Bill C-4

62 ELIZABETH II

——————

CHAPTER 40

A second act to implement certain provisions of the budget tabled in Parliament on March 21, 2013 and other measures

[Assented to 12th December, 2013]

Her Majesty, by and with the advice and consent of the Senate and House of Commons of Canada, enacts as follows:

SHORT TITLE

1. This Act may be cited as the Economic Action Plan 2013 Act, No. 2.

PART 1

MEASURES RELATING TO INCOME TAX

Income Tax Act

2. (1) Subsections 10(10) and (11) of the Income Tax Act are replaced by the following:

(10) Notwithstanding subsection (1.01), property described in an inventory of a taxpayer’s business that is an adventure or concern in the nature of trade at the end of the taxpayer’s taxation year that ends immediately before the time at which the taxpayer is subject to a loss restriction event is to be valued at the cost at which the taxpayer acquired the property, or its fair market value at the end of the year, whichever is lower, and after that time the cost at which the taxpayer acquired the property is, subject to a subsequent application of this subsection, deemed to be that lower amount.

(11) For the purposes of subsections 88(1.1) and 111(5), a taxpayer’s business that is at any time an adventure or concern in the nature of trade is deemed to be a business carried on at that time by the taxpayer.

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

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

11. (1) Subject to section 34.1, if an individ- ual is a proprietor of a business, the individ- ual’s income from the business for a taxation year is deemed to be the individual’s income from the business for the fiscal periods of the business that end in the year.

(2) Subsection (1) applies to taxation years that end after March 22, 2011.

4. (1) Subsection 12(1) of the Act is amended by striking out “and” at the end of paragraph (z.5), by adding “and” at the end of paragraph (z.6) and by adding the following after paragraph (z.6):

(z.7) the total of all amounts each of which is

(i) if the taxpayer acquires a property under a derivative forward agreement in the year, the amount by which the fair market value of the property at the time it is acquired by the taxpayer exceeds the cost to the taxpayer of the property, or

(ii) if the taxpayer disposes of a property under a derivative forward agreement in the year, the amount by which the proceeds of disposition (within the meaning assigned by subdivision c) of the property exceeds the fair market value of the property at the time the agreement is entered into by the taxpayer.

(2) Section 12 of the Act is amended by adding the following after subsection (2.01):

(2.02) For the purposes of this Act, if an amount is included in computing the income of a taxpayer for a taxation year because of paragraph (1)(l.1) and the amount is in respect of interest that is deductible by a partnership in computing its income from a particular source or from sources in a particular place, the amount is deemed to be from the particular source or from sources in the particular place, as the case may be.

(3) Subsection (1) applies to acquisitions and dispositions of property by a taxpayer that occur

(a) under a derivative forward agreement entered into after March 20, 2013 unless

(i) the agreement is part of a series of agreements and the series

(A) includes a derivative forward agreement entered into after March 20, 2013 and before July 11, 2013, and

(B) has a term of 180 days or less (determined without reference to agreements entered into before March 21, 2013), or

(ii) the agreement is entered into after the final settlement of another derivative forward agreement (in this paragraph referred to as the “prior agreement”) and

(A) having regard to the source of the funds used to purchase the property to be sold under the agreement, it is reasonable to conclude that the agreement is a continuation of the prior agreement,

(B) the terms of the agreement and the prior agreement are substantially similar,

(C) the final settlement date under the agreement is before 2015,

(D) subsection (1) would not apply to any acquisitions or dispositions under the prior agreement if this subsection were read without reference to subparagraph (i), and

(E) the notional amount of the agreement is at all times less than or equal to the amount determined by the formula

(A + B + C + D + E) – (F + G)

where

A      is the notional amount of the agreement when it is entered into,

B      is the total of all amounts each of which is an increase in the notional amount of the agreement, at or before that time, that is attrib- utable to the underlying interest,

C      is the amount of the taxpayer’s cash on hand immediately before March 21, 2013 that was committed, before March 21, 2013, to be invested under the agreement,

D      is the total of all amounts each of which is an increase, at or before that time, in the notional amount of the agreement that is attrib- utable to the final settlement of another derivative forward agreement (in this description referred to as the “terminated agreement”) if subsection (1) would not apply to any acquisitions or dispositions under the terminated agreement if this subsection were read without reference to subparagraph (i),

E      is the lesser of

(I) either

1. if the prior agreement was entered into before March 21, 2013, the amount, if any, by which the amount determined under clause (A) of the description of F in subparagraph (b)(ii) for the prior agreement immediately before it was finally settled exceeds the total deter-mined under clause (B) of the description of F in subparagraph (b)(ii) for the prior agreement immediately before it was finally settled, or

2. in any other case, the amount, if any, by which the amount determined under this subclause for the prior agreement immediately before it was finally settled exceeds the total determined under subclause (II) for the prior agreement immediately before it was finally settled, and

(II) the total of all amounts each of which is an increase in the notional amount of the agreement before July 11, 2013 that is not otherwise described in this formula,

F      is the total of all amounts each of which is a decrease in the notional amount of the agreement, at or before that time, that is attributable to the underlying interest, and

G      is the total of all amounts each of which is the amount of a partial settlement of the agreement, at or before that time, to the extent that it is not reinvested in the agreement;

(b) after March 20, 2013 and before March 22, 2018 under a derivative forward agreement entered into before March 21, 2013, if

(i) after March 20, 2013, the term of the agreement is extended beyond 2014, or

(ii) at any time after March 20, 2013, the notional amount of the agreement exceeds the amount determined by the formula

(A + B + C + D + E + F) – (G + H)

where

A      is the notional amount of the agreement immediately before March 21, 2013,

B      is the total of all amounts each of which is an increase in the notional amount of the agreement, after March 20, 2013 and at or before that time, that is attributable to the underlying interest,

C      is the amount of the taxpayer’s cash on hand immediately before March 21, 2013 that was committed, before March 21, 2013, to be invested under the agreement,

D      is the amount, if any, of an increase, after March 20, 2013 and at or before that time, in the notional amount of the agreement as a consequence of the exercise of an over-allotment option granted before March 21, 2013,

E      is the total of all amounts each of which is an increase, after March 20, 2013 and at or before that time, in the notional amount of the agreement that is attributable to the final settlement of another derivative forward agreement (in this description referred to as the “terminated agreement”) if

(A) the final settlement date under the agreement is

(I) before 2015, or

(II) on or before the date on which the terminated agreement, as it read immediately before March 21, 2013, was to be finally settled, and

(B) subsection (1) would not apply to any acquisitions or dispositions under the terminated agreement if this subsection were read without reference to subparagraph (a)(i),

F      is the lesser of

(A) 5% of the notional amount of the agreement immediately before March 21, 2013, and

(B) the total of all amounts each of which is an increase in the notional amount of the agreement after March 20, 2013 and before July 11, 2013 that is not otherwise described in this formula,

G      is the total of all amounts each of which is a decrease in the notional amount of the agreement, after March 20, 2013 and at or before that time, that is attributable to the underlying interest, and

H      is the total of all amounts each of which is the amount of a partial settlement of the agreement, after March 20, 2013 and at or before that time, to the extent that it is not reinvested in the agreement; or

(c) after March 21, 2018.

(4) For the purposes of subsection (3), the notional amount of a derivative forward agreement at any time is

(a) in the case of a purchase agreement, the fair market value at that time of the property that would be acquired under the agreement if the agreement were finally settled at that time; or

(b) in the case of a sale agreement, the sale price of the property that would be sold under the agreement if the agreement were finally settled at that time.

(5) Subsection (2) applies to taxation years that begin after 2013.

5. (1) The Act is amended by adding the following after section 12.5:

12.6 (1) The definitions in section 18.3 apply in this section.

(2) Subsection (3) applies for a taxation year of an entity in respect of a security of the entity if

(a) the security becomes, at a particular time in the year, a stapled security of the entity and, as a consequence, amounts described in paragraphs 18.3(3)(a) and (b) are not deduct-ible because of subsection 18.3(3);

(b) the security (or any security for which the security was substituted) ceased, at an earlier time, to be a stapled security of any entity and, as a consequence, subsection 18.3(3) ceased to apply to deny the deductibility of amounts that would be described in paragraphs 18.3(3)(a) and (b) if the security were a stapled security; and

(c) throughout the period that began immediately after the most recent time referred to in paragraph (b) and that ends at the particular time, the security (or any security for which the security was substituted) was not a stapled security of any entity.

(3) If this subsection applies for a taxation year of an entity in respect of a security of the entity, the entity shall include in computing its income for the year each amount that

(a) was deducted by the entity (or by another entity that issued a security for which the security was substituted) in computing its income for a taxation year that includes any part of the period described in paragraph (2)(c); and

(b) would not have been deductible if subsection 18.3(3) had applied in respect of the amount.

(4) For the purposes of subsection 161(1), if an amount described in paragraph (3)(a) is included in the income of an entity for a taxation year under subsection (3), the entity is deemed to have an excess immediately after the entity’s balance-due day for the year computed as if

(a) the entity were resident in Canada throughout the year;

(b) the entity’s tax payable for the year were equal to the tax payable by the entity on its taxable income for the year;

(c) the amount were the entity’s only taxable income for the year;

(d) the entity claimed no deductions under Division E for the year;

(e) the entity had not paid any amounts on account of its tax payable for the year; and

(f) the tax payable determined under paragraph (b) had been outstanding throughout the period that begins immediately after the end of the taxation year for which the amount was deducted and that ends on the entity’s balance-due day for the year.

(2) Subsection (1) is deemed to have come into force on July 20, 2011.

6. (1) Paragraph 13(7)(f) of the Act is replaced by the following:

(f) if a taxpayer is deemed under paragraph 111(4)(e) to have disposed of and reacquired depreciable property (other than a timber resource property), the capital cost to the taxpayer of the property at the time of the reacquisition is deemed to be equal to the total of

(i) the capital cost to the taxpayer of the property at the time of the disposition, and

(ii) 1/2 of the amount, if any, by which the taxpayer’s proceeds of disposition of the property exceed the capital cost to the taxpayer of the property at the time of the disposition;

(2) Subsection 13(18.1) of the Act is replaced by the following:

(18.1) For the purpose of determining whether property meets the criteria set out in the Income Tax Regulations in respect of prescribed energy conservation property, the Technical Guide to Class 43.1 and 43.2, as amended from time to time and published by the Department of Natural Resources, shall apply conclusively with respect to engineering and scientific matters.

(3) Clause 13(21.2)(e)(iii)(D) of the Act is replaced by the following:

(D) that is immediately before the transferor is subject to a loss restriction event, or

(4) Subsections 13(24) and (25) of the Act are replaced by the following:

(24) If at any time a taxpayer is subject to a loss restriction event and, within the 12-month period that ended immediately before that time, the taxpayer, a partnership of which the taxpayer was a majority-interest partner or a trust of which the taxpayer was a majority-interest beneficiary (as defined in subsection 251.1(3)) acquired depreciable property (other than property that was held, by the taxpayer, partnership or trust or by a person that would be affiliated with the taxpayer if section 251.1 were read without reference to the definition “controlled” in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer, partnership or trust) that was not used, or acquired for use, by the taxpayer, partnership or trust in a business that was carried on by it immediately before the 12-month period began

(a) subject to paragraph (b), for the purposes of the description of A in the definition “undepreciated capital cost” in subsection (21) and of sections 127 and 127.1, the property is deemed

(i) not to have been acquired by the taxpayer, partnership or trust, as the case may be, before that time, and

(ii) to have been acquired by it immediately after that time; and

(b) if the property was disposed of by the taxpayer, partnership or trust, as the case may be, before that time and was not reacquired by it before that time, for the purposes of the description of A in that definition, the property is deemed to have been acquired by it immediately before the property was disposed of.

(25) For the purposes of subsection (24), if the taxpayer referred to in that subsection was formed or created in the 12-month period referred to in that subsection, the taxpayer is deemed to have been, throughout the period that began immediately before the 12-month period and ended immediately after it was formed or created,

(a) in existence; and

(b) affiliated with every person with whom it was affiliated (otherwise than because of a right referred to in paragraph 251(5)(b)) throughout the period that began when it was formed or created and that ended immediately before the time at which the taxpayer was subject to the loss restriction event referred to in that subsection.

(5) Subsections (1), (3) and (4) are deemed to have come into force on March 21, 2013, except that subsection 13(24) of the Act, as enacted by subsection (4), is to be read as follows before September 13, 2013:

(24) If at any time a taxpayer is subject to a loss restriction event and, within the 12-month period that ended immediately before that time, the taxpayer or a partnership of which the taxpayer was a majority-interest partner acquired depreciable property (other than property that was held, by the taxpayer or partnership or by a person that would be affiliated with the taxpayer if section 251.1 were read without reference to the definition “controlled” in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer or partnership) that was not used, or acquired for use, by the taxpayer or partnership in a business that was carried on by it immediately before the 12-month period began

(a) subject to paragraph (b), for the purposes of the description of A in the definition “undepreciated capital cost” in subsection (21) and of sections 127 and 127.1, the property is deemed

(i) not to have been acquired by the taxpayer or partnership, as the case may be, before that time, and

(ii) to have been acquired by it immediately after that time; and

(b) if the property was disposed of by the taxpayer or partnership, as the case may be, before that time and was not reacquired by it before that time, for the purposes of the description of A in that definition, the property is deemed to have been acquired by it immediately before the property was disposed of.

