subsection (7)), to the Minister in prescribed form, containing prescribed information; and

(b) where the individual and a cohabiting spouse or common-law partner have made a joint application referred to in paragraph (a)

(i) the individual’s working income for the taxation year can reasonably be expected to be greater than the working income of the individual’s cohabiting spouse or common-law partner for the taxation year, or

(ii) the individual can reasonably be expected to be deemed by subsection (3) to have paid an amount on account of tax payable under this Part for the taxation year.

(7) Subject to subsection (8), the Minister may pay to an individual before the end of January of the year following a taxation year, one or more amounts that, in total, do not exceed one-half of the total of the amounts that the Minister estimates will be deemed to be paid by the individual under subsection (2) or (3) at the end of the taxation year, and any amount paid by the Minister under this subsection is deemed to have been received by the individual in respect of the taxation year.

(8) No payment shall be made under subsection (7) to an individual in respect of a taxation year

(a) if the total amount that the Minister may pay under that subsection is less than $100; or

(b) before the day on which the individual has filed a return of income for a preceding taxation year in respect of which the individual received a payment under that subsection.

(9) If, in a taxation year, an individual makes an application described in subsection (6), the individual shall notify the Minister of the occurrence of any of the following events before the end of the month following the month in which the event occurs

(a) the individual ceases to be resident in Canada in the taxation year;

(b) the individual ceases, before the end of the taxation year, to be a cohabiting spouse or common-law partner of another person with whom the individual made the application;

(c) the individual enrols as a full-time student at a designated educational institution in the taxation year; or

(d) the individual is confined to a prison or similar institution in the taxation year.

(10) For the purpose of applying subsections (2) and (3), an individual (referred to in this subsection as the “child”) is deemed not to be an eligible dependant of an eligible individual for a taxation year if the child is an eligible dependant of another eligible individual for the taxation year and both eligible individuals identified the child as an eligible dependant for the purpose of claiming or computing an amount under this section for the taxation year.

(11) For the purpose of this subdivision, if an individual becomes bankrupt in a particular calendar year

(a) notwithstanding subsection 128(2), any reference to the taxation year of the individ-ual (other than in this subsection) is deemed to be a reference to the particular calendar year; and

(b) the individual’s working income and adjusted net income for the taxation year ending on December 31 of the particular calendar year is deemed to include the individual’s working income and adjusted net income for the taxation year that begins on January 1 of the particular calendar year.

(12) For the purpose of this subdivision, if an individual dies after June 30 of a calendar year

(a) the individual is deemed to be resident in Canada from the time of death until the end of the year and to reside at the same place in Canada as the place where the individual resided immediately before death;

(b) the individual is deemed to be the same age at the end of the year as the individual would have been if the individual were alive at the end of the year;

(c) the individual is deemed to be the cohabiting spouse or common-law partner of another individual (referred to in this paragraph as the “surviving spouse”) at the end of the year if,

(i) immediately before death, the individ-ual was the cohabiting spouse or common-law partner of the surviving spouse, and

(ii) the surviving spouse is not the cohab-iting spouse or common-law partner of another individual at the end of the year; and

(d) any return of income filed by a legal representative of the individual is deemed to be a return of income filed by the individual.

122.71 The Minister of Finance may enter into an agreement with the government of a province whereby the amounts determined under subsections 122.7(2) and (3) with respect to an eligible individual resident in the province at the end of the taxation year shall, for the purpose of calculating amounts deemed to be paid on account of the tax payable of an individual under those subsections, be replaced by amounts determined in accordance with the agreement.

(2) Subsection (1) applies to the 2007 and subsequent taxation years except that

(a) for the 2007 taxation year, paragraphs (b) and (c) of the definition “adjusted net income” in subsection 122.7(1) of the Act, as enacted by subsection (1), shall be read as follows:

(b) in computing that income, no amount were included under subsection 56(6), as a beneficiary of a registered disability savings plan or in respect of any gain from a disposition of property to which section 79 applies; and

(c) in computing that income, no amount were deductible under paragraph 60(y).

(b) subsections 122.7(6) to (8) of the Act, as enacted by subsection (1), apply to the 2008 and subsequent taxation years.

43. (1) The portion of paragraph 127(5)(a) of the Act before clause (ii)(B) is replaced by the following:

(a) the total of

(i) the taxpayer’s investment tax credit at the end of the year in respect of property acquired before the end of the year, of the taxpayer’s apprenticeship expenditure for the year or a preceding taxation year, of the taxpayer’s child care space amount for the year or a preceding taxation year, of the taxpayer’s flow-through mining expenditure for the year or a preceding taxation year, of the taxpayer’s pre-production mining expenditure for the year or a preceding taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the year or at the end of a preceding taxation year, and

(ii) the lesser of

(A) the taxpayer’s investment tax credit at the end of the year in respect of property acquired in a subsequent taxation year, of the taxpayer’s apprenticeship expenditure for a subsequent taxation year, of the taxpayer’s child care space amount for a subsequent taxation year, of the taxpayer’s flow-through mining expenditure for a subsequent taxation year, of the taxpayer’s pre-production mining expenditure for a subsequent taxation year or of the taxpayer’s SR&ED qualified expenditure pool at the end of the subsequent taxation year to the extent that an investment tax credit was not deductible under this subsection for the subsequent taxation year, and

(2) Subsection 127(7) of the Act is replaced by the following:

(7) If, in a particular taxation year of a taxpayer who is a beneficiary under a testamentary trust or under an inter vivos trust that is deemed to be in existence by section 143, an amount is determined in respect of the trust under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for its taxation year that ends in that particular taxation year, the trust may, in its return of income for its taxation year that ends in that particular taxation year, designate the portion of that amount that can, having regard to all the circumstances including the terms and conditions of the trust, reasonably be considered to be attributable to the taxpayer and was not designated by the trust in respect of any other beneficiary of the trust, and that portion shall be added in computing the investment tax credit of the taxpayer at the end of that particular taxation year and shall be deducted in computing the investment tax credit of the trust at the end of its taxation year that ends in that particular taxation year.

(3) The portion of subsection 127(8) of the Act before paragraph (a) is replaced by the following:

(8) Subject to subsections (28) and (28.1), where, in a particular taxation year of a taxpayer who is a member of a partnership, an amount would be determined in respect of the partnership, for its taxation year that ends in the particular taxation year, under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9), if

(4) Subparagraph 127(8.2)(b)(i) of the Act is amended by striking out the word “or” at the end of clause (A.1) and by adding the following after clause (A.1):

(A.2) an amount that would be the child care space amount in respect of a property of the partnership if the reference to “$10,000” in paragraph (a) of the definition “child care space amount” in subsection (9) were read as a reference to “$40,000” and paragraph (b) of that definition were read without reference to “25% of”, or

(5) Paragraph 127(8.31)(a) of the Act is replaced by the following:

(a) the total of all amounts each of which is an amount that would, if the partnership were a person and its fiscal period were its taxation year, be determined in respect of the partnership under paragraph (a), (a.1), (a.4), (a.5), (b) or (e.1) of the definition “investment tax credit” in subsection (9) for a taxation year that is the fiscal period,

(6) Subsection 127(8.31) of the Act is amended by adding the word “and” at the end of subparagraph (b)(i), by striking out the word “and” at the end of subparagraph (b)(ii), and by repealing subparagraph (b)(iii).

(7) The definition “eligible apprentice” in subsection 127(9) of the Act is replaced by the following;

“eligible apprentice” means an individual who is employed in Canada in a trade prescribed in respect of a province or in respect of Canada, during the first twenty-four months of the individual’s apprenticeship contract registered with the province or Canada, as the case may be, under an apprenticeship program designed to certify or license individuals in the trade;

(8) Paragraph (a) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act is replaced by the following:

(a) that is a Canadian exploration expense incurred by a corporation after March 2007 and before 2009 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2009) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (a) or (d) of the definition “mineral resource” in subsection 248(1),

(9) Paragraphs (c) and (d) of the definition “flow-through mining expenditure” in subsection 127(9) of the Act are replaced by the following:

(c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2007 and before April 2008, and

(d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2007 and before April 2008;

(10) The definition “investment tax credit” in subsection 127(9) of the Act is amended by adding the following after paragraph (a.4):

(a.5) the child care space amount of the taxpayer for the taxation year,

(11) Paragraph (e.1) of the definition “investment tax credit” in subsection 127(9) of the Act is amended by striking out the word “or” at the end of subparagraph (iv), by striking out the word “and” at the end of subparagraph (v) and by adding the following after subparagraph (v):

(vi) the amount of eligible salary and wages payable by the taxpayer to an eligible apprentice under paragraph (11.1)(c.4), to the extent that that reduction had the effect of reducing the amount of an apprenticeship expenditure of the taxpayer, or

(vii) the amount of an eligible child care space expenditure of the taxpayer under paragraph (11.1)(c.5), to the extent that that reduction had the effect of reducing the amount of a child care space amount of the taxpayer, and

(12) Paragraph (f.1) of the definition “specified percentage” in subsection 127(9) is replaced by the following:

(f.1) in respect of the repayment of government assistance, non-government assistance or a contract payment that reduced

(i) a qualified expenditure incurred by the taxpayer under any of subsections (18) to (20), 20%,

(ii) the amount of eligible salary and wages payable (by the taxpayer) to an eligible apprentice under paragraph (11.1)(c.4), 10%, or

(iii) the amount of the taxpayer’s eligible child care space expenditure under paragraph (11.1)(c.5), 25%;

(13) Subsection 127(9) of the Act is amended by adding the following definitions in alphabetical order:

“child care space amount” of a taxpayer for a taxation year is, if the provision of child care spaces is ancillary to one or more businesses of the taxpayer that are carried on in Canada in the taxation year and that do not otherwise include the provision of child care spaces, the lesser of

(a) the amount obtained when $10,000 is multiplied by the number of new child care spaces created by the taxpayer during the taxation year in a licensed child care facility for the benefit of children of the taxpayer’s employees, or of a combination of children of the taxpayer’s employees and other children; and

(b) 25% of the taxpayer’s eligible child care space expenditure for the taxation year;

“eligible child care space expenditure” of a taxpayer for a taxation year is the total of all amounts each of which is an amount

(a) that is incurred by the taxpayer in the taxation year for the sole purpose of the creation of one or more new child care spaces in a licensed child care facility operated for the benefit of children of the taxpayer’s employees, or of a combination of children of the taxpayer’s employees and other children, and

(b) that is

(i) incurred by the taxpayer to acquire depreciable property of a prescribed class (other than a specified property) for use in the child care facility, or

(ii) incurred by the taxpayer to make a specified child care start-up expenditure in respect of the child care facility;

“specified child care start-up expenditure” of a taxpayer in respect of a child care facility is an expenditure incurred by the taxpayer (other than to acquire a depreciable property) that is

(a) a landscaping cost incurred to create, at the child care facility, an outdoor play area for children,

(b) an architectural fee for designing the child care facility or a fee for advice on planning, designing and establishing the child care facility,

(c) a cost of construction permits in respect of the child care facility,

(d) an initial licensing or regulatory fee in respect of the child care facility, including fees for mandatory inspections,

(e) a cost of educational materials for children, or

(f) a similar amount incurred for the sole purpose of the initial establishment of the child care facility;

“specified property” in respect of a taxpayer means any property that is

(a) a motor vehicle or any other motorized vehicle, or

(b) a property that is, or is located in, or attached to, a residence

(i) of the taxpayer,

(ii) an employee of the taxpayer,

(iii) a person who holds an interest in the taxpayer, or

(iv) a person related to a person referred to in any of subparagraphs (i) to (iii);

(14) Paragraph 127(11.1)(c.4) of the Act is replaced by the following:

(c.4) the amount of a taxpayer’s eligible salary and wages for a taxation year is deemed to be the amount of the taxpayer’s eligible salary and wages for the year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible salary and wages for the year that, at the time of the filing of the taxpayer’s return of income for the year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive;

(c.5) the amount of a taxpayer’s eligible child care space expenditure for a taxation year is deemed to be the amount of the taxpayer’s eligible child care space expenditure for the taxation year otherwise determined less the amount of any government assistance or non-government assistance in respect of the eligible child care space expenditure for the taxation year that, at the time of the filing of the taxpayer’s return of income for the taxation year, the taxpayer has received, is entitled to receive or can reasonably be expected to receive; and

(15) Subsection 127(11.2) of the Act is replaced by the following:

(11.2) In applying subsections (5), (7) and (8), paragraphs (a), (a.1) and (a.5) of the definition “investment tax credit” in subsection (9) and section 127.1,

(a) certified property, qualified property and first term shared-use-equipment are deemed not to have been acquired, and

(b) expenditures incurred to acquire property described in subparagraph 37(1)(b)(i) or included in an eligible child care expenditure are deemed not to have been incurred

by a taxpayer before the property is considered to have become available for use by the taxpayer, determined without reference to paragraphs 13(27)(c) and 13(28)(d), and subparagraph (27.12)(b)(i).