(6) Subsection (2) comes into force, or is deemed to have come into force, on the day on which the Technical Guide to Class 43.1 and 43.2 is first published by the Department of Natural Resources.

7. (1) Paragraph 14(12)(f) of the Act is replaced by the following:

(f) that is immediately before the transferor is subject to a loss restriction event, or

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

8. (1) Subsection 18(4) of the Act is replaced by the following:

(4) Notwithstanding any other provision of this Act (other than subsection (8)), in computing the income for a taxation year of a corporation or a trust from a business (other than the Canadian banking business of an authorized foreign bank) or property, no deduction shall be made in respect of that proportion of any amount otherwise deductible in computing its income for the year in respect of interest paid or payable by it on outstanding debts to specified non-residents that

(a) the amount, if any, by which

(i) the average of all amounts each of which is, in respect of a calendar month that ends in the year, the greatest total amount at any time in the month of the outstanding debts to specified non-residents of the corporation or trust,

exceeds

(ii) 1.5 times the equity amount of the corporation or trust for the year,

is of

(b) the amount determined under subparagraph (a)(i) in respect of the corporation or trust for the year.

(2) The portion of the definition “outstanding debts to specified non-residents” in subsection 18(5) of the Act before paragraph (b) is replaced by the following:

“outstanding debts to specified non-residents”, of a corporation or trust at any particular time in a taxation year, means

(a) the total of all amounts each of which is an amount outstanding at that time as or on account of a debt or other obligation to pay an amount

(i) that was payable by the corporation or trust to a person who was, at any time in the year,

(A) a specified non-resident shareholder of the corporation or a specified non-resident beneficiary of the trust, or

(B) a non-resident person who was not dealing at arm’s length with a specified shareholder of the corporation or a specified beneficiary of the trust, as the case may be, and

(ii) on which any amount in respect of interest paid or payable by the corporation or trust is or would be, but for subsection (4), deductible in computing the income of the corporation or trust for the year,

but does not include

(3) Subsection 18(5) of the Act is amended by adding the following in alphabetical order:

“beneficiary” has the same meaning as in subsection 108(1);

“equity amount”, of a corporation or trust for a taxation year, means

(a) in the case of a corporation resident in Canada, the total of

(i) the retained earnings of the corporation at the beginning of the year, except to the extent that those earnings include retained earnings of any other corporation,

(ii) the average of all amounts each of which is the corporation’s contributed surplus (other than any portion of that contributed surplus that arose in connection with an investment, as defined in subsection 212.3(10), to which subsection 212.3(2) applies) at the beginning of a calendar month that ends in the year, to the extent that it was contributed by a specified non-resident shareholder of the corporation, and

(iii) the average of all amounts each of which is the corporation’s paid-up capital at the beginning of a calendar month that ends in the year, excluding the paid-up capital in respect of shares of any class of the capital stock of the corporation owned by a person other than a specified non-resident shareholder of the corporation,

(b) in the case of a trust resident in Canada, the amount, if any, by which

(i) the total of

(A) the average of all amounts each of which is the total amount of all equity contributions to the trust made before a calendar month that ends in the year, to the extent that the contributions were made by a specified non-resident beneficiary of the trust, and

(B) the tax-paid earnings of the trust for the year,

exceeds

(ii) the average of all amounts each of which is the total of all amounts that were paid or became payable by the trust to a beneficiary of the trust in respect of the beneficiary’s interest under the trust before a calendar month that ends in the year except to the extent that the amount is

(A) included in the beneficiary’s income for a taxation year because of subsection 104(13),

(B) an amount from which tax was deducted under Part XIII because of paragraph 212(1)(c), or

(C) paid or payable to a person other than a specified non-resident beneficiary of the trust, and

(c) in the case of a corporation or trust that is not resident in Canada, including a corporation or trust that files a return under this Part in accordance with subsection 216(1) in respect of the year, 40% of the amount, if any, by which

(i) the average of all amounts each of which is the cost of a property, other than an interest as a member of a partnership, owned by the corporation or trust at the beginning of a calendar month that ends in the year

(A) that is used by the corporation or trust in the year in, or held by it in the year in the course of, carrying on business in Canada, or

(B) that is an interest in real property, or a real right in immovables, in Canada, or an interest in, or for civil law a right in, timber resource properties and timber limits, in Canada, and in respect of which the corporation or trust files a return under this Part in accordance with subsection 216(1) in respect of the year,

exceeds

(ii) the average of all amounts each of which is the total of all amounts outstanding, at the beginning of a calendar month that ends in the year, as or on account of a debt or other obligation to pay an amount that was payable by the corporation or trust that may reasonably be regarded as relating to a business carried on by it in Canada or to an interest or right described in clause (i)(B), other than a debt or obligation that is included in the outstanding debts to specified non-residents of the corporation or trust;

“equity contribution”, to a trust, means a transfer of property to the trust that is made

(a) in exchange for an interest as a beneficiary under the trust,

(b) in exchange for a right to acquire an interest as a beneficiary under the trust, or

(c) for no consideration by a person beneficially interested in the trust;

“specified beneficiary”, of a trust at any time, means a person who at that time, either alone or together with persons with whom that person does not deal at arm’s length, has an interest as a beneficiary under the trust with a fair market value that is not less than 25% of the fair market value of all interests as a beneficiary under the trust and for the purpose of determining whether a particular person is a specified beneficiary of a trust,

(a) if the particular person, or a person with whom the particular person does not deal at arm’s length, has at that time a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently, to, or to acquire, an interest as a beneficiary under a trust, the particular person or the person with whom the particular person does not deal at arm’s length, as the case may be, is deemed at that time to own the interest,

(b) if the particular person, or a person with whom the particular person does not deal at arm’s length, has at that time a right under a contract, in equity or otherwise, either immediately or in the future and either absolutely or contingently to cause a trust to redeem, acquire or terminate any interest in it as a beneficiary (other than an interest held by the particular person or a person with whom the particular person does not deal at arm’s length), the trust is deemed at that time to have redeemed, acquired or terminated the interest, unless the right is not exercisable at that time because the exercise of the right is contingent on the death, bankruptcy or permanent disability of an individual, and

(c) if the amount of income or capital of the trust that the particular person, or a person with whom the particular person does not deal at arm’s length, may receive as a beneficiary of the trust depends on the exercise by any person of, or the failure by any person to exercise, a discretionary power, that person is deemed to have fully exercised, or to have failed to exercise, the power, as the case may be;

“specified non-resident beneficiary”, of a trust at any time, means a specified beneficiary of the trust who at that time is a non-resident person;

“tax-paid earnings”, of a trust resident in Canada for a taxation year, means the total of all amounts each of which is the amount in respect of a particular taxation year of the trust that ended before the year determined by the formula

A – B

where

A      is the taxable income of the trust under this Part for the particular year, and

B      is the total of tax payable under this Part by the trust, and all income taxes payable by the trust under the laws of a province, for the particular year.

(4) Subsections 18(5.1) and (6) of the Act are replaced by the following:

(5.1) For the purposes of subsections (4) to (6), if

(a) a particular person would, but for this subsection, be a specified shareholder of a corporation or a specified beneficiary of a trust at any time,

(b) there was in effect at that time an agreement or arrangement under which, on the satisfaction of a condition or the occurrence of an event that it is reasonable to expect will be satisfied or will occur, the particular person will cease to be a specified shareholder of the corporation or a specified beneficiary of the trust, and

(c) the purpose for which the particular person became a specified shareholder or specified beneficiary was the safeguarding of rights or interests of the particular person or a person with whom the particular person is not dealing at arm’s length in respect of any indebtedness owing at any time to the particular person or a person with whom the particular person is not dealing at arm’s length,

the particular person is deemed not to be a specified shareholder of the corporation or a specified beneficiary of the trust, as the case may be, at that time.

(5.2) For the purposes of subsections (4) to (6), a non-resident corporation is deemed to be a specified shareholder of itself and a non-resident trust is deemed to be a specified beneficiary of itself.

(5.3) For the purposes of subparagraph (c)(i) of the definition “equity amount” in subsection (5),

(a) if a property is partly used or held by a taxpayer in a taxation year in the course of carrying on business in Canada, the cost of the property to the taxpayer is deemed for the year to be equal to the same proportion of the cost to the taxpayer of the property (determined without reference to this subsection) that the proportion of the use or holding made of the property in the course of carrying on business in Canada in the year is of the whole use or holding made of the property in the year; and

(b) if a corporation or trust is deemed to own a portion of a property of a partnership because of subsection (7) at any time,

(i) the property is deemed to have, at that time, a cost to the corporation or trust equal to the same proportion of the cost of the property to the partnership as the proportion of the debts and other obligations to pay an amount of the partnership allocated to it under subsection (7) is of the total amount of all debts and other obligations to pay an amount of the partnership, and

(ii) in the case of a partnership that carries on business in Canada, the corporation or trust is deemed to use or hold the property in the course of carrying on business in Canada to the extent the partnership uses or holds the property in the course of carrying on business in Canada for the fiscal period of the partnership that includes that time.

(5.4) For the purposes of this Act, a trust resident in Canada may designate in its return of income under this Part for a taxation year that all or any portion of an amount paid or credited as interest by the trust, or by a partnership, in the year to a non-resident person is deemed to be income of the trust that has been paid to the non-resident person as a beneficiary of the trust, and not to have been paid or credited by the trust or the partnership as interest, to the extent that an amount in respect of the interest

(a) is included in computing the income of the trust for the year under paragraph 12(1)(l.1); or

(b) is not deductible in computing the income of the trust for the year because of subsection (4).

(6) If any loan (in this subsection referred to as the “first loan”) has been made

(a) by a specified non-resident shareholder of a corporation or a specified non-resident beneficiary of a trust, or

(b) by a non-resident person who was not dealing at arm’s length with a specified shareholder of a corporation or a specified non-resident beneficiary of a trust,

to another person on condition that a loan (in this subsection referred to as the “second loan”) be made by any person to a particular corporation or trust, for the purposes of subsections (4) and (5), the lesser of

(c) the amount of the first loan, and

(d) the amount of the second loan

is deemed to be a debt incurred by the particular corporation or trust to the person who made the first loan.

(5) The portion of paragraph 18(7)(a) of the Act before subparagraph (i) is replaced by the following:

(a) to owe the portion (in this subsection and paragraph 12(1)(l.1) referred to as the “debt amount”) of each debt or other obligation to pay an amount of the partnership and to own the portion of each property of the partnership that is equal to

(6) Subparagraph 18(15)(b)(iii) of the Act is replaced by the following:

(iii) that is immediately before the transferor is subject to a loss restriction event, or

(7) Subsections (1) to (5) apply to taxation years that begin after 2013, except that if a trust that is resident in Canada on March 21, 2013 elects in writing and files the election with the Minister of National Revenue on or before the trust’s filing-due date for its first taxation year that begins after 2013,

(a) for the purpose of determining the trust’s equity amount, as defined in subsection 18(5) of the Act, as enacted by subsection (3), the trust is deemed

(i) to not have received any equity contributions, as defined in subsection 18(5) of the Act, as enacted by subsection (3), before March 21, 2013,

(ii) to not have paid or made payable any amount to a beneficiary of the trust before March 21, 2013, and

(iii) to have tax-paid earnings, as defined in subsection 18(5) of the Act, as enacted by subsection (3), of nil for each taxation year that ends before March 21, 2013, and

(b) each beneficiary of the trust at the beginning of March 21, 2013 is deemed to have made an equity contribution at that time to the trust equal to the amount determined by the formula

A/B × (C – D)

where

A      is the fair market value of the beneficiary’s interest as a beneficiary under the trust at that time,

B      is the fair market value of all the beneficial interests under the trust at that time,

C      is the total fair market value of all the properties of the trust at that time, and

D      is the total amount of the trust’s liabilities at that time.

(8) Subsection (6) is deemed to have come into force on March 21, 2013.

9. (1) Subparagraph 18.1(10)(b)(ii) of the Act is replaced by the following:

(ii) that is immediately before the taxpayer is subject to a loss restriction event,

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

10. (1) The Act is amended by adding the following before section 19:

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

“entity” has the same meaning as in subsection 122.1(1).

“equity value” has the same meaning as in subsection 122.1(1).

“real estate investment trust” has the same meaning as in subsection 122.1(1).