(16) Section 127 of the Act is amended by adding the following after subsection (27):

(27.1) There shall be added to a taxpayer’s tax otherwise payable under this Part for a particular taxation year, the total of all amounts each of which is an amount determined under subsection (27.12) in respect of a disposition by the taxpayer in the particular taxation year of a property a percentage of the cost of which can reasonably be considered to have been included in the child care space amount of the taxpayer for a taxation year, if the property was acquired in respect of a child care space that was created at a time that is less than 60 months before the disposition.

(27.11) For the purpose of subsection (27.1),

(a) if a particular child care space, in respect of which any amount is included in the child care space amount of a taxpayer or a partnership for a taxation year or a fiscal period, ceases at any particular time to be available, the child care space is, except where the child care space has been disposed of by the taxpayer or the partnership before the particular time, deemed to be a property

(i) disposed of by the taxpayer or the partnership, as the case maybe, at the particular time,

(ii) a percentage of the cost of which can reasonably be considered to be included in the child care space amount of the taxpayer or the partnership, as the case may be, for a taxation year or a fiscal period, and

(iii) acquired in respect of a child care space that was created at the time the child care space was created,

(b) child care spaces that cease to be available are deemed to so cease in reverse chronological order to their creation, and

(c) a property acquired by a taxpayer or a partnership in respect of a child care space is deemed to be disposed of by the taxpayer or the partnership, as the case maybe, in a disposition described in clause (27.12)(b)(ii)(B) if the property is leased by the taxpayer or the partnership to a lessee for any purpose or is converted to a use by the taxpayer or the partnership other than to a use for the child care space.

(27.12) For the purposes of subsection (27.1) and (27.11), the amount determined under this subsection in respect of a disposition of a property by a taxpayer or a partnership is,

(a) where the property disposed of is a child care space, the amount that can reasonably be considered to have been included under paragraph (a.5) of the definition “investment tax credit” in subsection (9) in respect of the taxpayer or partnership in respect of the child care space, and

(b) in any other case, the lesser of,

(i) the amount that can reasonably be considered to have been included under paragraph (a.5) of the definition “investment tax credit” in subsection (9) in respect of the taxpayer or partnership in respect of the cost of the property, and

(ii) 25% of

(A) if the property, or a part of the property, is disposed of to a person who deals at arm’s length with the taxpayer or the partnership, the proceeds of disposition of the property, or of the part of the property, and

(B) in any other case, the fair market value of the property or of the part of the property, at the time of the disposition.

(17) Section 127 of the Act is amended by adding the following after subsection (28):

(28.1) For the purpose of computing the amount determined under subsection (8) in respect of a partnership at the end of a particular fiscal period of the partnership, there shall be deducted the total of all amounts, each of which is an amount determined under subsection (27.12) in respect of a disposition by the partnership in the particular fiscal period of a property a percentage of the cost of which can reasonably be considered to have been included in the child care space amount of the partnership for a fiscal period, if the property was acquired in respect of a child care space that was created at a time that is less than 60 months before the disposition.

(18) Subsection 127(30) of the Act is replaced by the following:

(30) Where a taxpayer is a member of a partnership at the end of a fiscal period of the partnership, there shall be added to the taxpayer’s tax otherwise payable under this Part for the taxpayer’s taxation year in which that fiscal period ends the amount that can reasonably be considered to be the taxpayer’s share of the amount, if any, by which

(a) the total of

(i) the total of all amounts each of which is the lesser of the amounts described in paragraphs (28)(d) and (e) in respect of the partnership in respect of the fiscal period,

(ii) the total of all amounts each of which is the lesser of the amounts described in paragraphs (35)(c) and (d) in respect of the partnership in respect of the fiscal period, and

(iii) the total of all amounts each of which is an amount required by subsection (28.1) to be deducted in computing the amount determined in respect of the partnership in respect of the fiscal period under subsection (8),

exceeds

(b) the amount that would be determined in respect of the partnership under subsection (8) if that subsection were read without reference to subsections (28), (28.1), and (35).

(19) Subsections (1) to (5) and (15) to (18) apply on and after March 19, 2007.

(20) Subsection (6) applies to the 2007 and subsequent taxation years.

(21) Subsection (7) applies to taxation years ending on or after May 2, 2006.

(22) Subsections (8) and (9) apply to expenses renounced under agreements made after March 2007.

(23) Subsections (10) and (13) apply to expenditures incurred on and after March 19, 2007.

(24) Subsections (11), (12) and (14) apply to taxation years that end on or after May 2, 2006, except that subparagraph (e.1) (vii) of the definition “investment tax credit” in subsection 127(9) of the Act, as enacted by subsection (11), subparagraph (f.1)(iii) of the definition “specified percentage” in subsection 127(9) of the Act, as enacted by subsection (12), and paragraph 127(11.1)(c.5) of the Act, as enacted by subsection (14), apply to taxation years that end on or after March 19, 2007.

44. (1) The portion of subsection 141(5) of the Act before paragraph (a) is replaced by the following:

(5) For the purpose of paragraph (d) of the definition “taxable Canadian property” in subsection 248(1), a share of the capital stock of a corporation is deemed to be listed at any time on a designated stock exchange if

(2) Subsection (1) applies on and after the day on which this Act is assented to.

45. (1) The definition “contribution” in subsection 146.1(1) of the Act is replaced by the following:

“contribution”, into an education savings plan, does not include an amount paid into the plan under the Canada Education Savings Act or under a designated provincial program;

(2) Paragraph (c.1) of the definition “trust” in subsection 146.1(1) of the Act is replaced by the following:

(c.1) the repayment of amounts (and the payment of amounts related to that repayment) under the Canada Education Savings Act or under a designated provincial program,

(3) Subsection 146.1(1) of the Act is amended by adding the following in alphabetical order:

“designated provincial program” means

(a) a program administered pursuant to an agreement entered into under section 12 of the Canada Education Savings Act, or

(b) a prescribed program;

(4) Subsections (1) to (3) apply to the 2007 and subsequent taxation years.

46. (1) The portion of subsection 149.1(1) of the Act before the definition “capital gains pool” is replaced by the following:

149.1 (1) In this section and section 149.2,

(2) Subsection 149.1(1) of the Act is amended by adding the following in alphabetical order:

“divestment obligation percentage” of a private foundation for a particular taxation year, in respect of a class of shares of the capital stock of a corporation, is the percentage, if any, greater than 0%, determined by the formula

A + B - C

where

A      is the percentage determined under this definition in respect of the private foundation in respect of the class for the preceding taxation year,

B      is the total of all percentages, each of which is the portion of a net increase in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(5), and

C      is the total of all percentages, each of which is the portion of a net decrease in the excess corporate holdings percentage of the private foundation in respect of the class for the particular taxation year or for a preceding taxation year that is allocated to the particular taxation year in accordance with subsection 149.2(7);

“entrusted shares percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any particular time means the percentage of the issued and outstanding shares of that class that are held at the particular time by the private foundation that are shares that were acquired by the private foundation by way of a gift that was subject to a trust or direction that the shares are to be held by the private foundation for a period ending not earlier than the particular time, if the gift was made

(a) before March 19, 2007,

(b) on or after March 19, 2007 and before March 19, 2012

(i) under the terms of a will that was executed by a taxpayer before March 19, 2007 and not amended, by codicil or otherwise, on or after March 19, 2007, and

(ii) in circumstances where no other will of the taxpayer was executed or amended on or after March 19, 2007, or

(c) on or after March 19, 2007, under the terms of a testamentary or inter vivos trust created before March 19, 2007, and not amended on or after March 19, 2007;

“excess corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any time means

(a) if the private foundation is not, at that time, a registered charity, 0%,

(b) if the private foundation holds, at that time, an insignificant interest in respect of the class, 0%, and

(c) in any other case, the number of percent-age points, if any, by which the total corporate holdings percentage of the private foundation in respect of the class, at that time, exceeds the greater of 20% and the entrusted shares percentage, at that time, of the private foundation in respect of the class;

“material transaction” of a private foundation, in respect of a class of shares of the capital stock of a corporation, means a transaction or a series of transactions or events in shares of the class, in respect of which the total fair market value of the shares of the class that are acquired or disposed of by the private foundation or any relevant person in respect of the private foundation as part of the transaction or series (determined at the time of the transaction, or at the end of the series, as the case may be) exceeds the lesser of

(a) $100,000, and

(b) 0.5% of the total fair market value of all of the issued and outstanding shares of the class;

“original corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, means the total corporate holdings percentage of the private foundation, in respect of that class, held on March 18, 2007;

“relevant person” in respect of a private foundation means a person who, at any time in respect of which the expression is relevant, deals not at arm’s length with the private foundation (determined as if subsection 251(2) were applied as if the private foundation were a corporation), but does not include

(a) a person who at that time is considered to deal not at arm’s length with the private foundation solely because of a right referred to in paragraph 251(5)(b), or

(b) an individual

(i) who at that time has attained the age of 18 years and lives separate and apart from any other individual (referred to in this definition as a “controlling individual”) who would, if the private foundation were a corporation, control, or be a member of a related group that controls, the private foundation, and

(ii) in respect of whom the Minister is satisfied, upon review of an application by the private foundation, that the individual would, if subsection 251(1) were read without reference to its paragraphs (a) and (b), at that time, deal at arm’s length with all controlling individuals;

“total corporate holdings percentage” of a private foundation, in respect of a class of shares of the capital stock of a corporation, at any particular time means the percentage of the issued and outstanding shares of that class that are held at that time by the private foundation, or by a relevant person in respect of the private foundation who holds a material interest in respect of that class;

(3) Paragraph 149.1(4)(c) of the Act is replaced by the following:

(c) has, in respect of a class of shares of the capital stock of a corporation, a divestment obligation percentage at the end of any taxation year;

(4) The portion of paragraph 149.1(12)(a) of the Act after subparagraph (ii) is replaced by the following:

but, for the purpose of paragraph (3)(c), a charitable foundation is deemed not to have acquired control of a corporation if it has not purchased or otherwise acquired for consideration more than 5% of the issued shares of any class of the capital stock of that corporation;

(5) Subsection 149.1(15) of the Act is amended by striking out the word “and” at the end of paragraph (a), by adding the word “and” at the end of paragraph (b) and by adding the following after paragraph (b):

(c) if, at any time during a taxation year of a private foundation that is a registered charity, the private foundation holds more than an insignificant interest in respect of a class of shares of the capital stock of a corporation, the Minister shall make available to the public in such manner as the Minister deems appropriate,

(i) the name of the corporation, and

(ii) in respect of each class of shares of the corporation, that portion of the total corporate holdings percentage of the private foundation in respect of the class that is attributable to

(A) holdings of shares of that class by the private foundation, and

(B) the total of all holdings of shares of that class by relevant persons in respect of the private foundation.

(6) Subsections (1) and (2) apply on and after March 19, 2007.

(7) Subsections (3) to (5) apply to taxation years, of foundations, that begin after March 18, 2007, except that subsections (3) and (4) do not apply to a taxation year of a private foundation if subsection 149.2(8) of the Act, as enacted by clause 47(1), applies to the private foundation in respect of any class of shares of the capital stock of a corporation.

47. (1) The Act is amended by adding the following after section 149.1:

149.2 (1) In this section and section 149.1,

(a) a person has, at any time, a material interest in respect of a class of shares of the capital stock of a corporation if, at that time,

(i) the percentage of the shares of that class held by the person exceeds 0.5% of all the issued and outstanding shares of that class, or

(ii) the fair market value of the shares so held exceeds $100,000; and

(b) a private foundation has, at any time, an insignificant interest in respect of a class of shares of the capital stock of a corporation if, at that time, the percentage of shares of that class held by the private foundation does not exceed 2% of all the issued and outstanding shares of that class.

(2) If a private foundation or a relevant person in respect of the private foundation has engaged in one or more transactions or series of transactions or events, a purpose of which may reasonably be considered to be to avoid the application of the definition “material transaction”, each of those transactions or series of transactions or events is deemed to be a material transaction.

(3) The net increase in the excess corporate holdings percentage of a private foundation for a taxation year, in respect of a class of shares of the capital stock of a corporation, is the number of percentage points, if any, determined by the formula

A - B

where

A      is the excess corporate holdings percentage of the private foundation at the end of the taxation year, in respect of the class, and

B      is

(a) 0%, if

(i) at the beginning of the taxation year the private foundation was not both a private foundation and a registered charity, or

(ii) the private foundation was both a registered charity and a private foundation on March 18, 2007 and the taxation year is the first taxation year of the private foundation that begins after that date; and

(b) in any other case, the excess corporate holdings percentage of the private foundation in respect of the class at the end of its preceding taxation year.

(4) The net decrease in the excess corporate holdings percentage of a private foundation for a taxation year, in respect of a class of shares of the capital stock of a corporation, is the number of percentage points, if any, by which the percentage determined for B in the formula in subsection (3) for the taxation year exceeds the percentage determined for A in that formula for the taxation year.

(5) For the purpose of the description of B in the definition “divestment obligation percent-age” in subsection 149.1(1), the net increase in the excess corporate holdings percentage of a private foundation in respect of a class of shares of the capital stock of a corporation, for a taxation year (in this subsection referred to as the “current year”) is to be allocated in the following order:

(a) first to the divestment obligation percent-age of the private foundation in respect of that class for the current year, to the extent that the private foundation has in the current year acquired for consideration shares of that class;

(b) then to the divestment obligation percent-age of the private foundation in respect of that class for its fifth subsequent taxation year, to the extent of the lesser of

(i) that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), and

(ii) the percentage of the issued and outstanding shares of that class that were acquired by the private foundation in the current year by way of bequest;

(c) then to the divestment obligation percent-age of the private foundation in respect of that class for its second subsequent taxation year, to the extent of the lesser of

(i) that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a) or (b), and

(ii) the total of

(A) the percentage of the issued and outstanding shares of that class that were acquired by the private foundation in the current year by way of gift, other than from a relevant person or by way of bequest, and

(B) the portion of the net increase in the excess corporate holdings percentage of the private foundation that is attributable to the redemption, acquisition or cancellation of any of the issued and outstanding shares of that class in the current year by the corporation; and

(d) then to the divestment obligation percent-age of the private foundation in respect of that class for its subsequent taxation year, to the extent of that portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), (b) or (c).

(6) Notwithstanding subsection (5), on application by a private foundation, the Minister may, if the Minister believes it would be just and equitable to do so, reallocate any portion of the net increase in the excess corporate holdings percentage of the private foundation in respect of a class of shares of the capital stock of a corporation for a taxation year, that would otherwise be allocated under subsection (5) to the private foundation’s divestment obligation percentage in respect of that class for a particular taxation year, to the private foundation’s divestment obligation percentage in respect of that class for any of the ten taxation years subsequent to the particular taxation year.

(7) For the purpose of the description of C in the definition “divestment obligation percent-age” in subsection 149.1(1), the net decrease in the excess corporate holdings percentage of a private foundation in respect of a class of shares of the capital stock of a corporation for a taxation year (in this subsection referred to as the “current year”) is to be allocated in the following order:

(a) first, to the divestment obligation percentage of the private foundation in respect of that class for the current year, to the extent of that divestment obligation percentage; and

(b) then to the divestment obligation percent-age of the private foundation in respect of that class for a subsequent taxation year of the private foundation (referred to in this paragraph as the “subject year”), to the extent of the lesser of

(i) that portion of the net decrease in the excess corporate holdings percentage of the private foundation in respect of that class for the current year that is not allocated under paragraph (a), or under this paragraph, to the divestment obligation percentage of the private foundation in respect of that class for a taxation year of the private foundation that precedes the subject year, and

(ii) the amount of the divestment obligation percentage of the private foundation in respect of that class for the subject year, calculated as at the end of the current year and without reference to this subsection.

(8) If the original corporate holdings percent-age of a private foundation in respect of a class of shares of the capital stock of a corporation exceeds 20%, for the purpose of applying the definition “excess corporate holdings percent-age” in subsection 149.1(1) to

(a) the first taxation year of the private foundation that begins after March 18, 2007, the reference to 20% in that definition in respect of that class is to be read as the original corporate holdings percentage of the private foundation in respect of that class;

(b) taxation years of the private foundation that are after the taxation year referred to in paragraph (a) and that begin before March 19, 2012, the reference to 20% in that definition in respect of that class is to be read as the greater of

(i) 20%, and

(ii) the lesser of

(A) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the immediately preceding taxation year, and

(B) the original corporate holdings percentage in respect of that class;

(c) taxation years of the private foundation that begin after March 18, 2012 and before March 19, 2017, the reference to 20% in that definition in respect of that class is to be read as the greater of

(i) 20%, and

(ii) the lesser of

(A) the total corporate holdings percentage of the private foundation in respect of the class at the end of the preceding taxation year, and

(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 20%;

(d) taxation years of the private foundation that begin after March 18, 2017 and before March 19, 2022, the reference to 20% in that definition in respect of that class is to be read as the greater of

(i) 20%, and

(ii) the lesser of

(A) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the preceding taxation year, and

(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 40%; and

(e) taxation years of the private foundation that begin after March 18, 2022 and before March 19, 2027, the reference to 20% in that definition in respect of that class is to be read as the greater of

(i) 20%, and

(ii) the lesser of

(A) the total corporate holdings percentage of the private foundation in respect of the class at the end of the preceding taxation year, and

(B) the number of percentage points, if any, by which the private foundation’s original corporate holdings percentage in respect of that class exceeds 60%.

(2) Subsection (1) applies to taxation years, of private foundations, that begin on or after March 19, 2007.

48. (1) Paragraph 152(1)(b) of the Act is replaced by the following:

(b) the amount of tax, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 125.4(3), 125.5(3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

(2) Paragraph 152(4.2)(b) of the Act is replaced by the following:

(b) redetermine the amount, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer’s liability under this Part for the year.

(3) Subsections (1) and (2) apply to the 2007 and subsequent taxation years.

49. (1) Paragraph 153(1)(a) of the Act is replaced by the following:

(a) salary, wages or other remuneration, other than amounts described in subsection 115(2.3) or 212(5.1),

(2) Paragraph 153(1)(g) of the Act is replaced by the following:

(g) fees, commissions or other amounts for services, other than amounts described in subsection 115(2.3) or 212(5.1),

50. (1) Paragraphs (a) and (b) of the definition “instalment threshold” in subsection 156.1(1) of the Act are replaced by the following:

(a) in the case of an individual resident in the Province of Quebec at the end of the year, $1,800, and

(b) in any other case, $3,000;

(2) Subsection (1) applies to the 2008 and subsequent taxation years and, for the purpose of applying subsection 156.1(2) of the Act in respect of the 2008 and 2009 taxation years, to the 2006 and 2007 taxation years.

51. (1) The portion of subsection 157(1) of the Act before subparagraph (a)(ii) is replaced by the following:

157. (1) Subject to subsections (1.1) and (1.5), every corporation shall, in respect of each of its taxation years, pay to the Receiver General

(a) either

(i) on or before the last day of each month in the year, an amount equal to 1/12 of the total of the amounts estimated by it to be the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the year,

(2) Paragraph 157(1)(b) of the Act is replaced by the following:

(b) the remainder of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the year on or before its balance-due day for the year.

(3) Section 157 of the Act is amended by adding the following after subsection (1):

(1.1) A small-CCPC may, in respect of each of its taxation years, pay to the Receiver General

(a) one of the following:

(i) on or before the last day of each three-month period in the taxation year (or if the period that remains in a taxation year after the end of the last such three-month period is less than three months, on or before the last day of that remaining period), an amount equal to 1/4 of the total of the amounts estimated by it to be the taxes payable by it under this Part and Part VI.1 for the taxation year,

(ii) on or before the last day of each three-month period in the taxation year (or if the period that remains in a taxation year after the end of the last such three-month period is less than three months, on or before the last day of that remaining period), an amount equal to 1/4 of its first instalment base for the taxation year, or

(iii) on or before the last day

(A) of the first period in the taxation year not exceeding three months, an amount equal to 1/4 of its second instalment base for the taxation year, and

(B) of each of the following three-month periods in the taxation year (or if the period that remains in a taxation year after the end of the last such three-month period is less than three months, on or before the last day of that remaining period), an amount equal to 1/3 of the amount remaining after deducting the amount computed pursuant to clause (A) from its first instalment base for the taxation year; and

(b) the remainder of the taxes payable by it under this Part and Part VI.1 for the taxation year on or before its balance-due day for the taxation year.

(1.2) For the purpose of subsection (1.1), a small-CCPC, at a particular time during a taxation year, is a Canadian-controlled private corporation

(a) for which the amount determined under subsection (1.3) for the taxation year, or for the preceding taxation year, does not exceed $400,000;

(b) for which the amount determined under subsection (1.4) for the taxation year, or for the preceding taxation year, does not exceed $10 million;

(c) in respect of which an amount is deducted under section 125 of the Act in computing the corporation’s tax payable for the taxation year or for the preceding taxation year; and

(d) that has throughout the 12-month period that ends at the time its last remittance under this section is due,

(i) remitted, on or before the day on or before which the amounts were required to be remitted, all amounts that were required to be remitted under subsection 153(1), under Part IX of the Excise Tax Act, under subsection 82(1) of the Employment Insurance Act or under subsection 21(1) of the Canada Pension Plan; and

(ii) filed, on or before the day on or before which the returns were required to be filed, all returns that were required to be filed under this Act or under Part IX of the Excise Tax Act.

(1.3) The amount determined under this subsection in respect of a corporation for a particular taxation year is

(a) if the corporation is not associated with another corporation in the particular taxation year, the amount that is the corporation’s taxable income for the particular taxation year; or

(b) if the corporation is associated with another corporation in the particular taxation year, the amount that is the total of all amounts each of which is the taxable income of the corporation for the particular taxation year or the taxable income of a corporation with which it is associated in the particular taxation year for a taxation year of that other corporation that ends in the particular taxation year.

(1.4) The amount determined under this subsection in respect of a corporation for a particular taxation year is

(a) if the corporation is not associated with another corporation in the particular taxation year, the amount that is the corporation’s taxable capital employed in Canada (within the meaning assigned by section 181.2) for the particular taxation year; or

(b) if the corporation is associated with another corporation in the particular taxation year, the amount that is the total of all amounts each of which is the taxable capital employed in Canada (within the meaning assigned by section 181.2) of the corporation for the particular taxation year or the taxable capital employed in Canada (within the meaning assigned by section 181.2) of a corporation with which it is associated in the particular taxation year for a taxation year of that other corporation that ends in the particular taxation year.