“security”, of an entity, means

(a) a liability of the entity;

(b) if the entity is a corporation,

(i) a share of the capital stock of the corporation, and

(ii) a right to control in any manner whatever the voting rights of a share of the capital stock of the corporation if it can reasonably be concluded that one of the reasons that a person or partnership holds the right to control is to avoid the application of subsection (3) or 12.6(3);

(c) if the entity is a trust, an income or a capital interest in the trust; and

(d) if the entity is a partnership, an interest as a member of the partnership.

“stapled security”, of a particular entity at any time, means a particular security of the particular entity if at that time

(a) another security (referred to in this section as the “reference security”)

(i) is or may be required to be transferred together or concurrently with the particular security as a term or condition of the particular security, the reference security, or an agreement or arrangement to which the particular entity (or if the reference security is a security of another entity, the other entity) is a party, or

(ii) is listed or traded with the particular security on a stock exchange or other public market under a single trading symbol;

(b) the particular security or the reference security is listed or traded on a stock exchange or other public market; and

(c) any of the following applies:

(i) the reference security and the particular security are securities of the particular entity and the particular entity is a corporation, SIFT partnership or SIFT trust,

(ii) the reference security is a security of another entity, one of the particular entity or the other entity is a subsidiary of the other, and the particular entity or the other entity is a corporation, SIFT partnership or SIFT trust, or

(iii) the reference security is a security of another entity and the particular entity or the other entity is a real estate investment trust or a subsidiary of a real estate investment trust.

“subsidiary”, of a particular entity at any time, means

(a) an entity in which the particular entity holds at that time securities that have a total fair market value greater than 10% of the equity value of the entity; and

(b) an entity that at that time is a subsidiary of an entity that is a subsidiary of the particular entity.

“transition period”, of an entity, means

(a) if one or more securities of the entity would have been stapled securities of the entity on October 31, 2006 and July 19, 2011 had the definition “stapled security” in this subsection come into force on October 31, 2006, the period that begins on July 20, 2011 and ends on the earliest of

(i) January 1, 2016,

(ii) the first day after July 20, 2011 on which any of those securities is materially altered, and

(iii) the first day after July 20, 2011 on which any security of the entity becomes a stapled security other than by way of

(A) a transaction

(I) that is completed under the terms of an agreement in writing entered into before July 20, 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to this Act, and

(II) that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity, or

(B) the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before July 20, 2011, if the other security was a stapled security on July 20, 2011 and the issuance was made under a term or condition of the other security in effect on July 20, 2011;

(b) if paragraph (a) does not apply to the entity and one or more securities of the entity would have been stapled securities of the entity on July 19, 2011 had the definition “stapled security” in this subsection come into force on July 19, 2011, the period that begins on July 20, 2011 and ends on the earliest of

(i) July 20, 2012,

(ii) the first day after July 20, 2011 on which any of those securities is materially altered, and

(iii) the first day after July 20, 2011 on which any security of the entity becomes a stapled security other than by way of

(A) a transaction

(I) that is completed under the terms of an agreement in writing entered into before July 20, 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to this Act, and

(II) that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity, or

(B) the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before July 20, 2011, if the other security was a stapled security on July 20, 2011 and the issuance was made under a term or condition of the other security in effect on July 20, 2011; and

(c) in any other case, if the entity is a subsidiary of another entity on July 20, 2011 and the other entity has a transition period, the period that begins on July 20, 2011 and ends on the earliest of

(i) the day on which the other entity’s transition period ends,

(ii) the first day after July 20, 2011 on which the entity ceases to be a subsidiary of the other entity, and

(iii) the first day after July 20, 2011 on which any security of the entity becomes a stapled security other than by way of

(A) a transaction

(I) that is completed under the terms of an agreement in writing entered into before July 20, 2011 if no party to the agreement may be excused from completing the transaction as a result of amendments to this Act, and

(II) that is not the issuance of a security in satisfaction of a right to enforce payment of an amount by the entity, or

(B) the issuance of the security in satisfaction of a right to enforce payment of an amount that became payable by the entity on another security of the entity before July 20, 2011, if the other security was a stapled security on July 20, 2011 and the issuance was made under a term or condition of the other security in effect on July 20, 2011.

(2) For the purpose of determining whether a particular security of an entity is a stapled security, if a receipt or similar property (referred to in this subsection as the “receipt”) represents all or a portion of the particular security and the receipt would be described in paragraphs (a) and (b) of the definition “stapled security” in subsection (1) if it were a security of the entity, then

(a) the particular security is deemed to be described in those paragraphs; and

(b) a security that would be a reference security in respect of the receipt is deemed to be a reference security in respect of the particular security.

(3) Notwithstanding any other provision of this Act, in computing the income of a particular entity for a taxation year from a business or property, no deduction may be made in respect of an amount

(a) that is paid or payable after July 19, 2011, unless the amount is paid or payable in respect of the entity’s transition period; and

(b) that is

(i) interest paid or payable on a liability of the particular entity that is a stapled security, unless each reference security in respect of the stapled security is a liability, or

(ii) if a security of the particular entity, a subsidiary of the particular entity or an entity of which the particular entity is a subsidiary is a reference security in respect of a stapled security of a real estate investment trust or a subsidiary of a real estate investment trust, an amount paid or payable to

(A) the real estate investment trust,

(B) a subsidiary of the real estate investment trust, or

(C) any person or partnership on condition that any person or partnership pays or makes payable an amount to the real estate investment trust or a subsidiary of the real estate investment trust.

(2) Subsection (1) is deemed to have come into force on July 20, 2011.

11. (1) The portion of paragraph 20(1)(e.2) of the Act before clause (i)(A) is replaced by the following:

(e.2) the least of the following amounts in respect of a life insurance policy (other than an annuity contract or LIA policy):

(i) the premiums payable by the taxpayer under the policy in respect of the year, if

(2) The portion of paragraph 20(1)(e.2) of the Act after clause (i)(C) is replaced by the following:

(ii) the net cost of pure insurance in respect of the year (other than in respect of a period after 2013 during which the policy is a 10/8 policy), as determined in accordance with the regulations, in respect of the interest in the policy referred to in clause (i)(A), and

(iii) the portion, of the lesser of the amounts determined under subparagraphs (i) and (ii) in respect of the policy, that can reasonably be considered to relate to the amount owing from time to time during the year by the taxpayer to the institution under the borrowing;

(3) Subsection 20(1) of the Act is amended by striking out “and” at the end of paragraph (vv), by adding “and” at the end of paragraph (ww) and by adding the following after paragraph (ww):

(xx) in respect of a derivative forward agreement of a taxpayer, the amount determined by the formula

A – B

where

A      is the lesser of

(i) the total of all amounts each of which is

(A) if the taxpayer acquires a property under the agreement in the year or a preceding taxation year, the amount by which the cost to the taxpayer of the property exceeds the fair market value of the property at the time it is acquired by the taxpayer, or

(B) if the taxpayer disposes of a property under the agreement in the year or a preceding taxation year, the amount by which the fair market value of the property at the time the agreement is entered into by the taxpayer exceeds the proceeds of disposition (within the meaning assigned by subdivision c) of the property, and

(ii) the amount that is,

(A) if final settlement of the agreement occurs in the year and it cannot reasonably be considered that one of the main reasons for entering into the agreement is to obtain a deduction under this paragraph, the amount determined under subparagraph (i), or

(B) in any other case, the total of all amounts included under paragraph 12(1)(z.7) in computing the taxpayer’s income in respect of the agreement for the year or a preceding taxation year, and

B      is the total of all amounts deducted under this paragraph in respect of the agreement for a preceding taxation year.

(4) Section 20 of the Act is amended by adding the following after subsection (2):

(2.01) For the purposes of paragraphs (1)(c) and (d), interest does not include an amount if

(a) the amount

(i) is paid, after March 20, 2013 in respect of a period after 2013, in respect of a life insurance policy that is, at the time of the payment, a 10/8 policy, and

(ii) is described in paragraph (a) of the definition “10/8 policy” in subsection 248(1); or

(b) the amount

(i) is payable, in respect of a life insurance policy, after March 20, 2013 in respect of a period after 2013 during which the policy is a 10/8 policy, and

(ii) is described in paragraph (a) of the definition “10/8 policy” in subsection 248(1).

(5) Paragraph 20(8)(d) of the English version of the Act is replaced by the following:

(d) the purchaser of the property sold was a partnership in which the taxpayer was, immediately after the sale, a majority-interest partner.

(6) Subsections (1), (2) and (4) apply to taxation years that end after March 20, 2013.

(7) Subsection (3) applies to acquisitions and dispositions of property to which subsection 4(1) applies.

12. Subclause 20.01(2)(b)(i)(A)(II) of the English version of the Act is replaced by the following:

(II) a partnership of which the individual is a majority-interest partner, or

13. Subparagraph 28(1)(a)(ii) of the English version of the Act is replaced by the following:

(ii) were in payment of or on account of an amount that would, if the income from the business were not computed in accordance with the cash method, be included in computing income from the business for that or any other year,

14. (1) The portion of subsection 31(1) of the Act before paragraph (a) is replaced by the following:

31. (1) If a taxpayer’s chief source of income for a taxation year is neither farming nor a combination of farming and some other source of income that is a subordinate source of income for the taxpayer, then for the purposes of sections 3 and 111 the taxpayer’s loss, if any, for the year from all farming businesses carried on by the taxpayer is deemed to be the total of

(2) Subparagraph 31(1)(a)(i) of the Act is replaced by the following:

(i) the amount by which the total of the taxpayer’s losses for the year, determined without reference to this section and before making any deduction under section 37, from all farming businesses carried on by the taxpayer exceeds the total of the taxpayer’s incomes for the year, so determined from all such businesses, and

(3) Clause 31(1)(a)(ii)(B) of the Act is replaced by the following:

(B) $15,000, and

(4) Subparagraph 31(1)(b)(i) of the Act is replaced by the following:

(i) the amount that would be determined under subparagraph (a)(i) if it were read without reference to “and before making any deduction under section 37”,

(5) Subsection 31(2) of the Act is replaced by the following:

(2) Subsection (1) does not apply to a taxpayer for a taxation year if the taxpayer’s chief source of income for the year is a combination of farming and manufacturing or processing in Canada of goods for sale and all or substantially all output from all farming businesses carried on by the taxpayer is used in the manufacturing or processing.

(6) Subsections (1) to (5) apply to taxation years that end after March 20, 2013.

15. Subsections 34.1(4) to (7) of the Act are repealed.

16. (1) Subsection 34.2(4) of the Act is replaced by the following:

(4) If an amount was included in computing the income of a corporation in respect of a partnership for the immediately preceding taxation year under subsection (2) or (3),

(a) the portion of the amount that, because of subparagraph (5)(a)(i) or (ii), was income for that preceding year is deductible in computing the income of the corporation for the current taxation year; and

(b) the portion of the amount that, because of subparagraph (5)(a)(i) or (ii), was taxable capital gains for that preceding year is deemed to be an allowable capital loss of the corporation for the current taxation year from the disposition of property.

(2) Subparagraphs 34.2(5)(a)(i) to (v) of the Act are replaced by the following:

(i) an adjusted stub period accrual included under subsection (2) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for all fiscal periods of the partnership ending in the year,

(ii) an amount included under subsection (3) in respect of a partnership for the year is deemed to be income, and taxable capital gains from the disposition of property, having the same character and to be in the same proportions as any income and taxable capital gains that were allocated by the partnership to the corporation for the particular period referred to in that subsection,

(iii) an amount, a portion of which is deductible or is an allowable capital loss under subsection (4) in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the income and taxable capital gains included in the corporation’s income for the immediately preceding taxation year under subsection (2) or (3) in respect of the partnership,

(iv) an amount claimed as a reserve under subsection (11) in respect of a partnership for the year is deemed to have the same character and to be in the same proportions as the qualifying transitional income in respect of the partnership for the year, and

(v) an amount, a portion of which is included in income under paragraph (12)(a), or is deemed to be a taxable capital gain under paragraph (12)(b), in respect of a partnership for the year, is deemed to have the same character and to be in the same proportions as the amount claimed as a reserve under subsection (11) in respect of the partnership for the immediately preceding taxation year;

(3) Paragraph 34.2(5)(b) of the Act is replaced by the following:

(b) a corporation’s capital dividend account, as defined in subsection 89(1), is to be determined without reference to this section; and

(c) the reference in subparagraph 53(2)(c)(i.4) to an amount deducted under subsection (11) by a taxpayer includes an amount deemed to be an allowable capital loss under subparagraph (11)(b)(ii).