(1.5) Notwithstanding subsection (1), where a corporation, that has remitted amounts in accordance with subsection (1.1), ceases at any particular time in a taxation year to be eligible to remit in accordance with subsection (1.1), the corporation shall pay to the Receiver General, the following amounts for the taxation year,

(a) on or before the last day of each month, in the taxation year, that ends after the particular time, either

(i) the amount determined by the formula

(A - B)/C

where

A      is the total of the amounts estimated by the corporation to be the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year,

B      is the total of all payments payable by the corporation in the taxation year in accordance with subsection (1.1), and

C      is the number of months that end in the taxation year and after the particular time, or

(ii) the total of

(A) the amount determined by the formula

(A - B)/C

where

A      is the corporation’s first instalment base for the taxation year,

B      is the total of all payments payable by the corporation in the taxation year in accordance with subsection (1.1), and

C      is the number of months that end in the taxation year and after the particular time; and

(B) the amount obtained when the estimated tax payable by the corporation, if any, under Part VI and XIII.1 for the taxation year is divided by the number of months that end in the taxation year and after the particular time; and

(b) the remainder of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year on or before its balance-due date for the taxation year.

(4) Subsection 157(2.1) of the Act is replaced by the following:

(2.1) A corporation may, instead of paying the instalments required for a taxation year by paragraph (1)(a) or by subsection (1.1), pay to the Receiver General, under paragraph (1)(b), the total of the taxes payable by it under this Part and Parts VI, VI.1 and XIII.1 for the taxation year, if

(a) the total of the taxes payable under this Part and Parts VI, VI.1 and XIII.1 by the corporation for the taxation year (determined before taking into consideration the specified future tax consequences for the year) is equal to or less than $3,000; or

(b) the corporation’s first instalment base for the year is equal to or less than $3,000.

(5) The portion of subsection 157(3) of the Act before paragraph (a) is replaced by the following:

(3) Notwithstanding subsection (1) and (1.5), the amount payable under subsection (1) or (1.5) for a taxation year by a corporation to the Receiver General on or before the last day of any month in the yearis deemed to be the amount, if any, by which

(6) Section 157 of the Act is amended by adding the following after subsection (3):

(3.1) Notwithstanding subsection (1.1), the amount payable under subsection (1.1) for a taxation year by a corporation to the Receiver General on or before the last day of any period in the yearis deemed to be the amount, if any, by which

(a) the amount so payable as determined under that subsection for the period

exceeds the total of

(b) 1/4 of the corporation’s dividend refund (within the meaning assigned by subsection 129(1)) for the taxation year, and

(c) 1/4 of the total of the amounts each of which is deemed by subsection 125.4(3), 125.5(3), 127.1(1) or 127.41(3) to have been paid on account of the corporation’s tax payable under this Part for the taxation year.

(7) Subsections (1) to (6) apply to taxation years that begin after 2007.

52. (1) Subsection 161(4.1) of the Act is replaced by the following:

(4.1) For the purposes of subsection (2) and section 163.1, where a corporation is required to pay a part or instalment of tax for a taxation year computed by reference to a method described in subsection 157(1), (1.1) or (1.5), as the case may be, the corporation is deemed to have been liable to pay on or before each day on or before which subparagraph 157(1)(a)(i), (ii) or (iii), subparagraph 157(1.1)(a)(i), (ii) or (iii), or subparagraph 157(1.5)(a)(i) or (ii), as the case may be, requires a part or instalment to be made equal to the amount, if any, by which

(a) the part or instalment due on that day computed in accordance with whichever allowable method in the circumstances gives rise to the least total amount of such parts or instalments of tax for the year, computed by reference to

(i) the total of the taxes payable under this Part and Parts VI, VI.1 and XIII.1 by the corporation for the year, determined before taking into consideration the specified future tax consequences for the year,

(ii) its first instalment base for the year, or

(iii) its second instalment base and its first instalment base for the year,

exceeds

(b) the amount, if any, determined under any of paragraphs 157(3)(b) to (e) or under paragraph 157(3.1)(b) or (c), as the case may be, in respect of that instalment.

(2) Subsections (1) applies to taxation years that begin after 2007.

53. (1) Subsection 163(2) of the Act is amended by adding the following after paragraph (c.2):

(c.3) the amount, if any, by which

(i) the total of all amounts each of which is an amount that would be deemed by subsection 122.7(2) or (3) to be a payment on account of the person’s tax payable under this Part or another person’s tax payable under this Part for the year if those amounts were calculated by reference to the information provided in the return

exceeds

(ii) the total of all amounts each of which is an amount that is deemed by subsection 122.7(2) or (3) to be a payment on account of the person’s tax payable under this Part and, where applicable, the other person’s tax payable under this Part for the year,

(2) Subsection (1) applies to the 2007 and subsequent taxation years.

54. (1) The definition “tobacco manufacturing” in subsection 182(2) of the Act is replaced by the following:

“tobacco manufacturing” means any activity, other than an exempt activity, relating to the manufacture or processing in Canada of tobacco or tobacco products in or into any form that is, or would after any further activity become, suitable for smoking;

(2) Subsection 182(2) of the Act is amended by adding the following in alphabetical order:

“exempt activity”, of a particular corporation, means

(a) farming; or

(b) processing leaf tobacco, if

(i) that processing is done by, and is the principal business of, the particular corporation,

(ii) the particular corporation does not manufacture any tobacco product, and

(iii) the particular corporation is not related to any other corporation that carries on tobacco manufacturing (determined, in respect of the other corporation, as if the particular corporation did not exist and the definition “tobacco manufacturing” were read without reference to the words “in Canada”);

(3) Subsections (1) and (2) apply to taxation years that end after 2006.

55. (1) Subparagraph 186.1(b)(vii) of the Act is replaced by the following:

(vii) a registered securities dealer that was throughout the year a member, or a participating organization, of a designated stock exchange in Canada.

(2) Subsection (1) applies after April 2, 2000, except that, in its application before the day on which this Act is assented to, the reference to “designated stock exchange” in subparagraph 186.1(b)(vii) of the Act, as amended by subsection (1), shall be read as a reference to “prescribed stock exchange”.

56. Section 188.1 of the Act is amended by adding the following after subsection (3):

(3.1) A private foundation is liable to a penalty under this Part for a taxation year, in respect of a class of shares of the capital stock of a corporation, equal to

(a) 5% of the amount, if any, determined by multiplying the divestment obligation percentage of the private foundation for the taxation year in respect of the class by the total fair market value of all of the issued and outstanding shares of the class, except if the private foundation is liable for the taxation year under paragraph (b) for a penalty in respect of the class; or

(b) 10% of the amount, if any, determined by multiplying the divestment obligation percentage of the private foundation for the taxation year in respect of the class by the total fair market value of all of the issued and outstanding shares of the class, if

(i) the private foundation has failed to disclose, in its return required under subsection 149.1(14) for the taxation year,

(A) a material transaction, in the taxation year, of the private foundation in respect of the class,

(B) a material interest held at the end of the taxation year by a relevant person in respect of the private foundation, or

(C) the total corporate holdings percent-age of the private foundation in respect of the class at the end of the taxation year, unless at no time in the taxation year the private foundation held greater than an insignificant interest in respect of the class, or

(ii) the Minister has, less than five years before the end of the taxation year, assessed a liability under paragraph (a) or this paragraph for a preceding taxation year of the private foundation in respect of any divestment obligation percentage.

(3.2) If, at the end of a taxation year, a private foundation would — but for a transaction or series of transactions entered into by the private foundation or a relevant person in respect of the private foundation (in this subsection referred to as the “holder”) a result of which is that the holder holds, directly or indirectly, an interest (or for civil law, a right), in a corporation other than shares — have a divestment obligation percentage for that taxation year in respect of the private foundation’s holdings of a class of shares of the capital stock of the corporation, and it can reasonably be considered that a purpose of the transaction or series is to avoid that divestment obligation percentage by substituting shares of the class for that interest or right, for the purposes of applying this section, subsection 149.1(1) and section 149.2,

(a) each of those interests or rights is deemed to have been converted, immediately after the time it was first held, directly or indirectly by the holder, into that number of shares of that class that would, if those shares were shares of the class that were issued by the corporation, have a fair market value equal to the fair market value of the interest or right at that time;

(b) each such share is deemed to be a share that is issued by the corporation and outstanding and to continue to be held by the holder until such time as the holder no longer holds the interest or right; and

(c) each such share is deemed to have a fair market value, at any particular time, equal to the fair market value, at the particular time, of a share of the class issued by the corporation.

57. (1) Paragraph (b) of the definition “qualified investment” in section 204 of the Act is replaced by the following:

(b) debt obligations described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3),

(2) Subparagraphs (c)(i) and (ii) of the definition “qualified investment” in section 204 of the Act are replaced by the following:

(i) a corporation, mutual fund trust or limited partnership the shares or units of which are listed on a designated stock exchange in Canada,

(ii) a corporation the shares of which are listed on a designated stock exchange outside Canada, or

(3) Paragraph (d) of the definition “qualified investment” in section 204 of the Act is replaced by the following:

(d) securities (other than futures contracts or other derivative instruments in respect of which the holder’s risk of loss may exceed the holder’s cost) that are listed on a designated stock exchange,

(4) Subsection (1) applies after 2007.

(5) Subsections (2) and (3) apply on and after the day on which this Act is assented to.

58. (1) Subsection 207.1(5) of the Act is replaced by the following:

(5) Where at any time a taxpayer whose taxable income is exempt from tax under Part I makes an agreement (otherwise than as a consequence of the acquisition or writing by it of an option listed on a designated stock exchange) to acquire a share of the capital stock of a corporation (otherwise than from the corporation) at a price that may differ from the fair market value of the share at the time the share may be acquired, the taxpayer shall, in respect of each month during which the taxpayer is a party to the agreement, pay a tax under this Part equal to the total of all amounts each of which is the amount, if any, by which the amount of a dividend paid on the share at a time in the month at which the taxpayer is a party to the agreement exceeds the amount, if any, of the dividend that is received by the taxpayer.

(2) Subsection (1) applies on and after the day on which this Act is assented to.

59. (1) Subparagraph 212(1)(b)(vii) of the Act is amended by striking out the word “or” at the end of clause (E), by adding the word “or” at the end of clause (F) and by adding the following after clause (F):

(G) in the event that a change to this Act or to a tax treaty has the effect of relieving the non-resident person from liability for tax under this Part in respect of the interest;

(2) Paragraph 212(1)(b) of the Act is replaced by the following:

(b) interest that

(i) is not fully exempt interest, and is paid or payable to a person with whom the payer is not dealing at arm’s length, or

(ii) is participating debt interest;

(3) Subsection 212(3) of the Act is replaced by the following:

(3) The following definitions apply for the purpose of paragraph (1)(b).

“fully exempt interest” means

(a) interest that is paid or payable on a bond, debenture, note, mortgage, hypothecary claim or similar debt obligation

(i) of, or guaranteed (otherwise than by being insured by the Canada Deposit Insurance Corporation) by, the Government of Canada,

(ii) of the government of a province,

(iii) of an agent of a province,

(iv) of a municipality in Canada or a municipal or public body performing a function of government in Canada,

(v) of a corporation, commission or association to which any of paragraphs 149(1)(d) to (d.6) applies, or

(vi) of an educational institution or a hospital if repayment of the principal amount of the obligation and payment of the interest is to be made, or is guaranteed, assured or otherwise specifically provided for or secured by the government of a province;

(b) interest that is paid or payable on a mortgage, hypothecary claim or similar debt 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;

(c) interest that is paid or payable to a prescribed international organization or agency; or

(d) an amount paid or payable or credited under a securities lending arrangement that is deemed by subparagraph 260(8)(a)(i) to be a payment made by a borrower to a lender of interest, if

(i) the securities lending arrangement was entered into by the borrower in the course of carrying on a business outside Canada, and

(ii) the security that is transferred or lent to the borrower under the securities lending arrangement is described in paragraph (b) or (c) of the definition “qualified security” in subsection 260(1) and issued by a non-resident issuer.

“participating debt interest” means interest (other than interest described in any of paragraphs (b) to (d) of the definition “fully exempt interest”) that is paid or payable on an obligation, other than a prescribed obligation, all or any portion of which interest is contingent or dependent on the use of or production from property in Canada or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation.

(4) Subsection 212(14) of the Act is repealed.

(5) Section 212 of the Act is amended by adding the following after subsection (17):

(17.1) Notwithstanding subsections (1) and (2),

(a) the International Olympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Olympic Winter Games, and

(b) the International Paralympic Committee is not taxable under this Part on any amount paid or credited to it, after 2005 and before 2011, in respect of the 2010 Paralympic Winter Games.

(6) Subsections 212(18) and (19) of the Act are replaced by the following:

(18) Every person who in a taxation year is a prescribed financial institution or a person resident in Canada who is a registered securities dealer shall on demand from the Minister, served personally or by registered letter, file within such reasonable time as may be stipulated in the demand, an undertaking in prescribed form relating to the avoidance of payment of tax under this Part.

(19) Every taxpayer who is a registered securities dealer resident in Canada shall pay a tax under this Part equal to the amount determined by the formula

1/365 × .25 × (A - B) × C

where

A      is the total of all amounts each of which is the amount of money provided before the end of a day to the taxpayer (and not returned or repaid before the end of the day) by or on behalf of a non-resident person as collateral or as consideration for a security that was lent or transferred under a designated securities lending arrangement,

B      is the total of

(a) all amounts each of which is the amount of money provided before the end of the day by or on behalf of the taxpayer (and not returned or repaid before the end of the day) to a non-resident person as collateral or as consideration for a security that is described in paragraph (a) of the definition “fully exempt interest” in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, and that was lent or transferred under a securities lending arrangement, and

(b) the greater of

(i) 10 times the greatest amount determined, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be the capital employed by the taxpayer at the end of the day, and

(ii) 20 times the greatest amount of capital required, under the laws of the province or provinces in which the taxpayer is a registered securities dealer, to be maintained by the taxpayer as a margin in respect of securities described in paragraph (a) of the definition “fully exempt interest” in subsection (3), or that is an obligation of the government of any country, province, state, municipality or other political subdivision, at the end of the day, and

C      is the prescribed rate of interest in effect for the day,

and shall remit that amount to the Receiver General on or before the 15th day of the month after the month in which the day occurs.

(20) For the purpose of subsection (19), a designated securities lending arrangement is a securities lending arrangement

(a) under which

(i) the lender is a prescribed financial institution or a registered securities dealer resident in Canada,

(ii) the particular security lent or transferred is an obligation described in paragraph (a) of the definition “fully exempt interest” in subsection (3) or an obligation of the government of any country, prov- ince, state, municipality or other political subdivision,

(iii) the amount of money provided to the lender at any time during the term of the arrangement either as collateral or as consideration for the particular security does not exceed 110% of the fair market value at that time of the particular security; and

(b) that was neither intended, nor made as a part of a series of securities lending arrangements, loans or other transactions that was intended, to be in effect for more than 270 days.

(7) Subsection (1) applies to obligations entered into on or after March 19, 2007.

(8) Subsections (2) to (4) and (6) apply after 2007.

60. (1) Paragraph 214(8)(a) of the Act is replaced by the following:

(a) that is described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3), or on which the interest would have been exempt under subparagraph 212(1)(b)(iii) or (vii) as they applied to the 2007 taxation year;

(2) Subsection 214(11) of the Act is repealed.

(3) Subsections (1) and (2) apply after 2007.

61. (1) Section 220 of the Act is amended by adding the following after subsection (3.2):

(3.201) On application by a taxpayer, the Minister may extend the time for making an election, or grant permission to amend or revoke an election, under section 60.03 if

(a) the application is made on or before the day that is three calendar years after the taxpayer’s filing-due date for the taxation year to which the election applies; and

(b) the taxpayer is resident in Canada

(i) if the taxpayer is deceased at the time of the application, at the time that is immediately before the taxpayer’s death, or

(ii) in any other case, at the time of the application.

(2) The portion of subsection 220(3.5) of the Act before paragraph (a) is replaced by the following:

(3.5) Where, on application by a taxpayer or a partnership, the Minister extends the time for making an election or grants permission to amend or revoke an election (other than an extension or permission under subsection (3.201)), the taxpayer or the partnership, as the case may be, is liable to a penalty equal to the lesser of

(3) Subsections (1) and (2) applies to the 2007 and subsequent taxation years.

62. (1) Subsection 221(1) of the Act is amended by adding the following after paragraph (d.1):

(d.2) requiring any class of persons to make information available to the public for the purpose of making information returns respecting any class of information required in connection with assessments under this Act;

(2) Subsection (1) applies to information in respect of taxation years of taxpayers and fiscal periods of partnerships that end on or after July 4, 2007.

63. The portion of subsection 231.2(1) of the Act before paragraph (a) is replaced by the following:

231.2 (1) Notwithstanding any other provision of this Act, the Minister may, subject to subsection (2), for any purpose related to the administration or enforcement of this Act (including the collection of any amount payable under this Act by any person), of a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect or, for greater certainty, of a tax treaty with another country, by notice served personally or by registered or certified mail, require that any person provide, within such reasonable time as stipulated in the notice,

64. (1) Subparagraph 241(4)(e)(xii) of the Act is replaced by the following:

(xii) a provision contained in a tax treaty with another country or in a comprehensive tax information exchange agreement between Canada and another country or jurisdiction that is in force and has effect;

(2) Subsection 241(4) of the Act is amended by striking out the word “or” at the end of paragraph (o), by adding the word “or” at the end of paragraph (p) and by adding the following after paragraph (p):

(q) provide taxpayer information to an official of the government of a province solely for the use in the management or administration by that government of a program relating to earning supplementation or income support.

65. (1) The definition “NISA Fund No. 2” in subsection 248(1) of the Act is replaced by the following:

“NISA Fund No. 2” means the portion of a taxpayer’s net income stabilization account

(a) that is described in paragraph 8(2)(b) of the Farm Income Protection Act, and

(b) that can reasonably be considered to be attributable to a program that allows the funds in the account to accumulate;

(2) Subsection 248(1) of the Act is amended by adding the following definitions in alphabetical order:

“designated stock exchange” means a stock exchange, or that part of a stock exchange, for which a designation by the Minister of Finance under section 262 is in effect;

“functional currency” of a taxpayer for a particular taxation year has the meaning assigned by section 261;

“recognized stock exchange” means

(a) a designated stock exchange, and

(b) any other stock exchange, if that other stock exchange is located in Canada or in a country that is a member of the Organisation for Economic Co-operation and Development and that has a tax treaty with Canada;

(3) Subsection 248(29) of the Act is repealed.

(4) Subsection (1) applies to the 2008 and subsequent taxation years.

(5) The definitions “designated stock exchange” and “recognized stock exchange” in subsection 248(1) of the Act, as enacted by subsection (2), and subsection (3) apply on and after the day on which this Act is assented to.

(6) The definition “functional currency” in subsection 248(1) of the Act, as enacted by subsection (2), applies in respect of taxation years that begin on or after the day on which this Act is assented to.

66. (1) Paragraph (a) of the definition “qualified security” in subsection 260(1) of the Act is replaced by the following:

(a) a share of a class of the capital stock of a corporation that is listed on a stock exchange or of a class of the capital stock of a corporation that is a public corporation by reason of the designation of the class by the corporation in an election made under subparagraph (b)(i) of the definition “public corporation” in subsection 89(1) or by the Minister in a notice to the corporation under subparagraph (b)(ii) of that definition,

(2) Paragraph 260(8)(a) of the Act is amended by adding the word “and” at the end of subparagraph (i) and by replacing subparagraphs (ii) and (iii) with the following:

(ii) the security is deemed to be a security described in paragraph (a) of the definition “fully exempt interest” in subsection 212(3) if the security is described in paragraph (c) of the definition “qualified security” in subsection (1), and

(3) Section 260 of the Act is amended by adding the following after subsection (9):

(10) For the purpose of Part XIII, where the lender under a securities lending arrangement is not dealing at arm’s length with either the borrower under the arrangement or the issuer of the security that is transferred or lent under the arrangement, or both, and subsection (8) deems an amount to be a payment of interest by a person to the lender in respect of that security, the lender is deemed, in respect of that payment, not to be dealing at arm’s length with that person.

(4) Subsection (1) applies on and after the day on which this Act is assented to.

(5) Subsections (2) and (3) apply after 2007.

67. (1) The Act is amended by adding the following after section 260:

261. (1) The definitions in this subsection apply in this section.

“Canadian currency year” of a taxpayer means a taxation year of the taxpayer in respect of which subsection (4) did not apply to the taxpayer.

“Canadian tax results” of a taxpayer for a particular taxation year of the taxpayer means

(a) the amount of the income of the taxpayer for the particular taxation year;

(b) the amount of the taxable income of the taxpayer for the particular taxation year;

(c) the amount (other than an amount payable on behalf of another person under subsection 153(1) or section 215) of tax or other amount payable under this Act by the taxpayer in respect of the particular taxation year;

(d) the amount (other than an amount refundable on behalf of another person in respect of amounts payable on behalf of that person under subsection 153(1) or section 215) of tax or other amount refundable under this Act to the taxpayer in respect of the particular taxation year; and

(e) any amount that is relevant in determining the amounts described in respect of the taxpayer under paragraphs (a) to (d).

“consolidated financial statements” of a taxpayer for a taxation year means the financial statements of the taxpayer that are prepared in accordance with generally accepted accounting principles that are applicable to that taxation year.

“currency exchange rate” on a particular day means, in respect of a conversion of an amount determined in a particular currency into an amount determined in another currency, the average, for the 12 month period ending on the particular day,

(a) where the particular currency is Canadian currency, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of the Canadian dollar for a unit of the other currency or such rate or rates of exchange acceptable to the Minister;

(b) where the other currency is Canadian currency, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of a unit of the particular currency for the Canadian dollar or such rate or rates of exchange acceptable to the Minister; or

(c) where neither the particular currency nor the other currency is Canadian currency, of the rate of exchange (calculated by reference to the rates of exchange quoted by the Bank of Canada at noon on each business day in the period for the exchange of the Canadian dollar for a unit of each of those currencies) for the exchange of a unit of the particular currency for a unit of the other currency or such rate or rates of exchange acceptable to the Minister.

“functional currency” of a taxpayer for a particular taxation year of the taxpayer means the currency of a country other than Canada if that currency is

(a) a qualifying currency;

(b) the currency that is, more often than any other currency, used in the conduct of the taxpayer’s principal business activities in the particular taxation year; and

(c) the currency in which the financial results of the taxpayer for the particular taxation year are computed in the taxpayer’s consolidated financial statements and legal-entity financial statements for the particular taxation year.

“functional currency year” of a taxpayer means a taxation year of the taxpayer in respect of which subsection (4) applies to the taxpayer.

“generally accepted accounting principles” means the accounting principles established or recommended by the Accounting Standards Board of Canada or such other accounting principles as are determined to be acceptable by the Minister.

“initial functional currency year” of a taxpayer means a functional currency year of the taxpayer if the particular taxation year of the taxpayer ending immediately before the beginning of that functional currency year of the taxpayer was a Canadian currency year of the taxpayer.

“initial reversionary year” of a taxpayer means the first taxation year of the taxpayer that begins immediately after the last functional currency year of the taxpayer.