(4) Subsection 34.2(11) of the Act is replaced by the following:

(11) If a corporation has qualifying transitional income in respect of a partnership for a particular taxation year,

(a) the corporation may, in computing its income for the particular year, claim an amount, as a reserve, not exceeding the least of

(i) the specified percentage for the partic- ular year of the corporation’s qualifying transitional income in respect of the partnership,

(ii) if, for the immediately preceding taxation year, an amount was claimed under this subsection in computing the corporation’s income in respect of the partnership, the amount that is the total of

(A) the amount included under subsection (12) in computing the corporation’s income for the particular year in respect of the partnership, and

(B) the amount by which the corporation’s qualifying transitional income in respect of the partnership is increased in the particular year because of the application of subsections (16) and (17), and

(iii) the amount determined by the formula

A – B

where

A      is the corporation’s income for the particular year computed before deducting or claiming any amount under this subsection in respect of the partnership or under section 61.3 and 61.4, and

B      is the total of all amounts each of which is an amount deductible by the corporation for the year under section 112 or 113 in respect of a dividend received by the corporation after December 20, 2012; and

(b) the portion of the amount claimed under paragraph (a) for the particular year that, because of subparagraph (5)(a)(iv), has

(i) a character other than capital is deduct-ible in computing the income of the corporation for the particular year, and

(ii) the character of capital is deemed to be an allowable capital loss of the corporation for the particular year from the disposition of property.

(5) Subsection 34.2(12) of the Act is replaced by the following:

(12) Subject to subsection (5), if a reserve was claimed by a corporation under subsection (11) in respect of a partnership for the immediately preceding taxation year,

(a) the portion of the reserve that was deducted under subparagraph (11)(b)(i) for that preceding year is to be included in computing the income of the corporation for the current taxation year; and

(b) the portion of the reserve that was deemed by subparagraph (11)(b)(ii) to be an allowable capital loss of the corporation for that preceding year is deemed to be a taxable capital gain of the corporation for the current taxation year from the disposition of property.

(6) The portion of subsection 34.2(13) of the Act that is before paragraph (a) is replaced by the following

(13) No claim shall be made under subsection (11) in computing a corporation’s income for a taxation year in respect of a partnership

(7) The portion of subsection 34.2(14) of the Act that is before paragraph (a) is replaced by the following:

(14) A corporation that cannot claim an amount under subsection (11) for a taxation year in respect of a partnership solely because it has disposed of its interest in the partnership is deemed for the purposes of paragraph (13)(a) to be a member of a partnership continuously until the end of the taxation year if

(8) The portion of subsection 34.2(16) of the Act that is before paragraph (a) is replaced by the following:

(16) Subsection (17) applies for a particular taxation year of a corporation and for each subsequent taxation year for which the corporation may claim an amount under subsection (11) in respect of a partnership if the particular year is the first taxation year

(9) The description of C in paragraph 34.2(17)(b) of the Act is replaced by the following:

C      is nil,

(10) Subsections (1) to (9) apply to taxation years that end after March 22, 2011.

17. (1) Section 36 of the Act is repealed.

(2) Subsection (1) applies in respect of expenditures incurred in taxation years that begin after December 21, 2012.

18. (1) Paragraph 37(1)(h) of the Act is replaced by the following:

(h) if the taxpayer was subject to a loss restriction event before the end of the year, the amount determined for the year under subsection (6.1) with respect to the taxpayer.

(2) The portion of subsection 37(6.1) of the Act before paragraph (a) is replaced by the following:

(6.1) If a taxpayer was, at any time (in this subsection referred to as “that time”) before the end of a taxation year of the taxpayer, last subject to a loss restriction event, the amount determined for the purposes of paragraph (1)(h) for the year with respect to the taxpayer in respect of a business is the amount, if any, by which

(3) Clauses 37(6.1)(a)(i)(A) to (C) of the Act are replaced by the following:

(A) an expenditure described in paragraph (1)(a) or (c) that was made by the taxpayer before that time,

(B) the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)(b)(i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before 2014, or

(C) an amount determined in respect of the taxpayer under paragraph (1)(c.1) for its taxation year that ended immediately before that time

(4) Subparagraphs 37(6.1)(a)(ii) and (iii) of the Act are replaced by the following:

(ii) the total of all amounts determined in respect of the taxpayer under paragraphs (1)(d) to (g) for its taxation year that ended immediately before that time, or

(iii) the amount deducted under subsection (1) in computing the taxpayer’s income for its taxation year that ended immediately before that time

(5) Subparagraphs 37(6.1)(b)(i) and (ii) of the Act are replaced by the following:

(i) if the business to which the amounts described in any of clauses (a)(i)(A) to (C) can reasonably be considered to have been related was carried on by the taxpayer for profit or with a reasonable expectation of profit throughout the year, the total of

(A) the taxpayer’s income for the year from the business before making any deduction under subsection (1), and

(B) if properties were sold, leased, rented or developed, or services were rendered, in the course of carrying on the business before that time, the taxpayer’s income for the year, before making any deduction under subsection (1), from any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services, and

(ii) the total of all amounts each of which is an amount determined in respect of a preceding taxation year of the taxpayer that ended after that time equal to the lesser of

(A) the amount determined under subparagraph (i) with respect to the taxpayer in respect of the business for that preceding year, and

(B) the amount in respect of the business deducted under subsection (1) in computing the taxpayer’s income for that preceding year.

(6) The portion of paragraph 37(9.5)(b) of the English version of the Act before subparagraph (i) is replaced by the following:

(b) partnership of which a majority-interest partner is

(7) Subsections (1) to (5) are deemed to have come into force on March 21, 2013, except that, before January 1, 2014, clause 37(6.1)(a)(i)(B) of the Act, as enacted by subsection (3), is to be read as follows:

(B) the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)(b)(i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before that time, or

19. (1) Subparagraph 40(2)(a)(iii) of the English version of the Act is replaced by the following:

(iii) the purchaser of the property sold is a partnership in which the taxpayer was, immediately after the sale, a majority-interest partner;

(2) Subparagraph 40(3.4)(b)(iii) of the Act is replaced by the following:

(iii) that is immediately before the transferor is subject to a loss restriction event,

(3) Subsections 40(10) and (11) of the Act are replaced by the following:

(10) Subsection (11) applies in computing at any particular time a taxpayer’s gain or loss (in this subsection and subsection (11) referred to as the “new gain” or “new loss”, as the case may be), in respect of any part (which in this subsection and subsection (11) is referred to as the “relevant part” and which may for greater certainty be the whole) of a foreign currency debt of the taxpayer, arising from a fluctuation in the value of the currency of the foreign currency debt (other than, for greater certainty, a gain or a capital loss that arises because of the application of subsection 111(12)), if at any time before the particular time the taxpayer realized a capital loss or gain in respect of the foreign currency debt because of subsection 111(12).

(11) If this subsection applies, the new gain is the positive amount, or the new loss is the negative amount, as the case may be, determined by the formula

A + B – C

where

A      is

(a) if the taxpayer would, but for any application of subsection 111(12), recognize a new gain, the amount of the new gain, determined without reference to this subsection, or

(b) if the taxpayer would, but for any application of subsection 111(12), recognize a new loss, the amount of the new loss, determined without reference to this subsection, multiplied by (–1);

B      is the total of all amounts each of which is that portion of the amount of a capital loss realized by the taxpayer at any time before the particular time, in respect of the foreign currency debt and because of subsection 111(12), that is reasonably attributable to

(a) the relevant part of the foreign currency debt at the particular time, or

(b) the forgiven amount, if any, (as defined in subsection 80(1)) in respect of the foreign currency debt at the particular time; and

C      is the total of all amounts each of which is that portion of the amount of a gain realized by the taxpayer at any time before the particular time, in respect of the foreign currency debt and because of subsection 111(12), that is reasonably attributable to

(a) the relevant part of the foreign currency debt at the particular time, or

(b) the forgiven amount, if any, (as defined in subsection 80(1)) in respect of the foreign currency debt at the particular time.

(4) Subsections (2) and (3) are deemed to have come into force on March 21, 2013.

20. Paragraph 44(7)(c) of the English version of the Act is replaced by the following:

(c) the former property of the taxpayer was disposed of to a partnership in which the taxpayer was, immediately after the disposition, a majority-interest partner.

21. (1) Subparagraph 50(1)(b)(i) of the Act is replaced by the following:

(i) the corporation has during the year become a bankrupt,

(2) Subsection (1) is deemed to have come into force on December 21, 2012.

22. (1) Clause 53(1)(e)(i)(A) of the Act is replaced by the following:

(A) paragraphs 38(a.1) to (a.3) and the fractions set out in the formula in paragraph 14(1)(b) and in subsection 14(5), paragraph 38(a) and subsection 41(1),

(2) The portion of paragraph 53(1)(r) of the Act before the formula is replaced by the following:

(r) if the time is before 2005, the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs (a) to (f) and (h) of the definition “flow-through entity” in subsection 39.1(1) and immediately after that time the taxpayer disposed of all their interests in, and shares of the capital stock of, the entity, the amount determined by the formula

(3) Subsection 53(1) of the Act is amended by striking out “and” at the end of paragraph (q) and by adding the following after paragraph (r):

(s) if the property was acquired under a derivative forward agreement, any amount required to be included in respect of the property under subparagraph 12(1)(z.7)(i) in computing the income of the taxpayer for a taxation year; and

(t) if the property is disposed of under a derivative forward agreement, any amount required to be included in respect of the property under subparagraph 12(1)(z.7)(ii) in computing the income of the taxpayer for the taxation year that includes that time.

(4) Section 53 of the Act is amended by adding the following after subsection (1.1):

(1.2) For the purposes of paragraph (1)(r), if the fair market value of all of a taxpayer’s interests in, and shares of the capital stock of, a flow-through entity is nil when the taxpayer disposes of those interests and shares, the fair market value of each such interest or share at that time is deemed to be $1.

(5) Paragraph 53(2)(b.2) of the Act is replaced by the following:

(b.2) if the property is property of a taxpayer that was subject to a loss restriction event at or before that time, any amount required by paragraph 111(4)(c) to be deducted in computing the adjusted cost base of the property;

(6) Subsection 53(2) of the Act is amended by striking out “and” at the end of paragraph (u) and by adding the following after paragraph (v):

(w) if the property was acquired under a derivative forward agreement, any amount deductible in respect of the property under paragraph 20(1)(xx) in computing the income of the taxpayer for a taxation year; and

(x) if the property is disposed of under a derivative forward agreement, any amount deductible in respect of the property under paragraph 20(1)(xx) in computing the income of the taxpayer for the taxation year that includes that time.

(7) Subsection (1) applies in respect of gifts made after February 25, 2008.

(8) Subsections (2) and (4) apply to dispositions that occur after 2001.

(9) Subsections (3), (5) and (6) are deemed to have come into force on March 21, 2013.

23. (1) Paragraph (c) of the definition “superficial loss” in section 54 of the Act is replaced by the following:

(c) a disposition deemed to have been made by subsection 45(1), section 48 as it read in its application before 1993, section 50 or 70, subsection 104(4), section 128.1, paragraph 132.2(3)(a) or (c), subsection 138(11.3) or 142.5(2), section 142.6 or any of subsections 144(4.1) and (4.2) and 149(10),

(2) Paragraph (f) of the definition “superficial loss” in section 54 of the Act is replaced by the following:

(f) a disposition by a taxpayer that was subject to a loss restriction event within 30 days after the disposition,

(3) Subsection (1) applies to taxation years that begin after March 20, 2013.

(4) Subsection (2) is deemed to have come into force on March 21, 2013.

24. (1) Clause 55(3)(a)(iii)(B) of the Act is replaced by the following:

(B) property (other than shares of the capital stock of the dividend recipient) more than 10% of the fair market value of which was, at any time during the series, derived from any combination of shares of the capital stock and debt of the dividend payer,

(2) Clause 55(3)(a)(iv)(B) of the Act is replaced by the following:

(B) property more than 10% of the fair market value of which was, at any time during the series, derived from any combination of shares of the capital stock and debt of the dividend recipient, and

(3) Subsection 55(3.01) of the Act is amended by striking out “and” at the end of paragraph (d) and by adding the following after paragraph (e):

(f) a significant increase in the total direct interest in a corporation that would, but for this paragraph, be described in subparagraph (3)(a)(ii) is deemed not to be described in that subparagraph if the increase was the result of the issuance of shares of the capital stock of the corporation solely for money and the shares were redeemed, acquired or cancelled by the corporation before the dividend was received;

(g) a disposition of property that would, but for this paragraph, be described in subparagraph (3)(a)(i), or a significant increase in the total direct interest in a corporation that would, but for this paragraph, be described in subparagraph (3)(a)(ii), is deemed not to be described in those subparagraphs if

(i) the dividend payer was related to the dividend recipient immediately before the dividend was received,

(ii) the dividend payer did not, as part of the series of transactions or events that includes the receipt of the dividend, cease to be related to the dividend recipient,

(iii) the disposition or increase occurred before the dividend was received,

(iv) the disposition or increase was the result of the disposition of shares to, or the acquisition of shares of, a particular corporation, and

(v) at the time the dividend was received, all the shares of the capital stock of the dividend recipient and the dividend payer were owned by the particular corporation, a corporation that controlled the particular corporation, a corporation controlled by the particular corporation or any combination of those corporations; and

(h) a winding-up of a subsidiary wholly-owned corporation to which subsection 88(1) applies, or an amalgamation to which subsection 87(11) applies of a corporation with one or more subsidiary wholly-owned corporations, is deemed not to result in a significant increase in the total direct interest, or in the total of all direct interests, in the subsidiary or subsidiaries, as the case may be.

(4) The portion of paragraph 55(3.1)(a) of the Act before subparagraph (i) is replaced by the following:

(a) in contemplation of and before a distribution (other than a distribution by a specified corporation) made in the course of the reorganization in which the dividend was received, property became property of the distributing corporation, a corporation controlled by it or a predecessor corporation of any such corporation otherwise than as a result of

(5) Clause 55(3.1)(c)(i)(A) of the Act is replaced by the following:

(A) as a result of a disposition

(I) in the ordinary course of business, or

(II) before the distribution for consideration that consists solely of money or indebtedness that is not convertible into other property, or of any combination of the two,

(6) Clause 55(3.1)(d)(i)(A) of the Act is replaced by the following:

(A) as a result of a disposition

(I) in the ordinary course of business, or

(II) before the distribution for consideration that consists solely of money or indebtedness that is not convertible into other property, or of any combination of the two,

(7) Subsections (1) and (2) apply in respect of dividends received after December 20, 2012.

(8) Subsections (3) to (6) apply in respect of dividends received after 2003.

25. (1) Subparagraph 56(1)(a)(i) of the Act is amended by striking out “and” at the end of clause (E), by adding “and” at the end of clause (F) and by adding the following after clause (F):

(G) an amount received out of or under a registered pension plan as a return of all or a portion of a contribution to the plan to the extent that the amount

(I) is a payment made to the taxpayer under subsection 147.1(19) or subparagraph 8502(d)(iii) of the Income Tax Regulations, and

(II) is not deducted in computing the taxpayer’s income for the year or a preceding taxation year,

(2) Subsection 56(8) of the French version of the Act is replaced by the following:

(3) Paragraph 56(8)(a) of the English version of the Act is replaced by the following:

(a) one or more amounts

(i) are received by an individual (other than a trust) in a taxation year as, on account of, in lieu of payment of or in satisfaction of, any benefit under the Canada Pension Plan or a provincial pension plan as defined in section 3 of that Act, or

(ii) would be, but for this subsection, included in computing the income of an individual for a taxation year under subsection (6), and

(4) Subsection (1) applies to contributions made on or after the later of January 1, 2014 and the day on which this Act receives royal assent.

(5) Subsections (2) and (3) apply to the 2006 and subsequent taxation years.

26. (1) Subparagraph 60(q)(i) of the Act is replaced by the following:

(i) the amount has been included in computing the income of the taxpayer for the year or a preceding taxation year as an amount described in subparagraph 56(1)(n)(i) or paragraph 56(1)(o) paid to the taxpayer by the payer,

(2) Subsection (1) is deemed to have come into force on March 1, 1994.

27. (1) Section 60.001 of the Act is repealed.

(2) Subsection (1) applies to orders made after the day on which this Act receives royal assent.

28. The portion of subsection 60.1(1) of the French version of the Act before paragraph (a) is replaced by the following:

29. Section 60.11 of the Act is repealed.

30. (1) Subsections 66(11.4) and (11.5) of the Act are replaced by the following:

(11.4) If

(a) at any time a taxpayer is subject to a loss restriction event,

(b) within the 12-month period that ended immediately before that time, the taxpayer, a partnership of which the taxpayer was a majority-interest partner or a trust of which the taxpayer was a majority-interest beneficiary (as defined in subsection 251.1(3)) acquired a Canadian resource property or a foreign resource property (other than a property that was held, by the taxpayer, partnership or trust or by a person that would be affiliated with the taxpayer if section 251.1 were read without reference to the definition “controlled” in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer, partnership or trust), and

(c) immediately before the 12-month period began the taxpayer, partnership or trust was not, or would not be if it were a corporation, a principal-business corporation,

for the purposes of subsection (4) and sections 66.2, 66.21 and 66.4, except as those provisions apply for the purposes of section 66.7, the property is deemed not to have been acquired by the taxpayer, partnership or trust, as the case may be, before that time, except that if the property has been disposed of by it before that time and not reacquired by it before that time, the property is deemed to have been acquired by the taxpayer, partnership or trust, as the case may be, immediately before it disposed of the property.

(11.5) For the purposes of subsection (11.4), if the taxpayer referred to in that subsection was formed or created in the 12-month period referred to in that subsection, the taxpayer is deemed to have been, throughout the period that began immediately before the 12-month period and ended immediately after it was formed or created,

(a) in existence; and

(b) affiliated with every person with whom it was affiliated (otherwise than because of a right referred to in paragraph 251(5)(b)) throughout the period that began when it was formed or created and that ended immediately before the time at which the taxpayer was subject to the loss restriction event referred to in that subsection.

(11.6) If at any time a trust is subject to a loss restriction event,

(a) for the purposes of the provisions of this Act relating to deductions in respect of drilling and exploration expenses, prospecting, exploration and development expenses, Canadian exploration and development expenses, foreign resource pool expenses, Canadian exploration expenses, Canadian development expenses and Canadian oil and gas property expenses (in this subsection referred to as “resource expenses”) incurred by the trust before that time, the following rules apply:

(i) the trust is (other than for purposes of this subsection and subsections (11.4), (11.5) and 66.7(10) to (11)) deemed to be a corporation that

(A) after that time is a successor (within the meaning assigned by any of subsections 66.7(1), (2) and (2.3) to (5)), and

(B) at that time, acquired all the properties held by the trust immediately before that time from an original owner of those properties,

(ii) if the trust did not hold a foreign resource property immediately before that time, the trust is deemed to have owned a foreign resource property immediately before that time,

(iii) a joint election is deemed to have been filed in accordance with subsections 66.7(7) and (8) in respect of the acquisition described in clause (i)(B),

(iv) the resource expenses incurred by the trust before that time are deemed to have been incurred by an original owner of the properties and not by the trust,

(v) the original owner is deemed to have been resident in Canada at every time before that time at which the trust was resident in Canada,

(vi) if at that time the trust is a member of a partnership and the property of the partnership includes a Canadian resource property or a foreign resource property,

(A) for the purposes of clause (i)(B), the trust is deemed to have held immediately before that time that portion of the partnership’s property at that time that is equal to the trust’s percentage share of the total of amounts that would be paid to all members of the partnership if it were wound up at that time, and

(B) for the purposes of clauses 66.7(1)(b)(i)(C) and (2)(b)(i)(B), subparagraph 66.7(2.3)(b)(i) and clauses 66.7(3)(b)(i)(C), (4)(b)(i)(B) and (5)(b)(i)(B) for a taxation year that ends after that time, the lesser of the following amounts is deemed to be income of the trust for the year that can reasonably be regarded as attributable to production from the property:

(I) the trust’s share of the part of the income of the partnership for the fiscal period of the partnership that ends in the year that can reasonably be regarded as attributable to the production from the property, and

(II) an amount that would be determined under subclause (I) for the year if the trust’s share of the income of the partnership for the fiscal period of the partnership that ends in the year were determined on the basis of the percentage share referred to in clause (A), and

(vii) if after that time the trust disposes of property that was at that time held by the trust to another person, subsections 66.7(1) to (5) do not apply in respect of the acquisition by the other person of the property; and

(b) if before that time, the trust or a partnership of which the trust was a member acquired a property that is a Canadian resource property, a foreign resource property or an interest in a partnership and it can reasonably be considered that one of the main purposes of the acquisition is to avoid any limitation provided in any of subsections 66.7(1) to (5) on the deduction in respect of any expenses incurred by the trust, then the trust or the partnership, as the case may be, is deemed, for the purposes of applying those subsections to or in respect of the trust, not to have acquired the property.

(2) Subparagraph 66(12.66)(b)(ii) of the Act is replaced by the following:

(ii) would be described in paragraph (h) of the definition “Canadian exploration expense” in subsection 66.1(6) if the reference to “paragraphs (a) to (d) and (f) to (g.4)” in that paragraph were read as “paragraphs (a), (d), (f) and (g.1)”, or

(3) Subsection (1) is deemed to have come into force on March 21, 2013, except that subsection 66(11.4) of the Act, as enacted by subsection (1), is to be read as follows before September 13, 2013:

(11.4) If

(a) at any time a taxpayer is subject to a loss restriction event,

(b) within the 12-month period that ended immediately before that time, the taxpayer or a partnership of which the taxpayer was a majority-interest partner acquired a Canadian resource property or a foreign resource property (other than a property that was held, by the taxpayer or partnership or by a person that would be affiliated with the taxpayer if section 251.1 were read without reference to the definition “controlled” in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer or partnership), and

(c) immediately before the 12-month period began the taxpayer or partnership was not, or would not be if it were a corporation, a principal-business corporation,

for the purposes of subsection (4) and sections 66.2, 66.21 and 66.4, except as those provisions apply for the purposes of section 66.7, the property is deemed not to have been acquired by the taxpayer or partnership, as the case may be, before that time, except that if the property has been disposed of by it before that time and not reacquired by it before that time, the property is deemed to have been acquired by the taxpayer or partnership, as the case may be, immediately before it disposed of the property.

(4) Subsection (2) is deemed to have come into force on March 22, 2011, except that before March 21, 2013 subparagraph 66(12.66)(b)(ii) of the Act, as enacted by subsection (2), is to be read as follows:

(ii) would be described in paragraph (h) of the definition “Canadian exploration expense” in subsection 66.1(6) if the reference to “paragraphs (a) to (d) and (f) to (g.2)” in that paragraph were read as “paragraphs (a), (d), (f) and (g.1)”, or

31. (1) The definition “Canadian renewable and conservation expense” in subsection 66.1(6) of the Act is replaced by the following:

“Canadian renewable and conservation expense” has the meaning assigned by regulation, and for the purpose of determining whether an outlay or expense in respect of a prescribed energy conservation property is a Canadian renewable and conservation expense, the Technical Guide to Canadian Renewable and Conservation Expenses (CRCE), as amended from time to time and published by the Department of Natural Resources, shall apply conclusively with respect to engineering and scientific matters;

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

(g) any expense incurred by the taxpayer after November 16, 1978 and before March 21, 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities and incurred before the new mine comes into production in such quantities, including an expense for clearing, removing overburden, stripping, sinking a mine shaft or constructing an adit or other underground entry, but not including any expense that results in revenue or can reasonably be expected to result in reve-nue earned before the new mine comes into production in reasonable commercial quantities, except to the extent that the total of all such expenses exceeds the total of those revenues,

(3) The definition “Canadian exploration expense” in subsection 66.1(6) of the Act is amended by adding the following after paragraph (g.2):

(g.3) any expense incurred by the taxpayer that would be described in paragraph (g) if the reference to “March 21, 2013” in that paragraph were “2017” and that is incurred

(i) under an agreement in writing entered into by the taxpayer before March 21, 2013, or

(ii) as part of the development of a new mine, if

(A) the construction of the new mine was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose construction does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities), or

(B) the engineering and design work for the construction of the new mine, as evidenced in writing, was started by, or on behalf of, the taxpayer before March 21, 2013 (and for this purpose engineering and design work does not include obtaining permits or regulatory approvals, conducting environmental assessments, community consultations or impact benefit studies, and similar activities),

(g.4) any expense incurred by the taxpayer, the amount of which is determined by the formula

A × B

where

A      is an expense that would be described in paragraph (g) if the reference to “March 21, 2013” in that paragraph were “2018” and that is not described in paragraph (g.3), and

B      is

(i) 100% if the expense is incurred before 2015,

(ii) 80% if the expense is incurred in 2015,

(iii) 60% if the expense is incurred in 2016, and

(iv) 30% if the expense is incurred in 2017,

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

(h) subject to section 66.8, the taxpayer’s share of any expense referred to in any of paragraphs (a) to (d) and (f) to (g.4) incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership, or

(5) The description of A in the definition “eligible oil sands mine development expense” in subsection 66.1(6) of the Act is replaced by the following:

A      is an expense that would be a Canadian exploration expense of the taxpayer described in paragraph (g) of the definition “Canadian exploration expense” if that paragraph were read without reference to “and before March 21, 2013” and “other than a bituminous sands deposit or an oil shale deposit”, but does not include an expense that is a specified oil sands mine development expense, and

(6) Paragraph (a) of the definition “specified oil sands mine development expense” in subsection 66.1(6) of the Act is replaced by the following:

(a) would be a Canadian exploration expense described in paragraph (g) of the definition “Canadian exploration expense” if that paragraph were read without reference to “and before March 21, 2013” and “other than a bituminous sands deposit or an oil shale deposit”,

(7) Subsection (1) is deemed to have come into force on December 21, 2012.