“last Canadian currency year” of a taxpayer means the last taxation year of the taxpayer that ends before the beginning of the initial functional currency year of the taxpayer.

“last functional currency year” of a taxpayer means a functional currency year of the taxpayer if the particular taxation year of the taxpayer beginning immediately after the end of that functional currency year is a Canadian currency year of the taxpayer.

“legal-entity financial statements” of a taxpayer for a taxation year means the financial statements of the taxpayer that would be prepared for that taxation year in accordance with generally accepted accounting principles that are applica-ble to that taxation year if those generally accepted accounting principles did not require consolidation.

“qualifying currency” of a taxpayer for a taxation year means each of

(a) the currency of the United States of America;

(b) the currency of the European Monetary Union;

(c) the currency of the United Kingdom; and

(d) a prescribed currency.

“reversionary exchange rate” of a taxpayer for a functional currency year of the taxpayer means the average, for the 12-month period ending on the last day of the functional currency year of the taxpayer, of the rate of exchange (quoted by the Bank of Canada at noon on each business day in the period) for the exchange of a unit of the functional currency of the taxpayer for the functional currency year for the Canadian dollar.

“tax credit” means an amount deductible in computing a taxpayer’s tax payable, or deemed to have been paid on account of a taxpayer’s tax payable, under any Part of this Act for a taxation year.

“transitional exchange rate” of a taxpayer means the average, for the 12-month period ending on the last day of the last Canadian currency year of the taxpayer, of the rate of exchange (calculated by reference to the rate of exchange quoted by the Bank of Canada at noon on each business day in the period) for the exchange of the Canadian dollar for a unit of the functional currency of the taxpayer for the initial functional currency year of the taxpayer.

(2) Subject to subsections (3) to (10),

(a) the Canadian tax results of a taxpayer for a particular taxation year are to be determined using Canadian currency; and

(b) subject to subsection 79(7), paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing the taxpayer’s Canadian tax results for the particular taxation year is an amount expressed in a currency other than Canadian currency, that amount is to be converted to an amount expressed in Canadian currency using the rate of exchange quoted by the Bank of Canada at noon on the day on which that amount first arose for the exchange of a unit of that other currency for a unit of Canadian currency or such other rate of exchange as is acceptable to the Minister.

(3) Subsection (4) applies to a taxpayer in respect of a particular taxation year of the taxpayer if

(a) the taxpayer is, throughout the particular taxation year, a corporation (other than an investment corporation, a mortgage investment corporation or a mutual fund corporation) resident in Canada;

(b) the taxpayer has elected that subsection (4) apply to the taxpayer in respect of the particular taxation year, or a preceding taxation year, and each subsequent taxation year of the taxpayer and has filed that election with the Minister in prescribed form and manner on or before the taxpayer’s filing due date

(i) for the taxation year immediately preceding the first taxation year in respect of which the election was made, or

(ii) where there was not a taxation year immediately preceding the first taxation year in respect of which the election was made, for the first taxation year in respect of which the election was made;

(c) there is a functional currency of the taxpayer for the particular taxation year;

(d) where the taxpayer’s taxation year immediately preceding the particular taxation year was a functional currency year of the taxpayer, the functional currency of the taxpayer for that preceding taxation year is the same as the functional currency of the taxpayer for the particular taxation year; and

(e) where the taxpayer’s taxation year immediately preceding the particular taxation year was a Canadian currency year of the taxpayer, no preceding taxation year of the taxpayer was a functional currency year of the taxpayer.

(4) If, because of subsection (3), this subsection applies to a taxpayer for a particular taxation year of the taxpayer,

(a) the taxpayer’s Canadian tax results for the particular taxation year are to be determined using the taxpayer’s functional currency for the particular taxation year;

(b) each reference in the Act or the regulations to a particular amount expressed in Canadian dollars is to be read as a reference to a particular amount expressed in the taxpayer’s functional currency for the partic-ular taxation year determined by applying the currency exchange rate in respect of the conversion of Canadian currency into that functional currency as of the first day of the particular taxation year;

(c) subject to subsection 79(7), paragraphs 80(2)(k) and 142.7(8)(b), if a particular amount that is relevant in computing the taxpayer’s Canadian tax results for the particular taxation year is an amount expressed in a currency other than the taxpayer’s functional currency for the particular taxation year, that amount is to be converted to an amount expressed in the taxpayer’s functional currency for the particular taxation year by using the rates of exchange quoted by the Bank of Canada at noon on the day that the particular amount first arose for the exchange of the Canadian dollar for a unit of each of those currencies or such other rate of exchange as is acceptable to the Minister;

(d) each reference in subsection 79(7), paragraph 80(2)(k) and subsections 80.01(11) and 80.1(8) to “Canadian currency” is to be read as a reference to “the taxpayer’s functional currency”;

(e) the reference in subsection 39(2) to “the value of the currency or currencies of one or more countries other than Canada relative to Canadian currency, a taxpayer has made a gain or sustained a loss in a taxation year” is to be read as reference to “the value of the currency or currencies of one or more countries (other than the taxpayer’s functional currency for the taxation year) relative to a taxpayer’s functional currency for a taxation year, the taxpayer has made a gain or sustained a loss in the taxation year” and the references in that subsection to “currency of a country other than Canada” shall be read as references to “currency other than the taxpayer’s functional currency for the taxation year”;

(f) the definition “foreign currency” in subsection 248(1) is, in respect of the taxpayer, to be, at any time in the particular taxation year, read as:

“foreign currency” in respect of a taxpayer, at any time in a particular taxation year, means a currency other than the taxpayer’s functional currency for the particular taxation year;

(g) where a taxation year of a foreign affiliate of the taxpayer ends in the particular taxation year of the taxpayer, the references in section 95 and in regulations made for the purposes of that section (other than subsection 5907(6) of the Regulations) to “Canadian currency” shall be read, in respect of the foreign affiliate, as a reference to “the taxpayer’s functional currency for the particular taxation year ”.

(5) In applying this Act to a taxpayer for a particular functional currency year of the taxpayer

(a) subject to subparagraph (10)(b)(iii), in determining the amount (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) that may be deducted, or relevant in determining the amount that may be deducted, under subsection 37(1) or 66(4), section 110.1 or 111 or subsection 126(2), 127(5), 129(1), 181.1(4) or 190.1(3) in the particular functional currency year, each amount (determined in Canadian currency) that is relevant to the determination and that was determined for a taxation year of the taxpayer that preceded the initial functional currency year of the taxpayer, is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;

(b) in determining, at any time in the particular functional currency year, the cost (expressed in the taxpayer’s functional currency for the particular functional currency year) to the taxpayer of a property that was acquired by the taxpayer before the beginning of the taxpayer’s initial functional currency year, the cost (determined in Canadian currency) to the taxpayer of the property at the end of the last Canadian currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the partic-ular functional currency year using the transitional exchange rate of the taxpayer;

(c) in determining, at any time in the particular functional currency year, the adjusted cost base (expressed in the taxpayer’s functional currency for the particular functional currency year) to the taxpayer of a capital property that was acquired by the taxpayer before the beginning of the taxpayer’s initial functional currency year, each amount (determined in Canadian currency) that was required by section 53 to be added or deducted in computing, at any time before the beginning of the initial functional currency year of the taxpayer, the adjusted cost base of the property to the taxpayer is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;

(d) in determining, at any time in the particular functional currency year, the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer’s undepreciated capital cost of depreciable property of a prescribed class, cumulative eligible capital in respect of a business, cumulative Canadian exploration expense (within the meaning assigned by subsection 66.1(6)), cumulative Canadian development expense (within the meaning assigned by subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (within the meaning assigned by subsection 66.21(1)) and cumulative Canadian oil and gas property expense (within the meaning assigned by subsection 66.4(5)), (each of which is referred to in this paragraph as a “pool amount”) each amount (determined in Canadian currency) that was added to or deducted from a particular pool amount of the taxpayer in respect of a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;

(e) in determining any amount (expressed in the taxpayer’s functional currency for the particular functional currency year) that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last Canadian currency year, that amount (determined in Canadian currency) deducted or claimed as a reserve is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;

(f) in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of any outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer and the amount that was deducted in respect of that outlay or expense in respect of a taxation year preceding the initial functional currency year of the taxpayer, such amounts of outlay or expense or deductions (determined in Canadian currency for those years) are to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer;

(g) in determining, at any time in the particular functional currency year, the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer’s paid-up capital in respect of any class of shares of its capital stock, any amount (determined in Canadian currency) added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a taxation year preceding the initial functional currency year of the taxpayer is to be converted to the taxpayer’s functional currency for the partic-ular functional currency year using the transitional exchange rate of the taxpayer;

(h) where the taxpayer issued a debt obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) for which the obligation was issued, the principal amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of the obligation, any amount (expressed in the taxpayer’s functional currency for the particular functional currency year) paid in satisfaction of the principal amount of the obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, and the amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) of any gain or loss attributable to the fluctuation in the values of currencies,

(i) where the obligation was issued in the taxpayer’s functional currency for the particular functional currency year, the amount (determined in the taxpayer’s functional currency for the particular functional currency year) for which the obligation was issued, the principal amount (determined in the taxpayer’s functional currency for the particular functional currency year) of the obligation and the amounts (determined in the taxpayer’s functional currency for the particular functional currency year) paid in satisfaction of the principal amount of the obligation, in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer are those amounts determined in those years in the taxpayer’s functional currency for the particular functional currency year,

(ii) where the obligation was issued in Canadian currency, the amount for which the obligation was issued (determined in Canadian currency), the principal amount (determined in Canadian currency) of the obligation and the amounts (determined in Canadian currency) paid in satisfaction of the principal amount of the obligation, in a taxation year preceding the initial functional currency year are to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer, and

(iii) where the obligation was issued in a currency (referred to in this subparagraph as the “third currency”) other than Canadian currency or the taxpayer’s functional currency for the particular functional currency year, the amount (determined in the third currency) for which the obligation was issued, the principal amount (determined in the third currency) of the obligation and the amounts (determined in the third currency) paid in satisfaction of the principal amount of the obligation in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer, are to be converted to the taxpayer’s functional currency for the particular functional currency year using the currency exchange rate in respect of a conversion of an amount determined in the third currency into an amount determined in the taxpayer’s functional currency for the particular functional currency year on the last day of the last Canadian currency year of the taxpayer;

(i) in determining the amount (expressed in the taxpayer’s functional currency for the particular functional currency year) of tax payable under Part I for a Canadian currency year for the purpose of determining the taxpayer’s first instalment base or second instalment base for the taxpayer’s initial functional currency year, the amount (determined in Canadian currency) of tax payable is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer; and

(j) any amount (expressed in Canadian currency), other than an amount referred to in paragraphs (a) to (i), determined under the provisions of this Act in or in respect of a taxation year preceding the initial functional currency year of the taxpayer that is relevant in determining the Canadian tax results (expressed in the taxpayer’s functional currency for the particular functional currency year) of the taxpayer for the particular functional currency year is to be converted to the taxpayer’s functional currency for the particular functional currency year using the transitional exchange rate of the taxpayer.