(8) Subsections (2), (3), (5) and (6) are deemed to have come into force on March 21, 2013.

(9) Subsection (4) is deemed to have come into force on March 22, 2011, except that before March 21, 2013 paragraph (h) of the definition “Canadian exploration expense” in subsection 66.1(6) of the Act, as enacted by subsection (4), is to be read as follows:

(h) subject to section 66.8, the taxpayer’s share of any expense referred to in any of paragraphs (a) to (d) and (f) to (g.2) incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership, or

32. (1) The definition “Canadian development expense” in subsection 66.2(5) of the Act is amended by adding the following after paragraph (c.1):

(c.2) any expense, or portion of any expense, that is not a Canadian exploration expense, incurred by the taxpayer after March 20, 2013 for the purpose of bringing a new mine in a mineral resource in Canada, other than a bituminous sands deposit or an oil shale deposit, into production in reasonable commercial quantities and incurred before the new mine comes into production in such quantities, including an expense for clearing, removing overburden, stripping, sinking a mine shaft or constructing an adit or other underground entry,

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

33. (1) Subparagraph 67.1(2)(e)(iii) of the Act is replaced by the following:

(iii) is paid or payable in respect of the taxpayer’s duties performed at a work site in Canada that is

(A) outside any population centre, as defined by the last Census Dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Can-ada before the year, and

(B) at least 30 kilometres from the nearest point on the boundary of the nearest such population centre;

(2) Subsection (1) applies to the 2013 and subsequent taxation years.

34. (1) Section 70 of the Act is amended by adding the following after subsection (5.3):

(5.31) For the purposes of subsections (5) and 104(4), the fair market value at any time of any property deemed to have been disposed of at that time as a consequence of a particular individual’s death is to be determined as though the fair market value at that time of any annuity contract were the total of all amounts each of which is the amount of a premium paid on or before that time under the contract if

(a) the contract is, in respect of an LIA policy, a contract referred to in subparagraph (b)(ii) of the definition “LIA policy” in subsection 248(1); and

(b) the particular individual is the individual, in respect of the LIA policy, referred to in that subparagraph.

(2) Subsection (1) applies to taxation years that end after March 20, 2013.

35. (1) The portion of subsection 75(2) of the Act before paragraph (a) is replaced by the following:

(2) If a trust, that is resident in Canada and that was created in any manner whatever since 1934, holds property on condition

(2) Paragraphs 75(3)(c) to (c.3) of the Act are replaced by the following:

(c) by a qualifying environmental trust; or

(3) Subsections (1) and (2) apply to taxation years that end after March 20, 2013.

36. (1) The definition “relevant loss balance” in subsection 80(1) of the Act is replaced by the following:

“relevant loss balance”, at a particular time for a commercial obligation and in respect of a debtor’s non-capital loss, farm loss, restricted farm loss or net capital loss, as the case may be, for a particular taxation year, is

(a) subject to paragraph (b), the amount of such loss that would be deductible in computing the debtor’s taxable income or taxable income earned in Canada, as the case may be, for the taxation year that includes that time if

(i) the debtor had sufficient incomes from all sources and sufficient taxable capital gains,

(ii) subsections (3) and (4) did not apply to reduce such loss at or after that time, and

(iii) paragraph 111(4)(a) and subsection 111(5) did not apply to the debtor, and

(b) nil if the debtor is a taxpayer that was at a previous time subject to a loss restriction event and the particular year ended before the previous time, unless

(i) the obligation was issued by the debtor before, and not in contemplation of, the loss restriction event, or

(ii) all or substantially all of the proceeds from the issue of the obligation were used to satisfy the principal amount of another obligation to which subparagraph (i) or this subparagraph would apply if the other obligation were still outstanding;

(2) The portion of the definition “unrecognized loss” in subsection 80(1) of the Act before paragraph (b) is replaced by the following:

“unrecognized loss”, at a particular time, in respect of an obligation issued by a debtor, from the disposition of a property, is the amount that would, but for subparagraph 40(2)(g)(ii), be a capital loss from the disposition by the debtor at or before the particular time of a debt or other right to receive an amount, except that if the debtor is a taxpayer that is subject to a loss restriction event before the particular time and after the time of the disposition, the unrecognized loss at the particular time in respect of the obligation is nil unless

(a) the obligation was issued by the debtor before, and not in contemplation of, the loss restriction event, or

(3) Subparagraph 80(15)(c)(iv) of the Act is replaced by the following:

(iv) if the member is a taxpayer that was subject to a loss restriction event at a particular time that is before the end of that fiscal period and before the taxpayer became a member of the partnership, and the partnership obligation was issued before the particular time,

(A) subject to the application of this subparagraph to the taxpayer after the particular time and before the end of that fiscal period, the obligation referred to in subparagraph (i) is deemed to have been issued by the member after the particular time, and

(B) subparagraph (b)(ii) of the definition “relevant loss balance” in subsection (1), paragraph (f) of the definition “successor pool” in that subsection and paragraph (b) of the definition “unrecognized loss” in that subsection do not apply in respect of the loss restriction event, and

(4) Subsections (1) to (3) are deemed to have come into force on March 21, 2013.

37. (1) Paragraph 80.04(4)(h) of the Act is replaced by the following:

(h) if the transferee is a taxpayer that is subject to a loss restriction event after the time of issue and the transferee and the debtor were, if the transferee is a corporation, not related to each other — or, if the transferee is a trust, not affiliated with each other — immediately before the loss restriction event,

(i) the obligation referred to in paragraph (e) is deemed to have been issued after the loss restriction event, and

(ii) subparagraph (b)(ii) of the definition “relevant loss balance” in subsection 80(1), paragraph (f) of the definition “successor pool” in that subsection and paragraph (b) of the definition “unrecognized loss” in that subsection do not apply in respect of the loss restriction event,

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

38. (1) The Act is amended by adding the following after section 80.5:

80.6 (1) If a synthetic disposition arrangement is entered into in respect of a property owned by a taxpayer and the synthetic disposition period of the arrangement is one year or more, the taxpayer is deemed

(a) to have disposed of the property immediately before the beginning of the synthetic disposition period for proceeds equal to its fair market value at the beginning of the synthetic disposition period; and

(b) to have reacquired the property at the beginning of the synthetic disposition period at a cost equal to that fair market value.

(2) Subsection (1) does not apply in respect of a property owned by a taxpayer if

(a) the disposition referred to in subsection (1) would not result in the realization of a capital gain or income;

(b) the property is a mark-to-market property (as defined in subsection 142.2(1)) of the taxpayer;

(c) the synthetic disposition arrangement referred to in subsection (1) is a lease of tangible property or, for civil law, corporeal property;

(d) the arrangement is an exchange of property to which subsection 51(1) applies; or

(e) the property is disposed of as part of the arrangement, within one year after the day on which the synthetic disposition period of the arrangement begins.

(2) Subsection (1) applies to agreements and arrangements entered into after March 20, 2013. Subsection (1) also applies to an agreement or arrangement entered into before March 21, 2013, the term of which is extended after March 20, 2013, as if the agreement or arrangement were entered into at the time of the extension.

39. (1) Paragraph 87(2)(g.1) of the Act is replaced by the following:

(g.1) for the purposes of sections 12.4 and 26, subsection 97(3) and section 256.1, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

(2) Paragraph 87(2)(oo.1) of the Act is amended by striking out “and” at the end of subparagraph (ii), by adding “and” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(iv) a qualifying income limit for the particular year equal to the total of all amounts each of which is a predecessor corporation’s qualifying income limit for its taxation year that ended immediately before the amalgamation;

(3) Subsection (1) is deemed to have come into force on March 21, 2013.

(4) Subsection (2) applies to amalgamations that occur after February 25, 2008.

40. (1) Subparagraph 88(1)(c.2)(i) of the Act is replaced by the following:

(i) “specified person”, at any time, means

(A) the parent,

(B) each person who would be related to the parent at that time if

(I) this Act were read without reference to paragraph 251(5)(b), and

(II) each person who is the child of a deceased individual were related to each brother or sister of the individual and to each child of a deceased brother or sister of the individual, and

(C) if the time is before the incorporation of the parent, each person who is described in clause (B) throughout the period that begins at the time the parent is incorporated and ends at the time that is immediately before the beginning of the winding-up,

(i.1) a person described in clause (i)(B) or (C) is deemed not to be a specified person if it can reasonably be considered that one of the main purposes of one or more transactions or events is to cause the person to be a specified person so as to prevent a property that is distributed to the parent on the winding-up from being an ineligible property for the purposes of paragraph (c),

(2) Subparagraph 88(1)(c.2)(iii) of the Act is amended by striking out “and” at the end of clause (A) and by adding the following after clause (A):

(A.1) a corporation controlled by another corporation is, at any time, deemed not to own any shares of the capital stock of the other corporation if, at that time, the corporation does not have a direct or an indirect interest in any of the shares of the capital stock of the other corporation,

(A.2) the definition “specified shareholder” in subsection 248(1) is to be read without reference to its paragraph (a) in respect of any share of the capital stock of the subsidiary that the person would, but for this clause, be deemed to own solely because the person has a right described in paragraph 251(5)(b) to acquire shares of the capital stock of a corporation that

(I) is controlled by the subsidiary, and

(II) does not have a direct or an indirect interest in any of the shares of the capital stock of the subsidiary, and

(3) Paragraph 88(1)(c.2) of the Act is amended by striking out “and” at the end of subparagraph (ii), by adding “and” at the end of subparagraph (iii) and by adding the following after subparagraph (iii):

(iv) property that is distributed to the parent on the winding-up is deemed not to be acquired by a person if the person acquired the property before the acquisition of control referred to in clause (c)(vi)(A) and the property is not owned by the person at any time after that acquisition of control;

(4) Subparagraph 88(1)(c.3)(i) of the Act is replaced by the following:

(i) property (other than a specified property) owned by the person at any time after the acquisition of control referred to in clause (c)(vi)(A) more than 10% of the fair market value of which is, at that time, attributable to the particular property or properties, and

(5) Subparagraph 88(1)(c.4)(ii) of the Act is replaced by the following:

(ii) an indebtedness that was issued

(A) by the parent as consideration for the acquisition of a share of the capital stock of the subsidiary by the parent, or

(B) for consideration that consists sole- ly of money,

(6) Subparagraphs 88(1)(c.4)(v) and (vi) of the Act are replaced by the following:

(v) if the subsidiary was formed on the amalgamation of two or more predecessor corporations at least one of which was a subsidiary wholly-owned corporation of the parent,

(A) a share of the capital stock of the subsidiary that was issued on the amalgamation and that is, before the beginning of the winding-up,

(I) redeemed, acquired or cancelled by the subsidiary for consideration that consists solely of money or shares of the capital stock of the parent, or of any combination of the two, or

(II) exchanged for shares of the capital stock of the parent, or

(B) a share of the capital stock of the parent issued on the amalgamation in exchange for a share of the capital stock of a predecessor corporation, and

(vi) a share of the capital stock of a corporation issued to a person described in clause (c)(vi)(B) if all the shares of the capital stock of the subsidiary were acquired by the parent for consideration that consists solely of money;

(7) Paragraph 88(1)(c.4) of the Act, as amended by subsection (6), is amended by adding “and” at the end of subparagraph (iv), by striking out “and” at the end of subparagraph (v) and by repealing subparagraph (vi).

(8) Subsection 88(1) of the Act is amended by adding the following after paragraph (c.8):

(c.9) for the purposes of paragraph (c.4), a reference to a share of the capital stock of a corporation includes a right to acquire a share of the capital stock of the corporation;

(9) Subparagraph 88(1)(d)(ii) of the Act is replaced by the following:

(ii) the amount designated in respect of any such capital property may not exceed the amount determined by the formula

A – (B + C)

where

A      is the fair market value of the property at the time the parent last acquired control of the subsidiary,

B      is the greater of the cost amount to the subsidiary of the property at the time the parent last acquired control of the subsidiary and the cost amount to the subsidiary of the property immediately before the winding-up, and

C      is the prescribed amount, and

(10) Subparagraph 88(1)(e.9)(i) of the Act is amended by striking out “and” at the end of clause (A), by adding “and” at the end of clause (B) and by adding the following after clause (B):

(C) the parent’s qualifying income limit for that last year is deemed to be the total of

(I) its qualifying income limit (determined before applying this paragraph to the winding-up) for that last year, and

(II) the total of the subsidiary’s qual- ifying income limits (determined without reference to subparagraph (iii)) for its taxation years that ended in that preceding calendar year,

(11) Subparagraph 88(1)(e.9)(ii) of the Act is amended by striking out “and” at the end of clause (A), by adding “and” at the end of clause (B) and by adding the following after clause (B):

(C) the parent’s qualifying income limit for that preceding taxation year is deemed to be the total of

(I) its qualifying income limit (determined before applying this paragraph to the winding-up) for that preceding taxation year, and

(II) the total of the subsidiary’s qual- ifying income limits (determined without reference to subparagraph (iii)) for the subsidiary’s taxation years that end in the calendar year in which that preceding taxation year ended, and

(12) Subparagraph 88(1)(e.9)(iii) of the Act is replaced by the following:

(iii) where the parent and the subsidiary are associated with each other in the current year, the subsidiary’s taxable income, the subsidiary’s business limit and the subsidiary’s qualifying income limit for each taxation year that ends after the first time that the parent receives an asset of the subsidiary on the winding-up are deemed to be nil;

(13) Subsections (1) to (3), (5), (6) and (8) apply to windings-up that begin, and amalgamations that occur, after 2001.

(14) Subsection (4) applies to windings-up that begin, and amalgamations that occur, after December 20, 2012.

(15) Subsections (7) and (9) apply to windings-up that begin, and amalgamations that occur, after December 20, 2012 other than — if a taxable Canadian corporation (in this subsection referred to as the “parent corporation”) has acquired control of another taxable Canadian corporation (in this subsection referred to as the “subsidiary corporation”) — an amalgamation of the parent corporation and the subsidiary corporation that occurs, or a winding-up of the subsidiary corporation into the parent corporation that begins, before July 2013 if

(a) the parent corporation acquired control of the subsidiary corporation before December 21, 2012, or was obligated as evidenced in writing before December 21, 2012 to acquire control of the subsidiary corporation (except that the parent corporation shall not be considered to be obligated if, as a result of amendments to the Act, it may be excused from the obligation to acquire control); and

(b) the parent corporation had the intention as evidenced in writing before December 21, 2012 to amalgamate with, or wind up, the subsidiary corporation.

(16) Subsections (10) to (12) apply to windings-up that begin after February 25, 2008.

41. (1) The portion of paragraph (d) of the definition “capital dividend account” in subsection 89(1) of the Act after subparagraph (i) is replaced by the following:

(ii) all amounts each of which is the proceeds of a life insurance policy (other than an LIA policy) of which the corporation was not a beneficiary on or before June 28, 1982 received by the corporation in the period and after May 23, 1985 in consequence of the death of any person

exceeds the total of all amounts each of which is

(iii) the adjusted cost basis (within the meaning assigned by subsection 148(9)) of a policy referred to in subparagraph (i) or (ii) to the corporation immediately before the death, or

(iv) if the policy is a 10/8 policy immediately before the death and the death occurs after 2013, the amount outstanding, immediately before the death, of the borrowing that is described in subparagraph (a)(i) of the definition “10/8 policy” in subsection 248(1) in respect of the policy,

(2) Subsection (1) applies to taxation years that end after March 20, 2013.

42. (1) Subparagraph (b)(vi) of the definition “arm’s length transfer” in subsection 94(1) of the English version of the Act is replaced by the following:

(vi) a payment made before 2002 to a trust, to a corporation controlled by a trust or to a partnership of which a trust is a majority-interest partner in repayment of or otherwise in respect of a loan made by a trust, corporation or partnership to the transferor, or

(2) The portion of subparagraph (b)(vii) of the definition “arm’s length transfer” in subsection 94(1) of the English version of the Act before clause (A) is replaced by the following:

(vii) a payment made after 2001 to a trust, to a corporation controlled by the trust or to a partnership of which the trust is a majority-interest partner, in repayment of or otherwise in respect of a particular loan made by the trust, corporation or partnership to the transferor and either

(3) Subparagraph (b)(ii) of the definition “specified party” in subsection 94(1) of the English version of the Act is replaced by the following:

(ii) would be a controlled foreign affiliate of a partnership, of which the particular person is a majority-interest partner, if the partnership were a person resident in Canada at that time;

(4) The portion of paragraph (c) of the definition “specified party” in subsection 94(1) of the English version of the Act before subparagraph (i) is replaced by the following:

(c) a person, or a partnership of which the particular person is a majority-interest partner, for which it is reasonable to conclude that the benefit referred to in subparagraph (8)(a)(iv) was conferred

(5) The portion of paragraph (d) of the definition “specified party” in subsection 94(1) of the English version of the Act before subparagraph (i) is replaced by the following:

(d) a corporation in which the particular person, or partnership of which the particular person is a majority-interest partner, is a shareholder if

(6) Paragraph 94(4)(b) of the Act is replaced by the following:

(b) subsections (8.1) and (8.2), paragraph (14)(a), subsections 70(6) and 73(1), the definition “Canadian partnership” in subsection 102(1), paragraph 107.4(1)(c) and paragraph (a) of the definition “mutual fund trust” in subsection 132(6);

(7) Paragraph 94(4)(h) of the Act is replaced by the following:

(h) determining whether subsection 75(2) applies.

(8) Section 94 of the Act is amended by adding the following after subsection (8):

(8.1) Subsection (8.2) applies at any time to a particular person, and to a particular property, in respect of a non-resident trust, if at that time

(a) the particular person is resident in Canada; and

(b) the trust holds the particular property on condition that the particular property or property substituted for the particular property

(i) may

(A) revert to the particular person, or

(B) pass to one or more persons or partnerships to be determined by the particular person, or

(ii) shall not be disposed of by the trust during the existence of the particular person, except with the particular person’s consent or in accordance with the particular person’s direction.

(8.2) If this subsection applies at any time to a particular person, and to a particular property, in respect of a non-resident trust, then in applying this section in respect of the trust for a taxation year of the trust that includes that time

(a) every transfer or loan made at or before that time by the particular person (or by a trust or partnership of which the particular person was a beneficiary or member, as the case may be) of the particular property, of another property for which the particular property is a substitute, or of property from which the particular property derives, or the other property derived, its value in whole or in part, directly or indirectly, is deemed to be a transfer or loan, as the case may be, by the particular person

(i) that is not an arm’s length transfer, and

(ii) that is, for the purposes of paragraph (2)(c) and subsection (9), a transfer or loan of restricted property; and

(b) paragraph (2)(c) is to be read without reference to subparagraph (2)(c)(iii) in its application to each transfer and loan described in paragraph (a).

(9) Subsections (6) to (8) apply to taxation years that end after March 20, 2013.

43. (1) Subsection 96(1.6) of the Act is replaced by the following:

(1.6) If a partnership carries on a business in Canada at any time, each taxpayer who is deemed by paragraph (1.1)(a) to be a member of the partnership at that time is deemed to carry on the business in Canada at that time for the purposes of subsection 2(3), sections 34.1 and 150 and (subject to subsection 34.2(18)) section 34.2.

(2) Subsection (1) applies to taxation years that end after March 22, 2011.

44. (1) The portion of paragraph 107(4.1)(b) of the Act before subparagraph (i) is replaced by the following:

(b) subsection 75(2) was applicable (determined without its reference to “while the person is resident in Canada” and as if subsection 75(3) as it read before March 21, 2013 were read without reference to its paragraph (c.2)), or subsection 94(8.2) was applicable (determined without reference to paragraph 94(8.1)(a)), at a particular time in respect of any property of

(2) Subsection (1) applies to taxation years that end after March 20, 2013.

45. (1) Subsection 107.3(3) of the Act is replaced by the following:

(3) If at any time a trust ceases to be a qualifying environmental trust,

(a) for the purposes of subsections 111(5.5) and 149(10), the trust is deemed to cease at that time to be exempt from tax under this Part on its taxable income;

(b) each beneficiary under the trust immediately before that time is deemed to receive at that time from the trust an amount equal to the percentage of the fair market value of the properties of the trust immediately after that time that can reasonably be considered to be the beneficiary’s interest in the trust; and

(c) each beneficiary under the trust is deemed to acquire immediately after that time an interest in the trust at a cost equal to the amount deemed by paragraph (b) to be received by the beneficiary from the trust.

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

46. (1) The formula in paragraph 110.6(2)(a) of the Act is replaced by the following:

[$400,000 – (A + B + C + D)] × E

(2) Subsections 110.6(31) and (32) of the Act are replaced by the following:

(31) If an amount is included in an individ- ual’s income for a particular taxation year because of subparagraph 40(1)(a)(ii) in respect of a disposition of property in a preceding taxation year that is qualified farm property, qualified fishing property or a qualified small business corporation share, the total of all amounts deductible by the individual for the particular year under this section is reduced by the amount, if any, determined by the formula

A – B

where

A      is the total of all amounts each of which is an amount deductible under this section by the individual for the particular year or a preceding taxation year, computed without reference to this subsection; and

B      is the total of all amounts each of which is an amount that would be deductible under this section by the individual for the particular year or a preceding taxation year if the individual had not for any preceding taxation year claimed a reserve under subparagraph 40(1)(a)(iii) and had claimed, for each taxation year ending before the particular year, the amount that would have been deductible under this section.

(3) Subsection (1) applies to the 2014 and subsequent taxation years.

(4) Subsection (2) applies to taxation years that begin after March 19, 2007.

47. (1) Subsections 111(4) to (5.3) of the Act are replaced by the following:

(4) Notwithstanding subsection (1), and subject to subsection (5.5), if at any time (in this subsection referred to as “that time”) a taxpayer is subject to a loss restriction event,

(a) no amount in respect of a net capital loss for a taxation year that ended before that time is deductible in computing the taxpayer’s taxable income for a taxation year that ends after that time;

(b) no amount in respect of a net capital loss for a taxation year that ends after that time is deductible in computing the taxpayer’s taxable income for a taxation year that ends before that time;

(c) in computing the adjusted cost base to the taxpayer at and after that time of each capital property, other than a depreciable property, of the taxpayer immediately before that time, there is to be deducted the amount, if any, by which the adjusted cost base to the taxpayer of the property immediately before that time exceeds its fair market value immediately before that time;

(d) each amount required by paragraph (c) to be deducted in computing the adjusted cost base to the taxpayer of a property is deemed to be a capital loss of the taxpayer for the taxation year that ended immediately before that time from the disposition of the property;

(e) if the taxpayer designates — in its return of income under this Part for the taxation year that ended immediately before that time or in a prescribed form filed with the Minister on or before the day that is 90 days after the day on which a notice of assessment of tax payable for the year or notification that no tax is payable for the year is sent to the taxpayer — a property that was a capital property of the taxpayer immediately before that time (other than a property in respect of which an amount would, but for this paragraph, be required by paragraph (c) to be deducted in computing its adjusted cost base to the taxpayer or a depreciable property of a prescribed class to which, but for this paragraph, subsection (5.1) would apply),

(i) the taxpayer is deemed to have disposed of the property at the time that is immediately before the time that is immediately before that time for proceeds of disposition equal to the lesser of

(A) the fair market value of the property immediately before that time, and

(B) the greater of the adjusted cost base to the taxpayer of the property immediately before the disposition and such amount as is designated by the taxpayer in respect of the property,

(ii) subject to subparagraph (iii), the taxpayer is deemed to have reacquired the property at that time at a cost equal to those proceeds of disposition, and

(iii) if the property is depreciable property of the taxpayer the capital cost of which to the taxpayer immediately before the disposition exceeds those proceeds of disposition, for the purposes of sections 13 and 20 and any regulations made for the purposes of paragraph 20(1)(a),

(A) the capital cost of the property to the taxpayer at that time is deemed to be the amount that was its capital cost immediately before the disposition, and

(B) the excess is deemed to have been allowed to the taxpayer in respect of the property under regulations made for the purposes of paragraph 20(1)(a) in computing the taxpayer’s income for taxation years that ended before that time; and

(f) for the purposes of the definition “capital dividend account” in subsection 89(1), each amount that because of paragraph (d) or (e) is a capital loss or gain of the taxpayer from a disposition of a property for the taxation year that ended immediately before that time is deemed to be a capital loss or gain, as the case may be, of the taxpayer from the disposition of the property immediately before the time that a capital property of the taxpayer in respect of which paragraph (e) would be applicable would be deemed by that paragraph to have been disposed of by the taxpayer.