(6) In applying this Act to a taxpayer for a particular functional currency year of the taxpayer

(a) where, at any time in the particular functional currency year, the taxpayer has made a particular payment (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) on account of the principal amount (expressed in the taxpayer’s functional currency for the partic-ular functional currency year) of a debt obligation that was issued by the taxpayer in a Canadian currency year of the taxpayer that ended before the beginning of the initial functional currency year of the taxpayer

(i) the taxpayer is deemed to have a capital gain under paragraph 39(2)(a) or income, as the case may be, attributable to the fluctuation in the values of currencies in respect of the particular payment for the particular functional currency year equal to the amount determined by the formula

A × B/C

where

A      is the amount determined by the formula

D × E

where

D      is the amount (expressed in Canadian currency), if any, that would have been determined to be the taxpayer’s capital gain under paragraph 39(2)(a) or income, as the case may be, if the principal amount of the debt obligation outstanding (determined in Canadian currency), immediately before the end of the last Canadian currency year of the taxpayer, had been settled by a payment by the taxpayer to the holder of the obligation of an amount equal to that outstanding principal amount at that time, and

E      is the transitional exchange rate of the taxpayer,

B      is the amount of the particular payment (expressed in the taxpayer’s functional currency for the particular functional currency year), and

C      is the principal amount of the debt obligation outstanding (determined in the taxpayer’s functional currency for the particular functional currency year) at the beginning of the initial functional currency year of the taxpayer,

(ii) the taxpayer is deemed to have a capital loss under paragraph 39(2)(b) or a loss, as the case may be, attributable to the fluctuation in the values of currencies in respect of the particular payment for the particular functional currency year equal to the amount determined by the formula

F × G/H

where

F      is the amount determined by the formula

I × J

where

I      is the amount (expressed in Canadian currency), if any, that would have been determined to be the taxpayer’s capital loss under paragraph 39(2)(b) or loss, as the case may be, if the principal amount of the debt obligation outstanding (determined in Canadian currency), immediately before the end of the last Canadian currency year of the taxpayer, had been settled by a payment by the taxpayer to the holder of the obligation of an amount equal to that outstanding principal amount at that time, and

J      is the transitional exchange rate of the taxpayer,

G      is the amount of the particular payment (expressed in the taxpayer’s functional currency for the particular functional currency year), and

H      is the principal amount of the debt obligation outstanding (determined in the taxpayer’s functional currency for the particular functional currency year) at the beginning of the initial functional currency year of the taxpayer, and

(iii) where a debt obligation is denominated in a currency other than the taxpayer’s functional currency for the particular functional currency year, any amount determined under element B in the formula in subparagraph (i) or element G in the formula in subparagraph (ii) is to be determined with reference to the relative value of that currency and the taxpayer’s functional currency for the particular functional currency year at the beginning of the initial functional currency year of the taxpayer, and

(b) notwithstanding paragraph 80(2)(k), where an obligation of the taxpayer was issued in a taxation year of the taxpayer preceding the initial functional currency year of the taxpayer in a currency other than the taxpayer’s functional currency for the partic-ular functional currency year, a forgiven amount arising at any time in the particular functional currency year in respect of the obligation is to be determined by reference to the currency exchange rate on the last day of the taxpayer’s last Canadian currency year in respect of a conversion of an amount determined in the other currency into an amount determined in the taxpayer’s functional currency for the particular functional currency year.

(7) Notwithstanding subsection (4),

(a) if, at any particular time, an amount (determined in the taxpayer’s functional currency for the particular functional currency year) first becomes payable under this Act by a taxpayer to the Receiver General in respect of a particular functional currency year of the taxpayer,

(i) that amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) is to be converted to Canadian currency using the currency exchange rate on the earlier of the day the amount is so paid and the day that includes the particular time in respect of a conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency, and

(ii) the amount so determined in Canadian currency under subparagraph (i) is to be paid to the Receiver General in Canadian currency; and

(b) if, at any particular time, an amount (determined in a taxpayer’s functional currency for the particular functional currency year) first becomes payable under this Act to the taxpayer by the Minister, for a particular functional currency year of the taxpayer, or is deemed to be paid on account of an amount payable by the taxpayer under the Act for that particular functional currency year,

(i) that amount (determined in the taxpayer’s functional currency for the partic-ular functional currency year) is to be converted to Canadian currency using the currency exchange rate on the day that includes the particular time in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency, and

(ii) the amount so determined in Canadian currency under subparagraph (i) is to be paid to the taxpayer by the Minister or is deemed to have been paid to the taxpayer by the Minister, as the case may be, in Canadian currency.

(8) Subsection (9) applies to a taxpayer for a particular Canadian currency year that begins after the last functional currency year of the taxpayer.

(9) Where, because of subsection (8), this subsection applies to a taxpayer for a particular Canadian currency year of the taxpayer, in applying this Act to the taxpayer for that particular Canadian currency year, the following rules apply:

(a) subject to subparagraph (10)(a)(iii), in determining the amount (expressed in Canadian currency) that may be deducted, or relevant in determining the amount that may be deducted, under subsection 37(1) or 66(4), section 110.1 or 111 or subsection 126(2), 127(5), 129(1), 181.1(4) or 190.1(3) in the particular Canadian currency year,

(i) each amount (determined in the taxpayer’s functional currency for the functional currency year of the taxpayer) that is relevant to the determination and that was first required to be determined in a functional currency year of the taxpayer that preceded the particular Canadian currency year, is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) each amount (determined in Canadian currency) that is relevant to the determination and that was first required to be determined in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;

(b) in determining, at any time in the particular Canadian currency year, the cost (expressed in Canadian currency) to the taxpayer of a property,

(i) where the property was acquired by the taxpayer in a functional currency year of the taxpayer preceding the particular Canadian currency year, the cost (determined in the taxpayer’s functional currency for the functional currency year) to the taxpayer of the property is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) where the property was acquired by the taxpayer in a Canadian currency year of the taxpayer preceding the particular Canadian currency year, the cost (determined in Canadian currency) to the taxpayer of the property is the cost so determined in Canadian currency in that Canadian currency year;

(c) in determining, at any time in the particular Canadian currency year, the adjusted cost base (expressed in Canadian currency) to the taxpayer of a capital property

(i) each amount (determined in the taxpayer’s functional currency for the functional currency year) that is required by section 53 to be added or deducted in computing the adjusted cost base of the property to the taxpayer and was first required by that section to be added or deducted at any time in a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) each amount (determined in Canadian currency) that is required by section 53 to be added or deducted in computing the adjusted cost base of the property to the taxpayer and was first required by that section to be added or deducted at any time in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;

(d) in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) of the taxpayer’s undepreciated capital cost of depreciable property of a prescribed class, cumulative eligible capital in respect of a business, cumulative Canadian exploration expense (within the meaning assigned by subsection 66.1(6)), cumulative Canadian development expense (within the meaning assigned by subsection 66.2(5)), cumulative foreign resource expense in respect of a country other than Canada (within the meaning assigned by subsection 66.21(1)) and cumulative Canadian oil and gas property expense (within the meaning assigned by subsection 66.4(5)), (each of which is referred to in this paragraph as a “pool amount”),

(i) each amount (determined in the taxpayer’s functional currency for the functional currency year) that is required to be added to or deducted from a particular pool amount of the taxpayer and was first required to be added or deducted in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) each amount (determined in Canadian currency) that is required to be added to or deducted from a particular pool amount of the taxpayer and was first required to be added or deducted in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;

(e) in determining any amount (expressed in Canadian currency) that has been deducted or claimed as a reserve in computing the income of the taxpayer for its last functional currency year preceding the particular Canadian currency year, that amount (determined in the taxpayer’s functional currency for the last functional currency year) deducted or claimed as a reserve for that last functional currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that last functional currency year;

(f) in determining the amount (expressed in Canadian currency) of any outlay or expense referred to in subsection 18(9) that was made or incurred by the taxpayer and the amount that was deducted by the taxpayer in respect of that outlay or expense in respect of a taxation year of the taxpayer preceding the particular Canadian currency year,

(i) such of those amounts (determined in the taxpayer’s functional currency for the functional currency year) that were first made or incurred or deducted by the taxpayer in or in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year are to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) such of those amounts (determined in Canadian currency) that were first made or incurred or deducted by the taxpayer in or in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year are the amounts that were so determined in Canadian currency in that Canadian currency year;

(g) in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) of the taxpayer’s paid-up capital in respect of any class of shares of its capital stock,

(i) any amount (determined in the taxpayer’s functional currency for the functional currency year) that was first added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a functional currency year of the taxpayer preceding the particular Canadian currency year is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) any amount (determined in Canadian currency) that was first added or deducted in computing the taxpayer’s paid-up capital in respect of the class in a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year;

(h) where an obligation was issued in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in determining, at any time in the particular Canadian currency year, the amount (expressed in Canadian currency) for which an obligation was issued, the principal amount (expressed in Canadian currency) of the obligation, the amounts (expressed in Canadian currency) paid in satisfaction of the principal amount of the obligation, and the amount (determined in Canadian currency), if any, of any gain or loss attributable to the fluctuation in the value of the Canadian currency relative to the value of the currency in which the obligation was issued,

(i) subject to paragraph (i), where the obligation was issued in a currency other than Canadian currency,

(A) the amount (determined in the currency in which the obligation was issued) for which the obligation was issued and the principal amount (determined in the currency in which the obligation was issued) of the obligation are

(I) where the taxation year of the taxpayer in which the obligation was issued was a Canadian currency year of the taxpayer, the amounts (determined in Canadian currency) that were so determined in Canadian currency in that Canadian currency year, or

(II) where the taxation year of the taxpayer in which the obligation was issued was a functional currency year of the taxpayer, the amounts determined by converting those amounts (determined in the taxpayer’s functional currency for the functional currency year) to Canadian currency by using the reversionary exchange rate of the taxpayer for that functional currency year, and

(B) the amounts (determined in the currency in which the obligation was issued) paid at any time in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer in satisfaction of the principal amount of the obligation are

(I) where the taxation year of the taxpayer in which an amount was paid was a Canadian currency year of the taxpayer, the amount (determined in Canadian currency) that was so determined in Canadian currency in that Canadian currency year, or

(II) where the taxation year of the taxpayer in which an amount was paid was a functional currency year of the taxpayer, the amount determined by converting that amount (determined in the taxpayer’s functional currency for the functional currency year) to Canadian currency by using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) where the obligation was issued in Canadian currency, the amount (determined in Canadian currency) for which the obligation was issued, the principal amount (determined in Canadian currency) of the obligation and the amounts (determined in Canadian currency) paid, in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in satisfaction of the principal amount of the obligation, are the amounts so determined in Canadian currency in those preceding years;

(i) where an obligation was issued in a currency other than Canadian currency in a taxation year of the taxpayer preceding the initial reversionary year of the taxpayer, in determining, in respect of subsection 79(7) or paragraph 80(2)(k) or 142.7(8)(b), the amount (expressed in Canadian currency) for which the obligation was issued, the principal amount (determined in Canadian currency) of the obligation, and the amounts (determined in Canadian currency) paid in satisfaction of the principal amount of the obligation, at any time in the particular Canadian currency year, those amounts are to be determined as if subsections (1) to (7) had not applied to the taxpayer for any preceding taxation year;

(j) where the particular Canadian currency year is the initial reversionary year of the taxpayer, for the purpose of determining the taxpayer’s first instalment base or second instalment base in the particular Canadian currency year, the amount (determined in the taxpayer’s functional currency for the functional currency year) of tax payable by the taxpayer under Part I for the last functional currency year of the taxpayer is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that last functional currency year; and

(k) in determining any amount (determined in Canadian currency and referred to in this paragraph as the “specified amount”), at any time in the particular Canadian currency year, other than an amount referred to in paragraphs (a) to (j), that is relevant in determining the Canadian tax results of the taxpayer for the particular Canadian currency year

(i) any amount (determined in the taxpayer’s functional currency for the functional currency year) that is relevant in determining the specified amount and was first determined in or in respect of a functional currency year of the taxpayer preceding the particular Canadian currency year, is to be converted to Canadian currency using the reversionary exchange rate of the taxpayer for that functional currency year, and

(ii) any amount (determined in Canadian currency) that is relevant in determining the specified amount and was first determined in or in respect of a Canadian currency year of the taxpayer preceding the particular Canadian currency year is the amount that was so determined in Canadian currency in that Canadian currency year.

(10) In determining an amount that a taxpayer may claim under section 111 or subsection 126(2), 127(5), 181.1(4) or 190.1(3), for a particular taxation year of the taxpayer, the following rules apply:

(a) if the particular taxation year is a Canadian currency year of the taxpayer, the amount that may be claimed (determined in Canadian currency) is to be determined,

(i) by converting each amount (determined in the taxpayer’s functional currency for the particular functional currency year) of a loss incurred, tax credit arising and expenditure made in or in respect of a particular functional currency year of the taxpayer that ends after the particular taxation year to Canadian currency using the currency exchange rate in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year into an amount determined in Canadian currency on the last day of that particular functional currency year,

(ii) as if each amount (determined in Canadian currency) of a loss incurred, tax credit arising, expenditure made and deduction claimed in or in respect of a Canadian currency year of the taxpayer were the amount of that loss incurred, tax credit arising, expenditure made and deduction claimed in Canadian currency in or in respect of that Canadian currency year of the taxpayer, and

(iii) by converting each amount (determined in the taxpayer’s functional currency for the particular functional currency year) claimed in or in respect of a particular functional currency year of the taxpayer preceding the initial reversionary year of the taxpayer (in respect of an amount of loss incurred, tax credit arising or expenditure made by a taxpayer in or in respect of a Canadian currency year) to Canadian currency using the currency exchange rate on the last day of the Canadian currency year of the taxpayer in or in respect of which the amount claimed arose in respect of the conversion of an amount determined in the taxpayer’s functional currency for the particular functional currency year to an amount determined in Canadian currency; and

(b) if the particular taxation year is a functional currency year of the taxpayer, the amount that may be claimed (determined in the taxpayer’s functional currency for the particular taxation year) is to be determined,

(i) by converting each amount (determined in Canadian currency) of a loss incurred, tax credit arising and expenditure made in or in respect of a particular Canadian currency year of the taxpayer that ends after the particular taxation year to the taxpayer’s functional currency for the particular taxation year using the currency exchange rate in respect of the conversion of an amount determined in Canadian currency into an amount determined in the taxpayer’s functional currency for the particular taxation year on the last day of that particular Canadian currency year,

(ii) as if each amount (determined in the taxpayer’s functional currency for the particular taxation year) of a loss incurred, tax credit arising, expenditure made and deduction claimed in or in respect of a functional currency year of the taxpayer were the amount of that loss incurred, tax credit arising, expenditure made and deduction claimed in the taxpayer’s functional currency for the particular taxation year, and

(iii) by converting each amount (determined in Canadian currency) claimed in or in respect of a particular Canadian currency year of the taxpayer preceding the initial functional currency year of the taxpayer (in respect of an amount of loss incurred, tax credit arising or expenditure made by a taxpayer in or in respect of a functional currency year of the taxpayer) to the taxpayer’s functional currency for the particular taxation year using the currency exchange rate on the last day of the functional currency year of the taxpayer in or in respect of which the amount claimed arose in respect of the conversion of an amount determined in Canadian currency to an amount determined in the taxpayer’s functional currency for the particular taxation year.

(11) Subsection (12) applies to a corporation (referred to in this subsection and subsection (12) as the “subsidiary”) that has been wound up into another corporation (referred to in this subsection as the “parent”) if

(a) subsection 88(1) applied to the subsidiary and the parent in respect of the winding-up of the subsidiary;

(b) the taxation year of the subsidiary (referred to in this subsection and subsection (12) as the “distribution year of the subsidiary”) in which any portion of a property (such portion of the property referred to in this subsection as the “distributed property”) of the subsidiary was distributed to the parent, or any portion of an obligation (such portion of the obligation referred to in this subsection as the “assumed obligation”) of the subsidiary was assumed by the parent, on the winding-up of the subsidiary would, were this section read without reference to this subsection, be a functional currency year of the subsidiary; and

(c) either

(i) where the taxation year of the parent (referred to in this paragraph as the “acquisition year of the parent”) in which the subsidiary distributed the distributed property to the parent, or the assumed obligation of the subsidiary was assumed by the parent, on the winding-up of the subsidiary was a functional currency year of the parent, the functional currency for the acquisition year of the parent was not the functional currency of the subsidiary for the distribution year of the subsidiary, or

(ii) the acquisition year of the parent was not a functional currency year of the parent.

(12) Where, because of subsection (11), this subsection applies to the subsidiary, for the purposes of this section

(a) the last taxation year of the subsidiary that ends before the beginning of the distribution year of the subsidiary is deemed to be the last functional currency year of the subsidiary; and

(b) subsection (4) is deemed not to apply to the subsidiary for each taxation year of the subsidiary commencing after the end of the last functional currency year of the subsidiary described in paragraph (a).

(13) Subsection (14) applies to a corporation (referred to in this subsection and subsection (14) as the “specified predecessor”) that has merged with one or more other corporations to form one corporate entity (referred to in this subsection as the “new corporation”) if

(a) the merger was an amalgamation (within the meaning assigned by subsection 87(1));

(b) the taxation year of the specified pred- ecessor (referred to in this subsection and subsection (14) as the “last taxation year of the specified predecessor”) that ended immediately before the amalgamation would, were this section read without reference to subsection (14), be a functional currency year of the specified predecessor; and

(c) either

(i) where the taxation year of the new corporation (referred to in this paragraph as the “first taxation year of the new corporation”) that began at the time of the amalgamation was a functional currency year of the new corporation, the functional currency of the new corporation for the first taxation year of the new corporation was not the functional currency of the specified predecessor for the last taxation year of the specified predecessor, or

(ii) the first taxation year of the new corporation was not a functional currency year of the new corporation.

(14) Where, because of subsection (13), this subsection applies to the specified predecessor, for the purposes of this section

(a) the taxation year of the specified pred- ecessor that ends immediately before the beginning of the last taxation year of the specified predecessor is deemed to be the last functional currency year of the specified predecessor; and

(b) subsection (4) is deemed not to apply to the specified predecessor corporation for each taxation year of the specified predecessor commencing after the end of the last functional currency year of the specified predecessor described in paragraph (a).

(15) For the purpose of this section,

(a) subject to subsection (16), where there has been a winding-up of a taxpayer (referred to in this subsection and subsection (16) as the “subsidiary”) into another taxpayer (referred to in this subsection and subsection (16) as the “parent”) to which subsection 88(1) has applied, the parent is deemed to be the same corporation as and a continuation of the subsidiary; and

(b) subject to subsection (17), where there has been an amalgamation (within the meaning assigned by subsection 87(1)) of two or more corporations (each such taxpayer referred to in this subsection and subsection (17) as a “predecessor”) to form one corporate entity (referred to in this subsection and subsection (17) as the “new corporation”) the new corporation is deemed to be the same corporation as and a continuation of each such predecessor corporation.

(16) Where the parent would not, in a taxation year of the parent ending after the time the subsidiary was wound up, satisfy the requirements of paragraph (3)(e) because the last functional currency year of the subsidiary referred to in subsection (12) in respect of the winding-up is, because of paragraph (15)(a), the last functional currency year of the parent, paragraph (15)(a) shall not apply, for the purposes of paragraph (3)(e), to the parent in respect of the subsidiary if the total of all amounts each of which is the cost amount, at the end of the taxation year of the parent in which the property of the subsidiary was distributed to the parent in the course of winding-up, to the parent of a property that was distributed to the parent on the winding-up (or property substituted for such property) is less than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year, to the parent of a property of the parent.

(17) Where the new corporation would not, in a taxation year of the new corporation commencing on or after the time of the amalgamation, satisfy the requirements of paragraph (3)(e) because the last functional currency year of the predecessor referred to in subsection (14) in respect of the amalgamation is, because of paragraph (15)(b) the last functional currency year of the new corporation, paragraph (15)(b) shall not apply, for the purposes of paragraph (3)(e), to the new corporation in respect of the predecessor if the total of all amounts each of which is the cost amount, at the end of the taxation year of the new corporation that began at the time of the amalgamation, to the new corporation of a property that, immediately before the amalgamation, was a property of the predecessor (or property substituted for such property) is less than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year of the new corporation, to the new corporation of a property of the new corporation.

(18) Where, at any time, all or substantially all of the property (referred to in this subsection as the “transferred property”) of a business (referred to in this subsection as the “transferred business”) of a taxpayer has been disposed of by the taxpayer (referred to in this subsection as the “transferor”) and acquired, either directly or indirectly by a corporation resident in Canada (referred to in this subsection as the “transferee”) that, immediately after the acquisition, was related to the taxpayer, and a taxation year of the transferor beginning before that time was a functional currency year of the transferor, for the purposes of this section, the transferee is deemed to be the same corporation as and a continuation of the transferor if the total of all amounts each of which is the cost amount, at the end of the taxation year of the transferee in which the transferred business was transferred, to the transferee of a property that was a transferred property (or property substituted for such property) is greater than 50% of the total of all amounts each of which is the cost amount, at the end of that taxation year of the transferree, to the transferree of a property of the transferree.

262. (1) The Minister of Finance may designate a stock exchange, or a part of a stock exchange, for the purposes of this Act.

(2) The Minister of Finance may revoke the designation of a stock exchange, or a part of a stock exchange, designated under subsection (1).

(3) A designation under subsection (1) or a revocation under subsection (2) shall specify the time at and after which it is in effect, which time may, for greater certainty, precede the time at which the designation or revocation is made.

(4) The Minister of Finance shall cause to be published, by posting on the Internet website of the Department of Finance or by any other means that the Minister of Finance considers appropriate, the names of those stock exchanges, or parts of stock exchanges, as the case may be, that are or at any time were designated under subsection (1).

(5) The Minister of Finance is deemed to have designated under subsection (1) each stock exchange and each part of a stock exchange that was, immediately before the day on which this section came into force, a prescribed stock exchange, with effect on and after that day.

(2) The definition “Canadian tax results” in subsection 261(1), and subsection 261(2), of the Act, as enacted by subsection (1), apply for all taxation years.

(3) Subsection 261(1) (other than the definition “Canadian tax results”), and subsections 261(3) to (18), of the Act, as enacted by subsection (1), apply in respect of taxation years that begin on or after the day on which this Act is assented to.

(4) Subsection 261(10) of the Act, as enacted by subsection (1), applies on and after the day on which this Act is assented to.

(5) Section 262 of the Act, as enacted by subsection (1), applies on and after the day on which this Act is assented to.

68. (1) The Act is amended by replacing “prescribed stock exchange” with “designated stock exchange” in the following provisions:

(a) the portion of paragraph 187.3(2)(d) before subparagraph (i); and

(b) paragraph (d.1) of the definition “term preferred share” in subsection 248(1).

(2) The Act is amended by replacing “prescribed stock exchange” with “designated stock exchange” in the following provisions:

(a) subparagraphs 7(9)(d)(i) and (ii);

(b) subparagraph 13(27)(f)(i);

(c) subparagraph 48.1(1)(a)(ii);

(d) subparagraphs 86.1(2)(c)(ii) and (d)(ii);

(e) subsection 87(4.3) and paragraphs 87(9)(a.2) and (10)(e);

(f) subsection 110.1(6);

(g) paragraph 112(2.21)(c);

(h) clauses (a)(i)(A) and (B) of the definition “qualified investment” in subsection 115.2(1);

(i) paragraph 118.1(18)(a);

(j) subparagraphs (a)(i) and (ii) and clauses (c)(ii)(A) and (B) of the definition “split income” in subsection 120.4(1);

(k) paragraph (c) of the definition “Canadian-controlled private corporation” in subsection 125(7);

(l) subsection 137(4.1);

(m) paragraph (b) of the definition “non-qualified investment” in subsection 149.1(1);

(n) subsection 207.5(2);

(o) paragraph (a) of the definition “Canadian property mutual fund investment” in subsection 218.3(1);

(p) paragraph (d) of the definition “grandfathered share” in subsection 248(1); and

(q) paragraphs (d) to (f) of the definition “taxable Canadian property” in subsection 248(1).

(3) Subsections (1) and (2) apply on and after the day on which this Act is assented to.