(5) If at any time a taxpayer is subject to a loss restriction event,

(a) no amount in respect of the taxpayer’s non-capital loss or farm loss for a taxation year that ended before that time is deductible by the taxpayer for a taxation year that ends after that time, except that the portion of the taxpayer’s non-capital loss or farm loss, as the case may be, for a taxation year that ended before that time as may reasonably be regarded as the taxpayer’s loss from carrying on a business and, if a business was carried on by the taxpayer in that year, the portion of the non-capital loss as may reasonably be regarded as being in respect of an amount deductible under paragraph 110(1)(k) in computing the taxpayer’s taxable income for that year is deductible by the taxpayer for a particular taxation year that ends after that time

(i) only if that business was carried on by the taxpayer for profit or with a reasonable expectation of profit throughout the partic- ular year, and

(ii) only to the extent of the total of the taxpayer’s income for the particular year from

(A) that business, and

(B) if properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services; and

(b) no amount in respect of the taxpayer’s non-capital loss or farm loss for a taxation year that ends after that time is deductible by the taxpayer for a taxation year that ended before that time, except that the portion of the taxpayer’s non-capital loss or farm loss, as the case may be, for a taxation year that ended after that time as may reasonably be regarded as the taxpayer’s loss from carrying on a business and, if a business was carried on by the taxpayer in that year, the portion of the non-capital loss as may reasonably be regarded as being in respect of an amount deductible under paragraph 110(1)(k) in computing the taxpayer’s taxable income for that year is deductible by the taxpayer for a particular taxation year that ends before that time

(i) only if throughout the taxation year and in the particular year that business was carried on by the taxpayer for profit or with a reasonable expectation of profit, and

(ii) only to the extent of the taxpayer’s income for the particular year from

(A) that business, and

(B) if properties were sold, leased, rented or developed or services rendered in the course of carrying on that business before that time, any other business substantially all the income of which was derived from the sale, leasing, rental or development, as the case may be, of similar properties or the rendering of similar services.

(5.1) Subject to subsection (5.5), if at any time a taxpayer is subject to a loss restriction event and, if this Act were read without reference to subsection 13(24), the undepreciated capital cost to the taxpayer of depreciable property of a prescribed class immediately before that time would have exceeded the total of

(a) the fair market value of all the property of that class immediately before that time, and

(b) the amount in respect of property of that class otherwise allowed under regulations made under paragraph 20(1)(a) or deductible under subsection 20(16) in computing the taxpayer’s income for the taxation year that ended immediately before that time,

the excess is to be deducted in computing the taxpayer’s income for the taxation year that ended immediately before that time and is deemed to have been allowed in respect of property of that class under regulations made under paragraph 20(1)(a).

(5.2) Subject to subsection (5.5), if at any time a taxpayer is subject to a loss restriction event and immediately before that time the taxpayer’s cumulative eligible capital in respect of a business exceeds the total of

(a) 3/4 of the fair market value of the eligible capital property in respect of the business, and

(b) the amount otherwise deducted under paragraph 20(1)(b) in computing the taxpayer’s income from the business for the taxation year that ended immediately before that time,

the excess is to be deducted under paragraph 20(1)(b) in computing the taxpayer’s income for the taxation year that ended immediately before that time.

(5.3) Subject to subsection (5.5), if at any time a taxpayer is subject to a loss restriction event,

(a) no amount may be deducted under paragraph 20(1)(l) in computing the taxpayer’s income for the taxation year that ended immediately before that time; and

(b) in respect of each debt owing to the taxpayer immediately before that time

(i) the amount that is the greatest amount that would, but for this subsection and subsection 26(2) of this Act and subsection 33(1) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, have been deductible under paragraph 20(1)(l)

(A) is deemed to be a separate debt, and

(B) notwithstanding any other provision of this Act, is to be deducted as a bad debt under paragraph 20(1)(p) in computing the taxpayer’s income for its taxation year that ended immediately before that time, and

(ii) the amount by which the debt exceeds that separate debt is deemed to be a separate debt incurred at the same time and under the same circumstances as the debt was incurred.

(2) Subsection 111(5.5) of the Act is replaced by the following:

(5.5) If at any time a taxpayer is subject to a loss restriction event,

(a) paragraphs (4)(c) to (f) and subsections (5.1) to (5.3) do not apply to the taxpayer in respect of the loss restriction event if at that time the taxpayer becomes or ceases to be exempt from tax under this Part on its taxable income; and

(b) if it can reasonably be considered that the main reason that the taxpayer is subject to the loss restriction event is to cause paragraph (4)(d) or any of subsections (5.1) to (5.3) to apply with respect to the loss restriction event, the following do not apply with respect to the loss restriction event:

(i) that provision and paragraph (4)(e), and

(ii) if that provision is paragraph (4)(d), paragraph (4)(c).

(3) Paragraph (b) of the description of A in the definition “farm loss” in subsection 111(8) of the Act is replaced by the following:

(b) the amount that would be the taxpayer’s non-capital loss for the year if the amount determined for D in the definition “non-capital loss” in this subsection were nil, and

(4) Paragraph (c) of the description of C in the definition “net capital loss” in subsection 111(8) of the Act is replaced by the following:

(c) if the taxpayer was subject to a loss restriction event before the end of the year and after the end of the taxpayer’s tenth preceding taxation year, nil, and

(5) Subsection 111(12) of the Act is replaced by the following:

(12) For the purposes of subsection (4), if at any time a taxpayer owes a foreign currency debt in respect of which the taxpayer would have had, if the foreign currency debt had been repaid at that time, a capital loss or gain, the taxpayer is deemed to own at the time (in this subsection referred to as the “measurement time”) that is immediately before that time a property

(a) the adjusted cost base of which at the measurement time is the amount determined by the formula

A + B – C

where

A      is the amount of principal owed by the taxpayer under the foreign currency debt at the measurement time, calculated, for greater certainty, using the exchange rate applicable at the measurement time,

B      is the portion of any gain, previously recognized in respect of the foreign currency debt because of this section, that is reasonably attributable to the amount described in A, and

C      is the portion of any capital loss previously recognized in respect of the foreign currency debt because of this section, that is reasonably attributable to the amount described in A; and

(b) the fair market value of which is the amount that would be the amount of the principal owed by the taxpayer under the foreign currency debt at the measurement time if that amount were calculated using the exchange rate applicable at the time of the original borrowing.

(6) Subsections (1), (2), (4) and (5) are deemed to have come into force on March 21, 2013.

48. (1) Section 112 of the Act is amended by adding the following after subsection (7):

(8) If a synthetic disposition arrangement is entered into in respect of a property owned by a taxpayer and the synthetic disposition period of the arrangement is 30 days or more, for the purposes of paragraphs (3.01)(b) and (3.11)(b), subclauses (3.2)(a)(ii)(C)(I) and (3.3)(a)(ii)(C)(I) and paragraphs (3.31)(b), (3.32)(b), (4.01)(b), (4.11)(b), (4.21)(b), (4.22)(b), (5.1)(b) and (5.21)(b) and subsection (9), the taxpayer is deemed not to own the property during the synthetic disposition period.

(9) Subsection (8) does not apply in respect of a property owned by a taxpayer in respect of a synthetic disposition arrangement if the taxpayer owned the property throughout the 365-day period (determined without reference to this subsection) that ended immediately before the synthetic disposition period of the arrangement.

(2) Subject to subsection (3), subsection (1) applies to:

(a) an agreement or arrangement entered into after March 20, 2013; and

(b) an agreement or arrangement entered into before March 21, 2013, the term of which is extended after March 20, 2013, as if the agreement or arrangement were entered into at the time of the extension.

(3) In respect of an agreement or arrangement referred to in subsection (2), that is entered into before September 13, 2013 and the term of which is not extended after September 12, 2013, subsection 112(9) of the Act, as enacted by subsection (1), is to be read as follows:

(9) Subsection (8) does not apply in respect of a property owned by a taxpayer in respect of a synthetic disposition arrangement if the taxpayer owned the property throughout the 365-day period that ended immediately before the synthetic disposition period of the arrangement.

49. (1) The portion of subsection 117.1(1) of the Act before paragraph (a) is replaced by the following:

117.1 (1) The amount of $1,000 referred to in the formula in paragraph 8(1)(s), each of the amounts expressed in dollars in subparagraph 6(1)(b)(v.1), subsection 117(2), the description of B in subsection 118(1), subsection 118(2), paragraph (a) of the description of B in subsection 118(10), subsection 118.01(2), the descriptions of C and F in subsection 118.2(1) and subsections 118.3(1), 122.5(3) and 122.51(1) and (2), the amount of $400,000 referred to in the formula in paragraph 110.6(2)(a), the amounts of $925 and $1,680 referred to in the description of A, and the amounts of $10,500 and $14,500 referred to in the description of B, in the formula in subsection 122.7(2), the amount of $462.50 referred to in the description of C, and the amounts of $16,667 and $25,700 referred to in the description of D, in the formula in subsection 122.7(3), and each of the amounts expressed in dollars in Part I.2 in relation to tax payable under this Part or Part I.2 for a taxation year shall be adjusted so that the amount to be used under those provisions for the year is the total of

(2) Subsection (1) applies to the 2015 and subsequent taxation years.

50. (1) Subparagraph 118.5(3)(c)(iv) of the Act is replaced by the following:

(iv) the provision of financial assistance to students, except to the extent that, if this Act were read without reference to subsection 56(3), the amount of the assistance would be required to be included in computing the income, and not be deduct- ible in computing the taxable income, of the students to whom the assistance is provided, or

(2) Subsection (1) applies to the 2012 and subsequent taxation years.

51. (1) The definition “non-portfolio property” in subsection 122.1(1) of the Act is replaced by the following:

“non-portfolio property”, of a particular entity for a taxation year, means a property, held by the particular entity at any time in the taxation year, that is

(a) a security of a subject entity (other than a portfolio investment entity), if at that time the particular entity holds

(i) securities of the subject entity that have a total fair market value that is greater than 10% of the equity value of the subject entity, or

(ii) securities of the subject entity that, together with all the securities that the particular entity holds of entities affiliated with the subject entity, have a total fair market value that is greater than 50% of the equity value of the particular entity;

(b) a Canadian real, immovable or resource property, if at any time in the taxation year the total fair market value of all properties held by the particular entity that are Canadian real, immovable or resource properties is greater than 50% of the equity value of the particular entity; or

(c) a property that the particular entity, or a person or partnership with whom the partic-ular entity does not deal at arm’s length, uses at that time in the course of carrying on a business in Canada.

(2) Paragraph (b) of the definition “excluded subsidiary entity” in subsection 122.1(1) of the Act is amended by striking out “or” at the end of subparagraph (iv) and by replacing subparagraph (v) with the following:

(v) a person or partnership that does not have, in connection with the holding of a security of the entity, property the value of which is determined, all or in part, by reference to a security that is listed or traded on a stock exchange or other public market, or

(vi) an excluded subsidiary entity for the taxation year.

(3) Subsection (1) applies to taxation years that end after July 20, 2011.

(4) Subsection (2) is deemed to have come into force on October 31, 2006, except that it does not apply for the purpose of determining if an entity is an excluded subsidiary entity for taxation years of the entity that began before July 21, 2011 if the entity so elects in writing filed with the Minister of National Revenue within 365 days after the day on which this Act receives royal assent.

52. Subsection 122.61(3) of the Act is replaced by the following:

(3) For the purposes of this section, if a person was non-resident at any time in a taxation year, the person’s income for the year is, for greater certainty, deemed to be the amount that would have been the person’s income for the year had the person been resident in Canada throughout the year.

53. Section 122.64 of the Act is repealed.

54. (1) Subparagraph (a)(iv) of the definition “full rate taxable income” in subsection 123.4(1) of the Act is replaced by the following:

(iv) if the corporation is a credit union throughout the year and the corporation deducted an amount for the year under subsection 125(1) (because of the application of subsections 137(3) and (4)), the amount, if any, that is the product of the amount, if any, determined for B in subsection 137(3) multiplied by the amount determined for C in subsection 137(3) in respect of the corporation for the year;

(2) Subsection (1) applies to taxation years that end after March 20, 2013.

55. (1) The descriptions of G and H in the definition “specified partnership income” in subsection 125(7) of the Act are replaced by the following:

G      is the total of all amounts each of which is the corporation’s share of the income (determined in accordance with subdivision j of Division B) of the partnership for a fiscal period of the business that ends in the year, or an amount included in the corporation’s income for the year in respect of the business under any of subsections 34.2(2), (3) and (12), and

H      is the total of all amounts deducted in computing the corporation’s income for the year from the business (other than amounts that were deducted in computing the income of the partnership from the business) or in respect of the business under subsection 34.2(4) or (11), and

(2) Subsection (1) applies to taxation years that end after March 22, 2011.

56. (1) Section 126 of the Act is amended by adding the following after subsection (4.4):

(4.5) If a synthetic disposition arrangement is entered into in respect of a property owned by a taxpayer and the synthetic disposition period of the arrangement is 30 days or more,

(a) for the purpose of determining whether the period referred to in subsection (4.2) is one year or less, the period is deemed to begin at the earlier of

(i) the time that is immediately before the particular time referred to in subsection (4.2), and

(ii) the end, if any, of the synthetic disposition period; and

(b) for the purposes of subsection (4.6), the taxpayer is deemed not to own the property during the synthetic disposition period.

(4.6) Subsection (4.5) does not apply in respect of a property owned by a taxpayer in respect of a synthetic disposition arrangement if the taxpayer owned the property throughout the one-year period (determined without reference to this subsection) that ended immediately before the synthetic disposition period of the arrangement.

(2) Subject to subsection (3), subsection (1) applies to:

(a) an agreement or arrangement entered into after March 20, 2013; and

(b) an agreement or arrangement entered into before March 21, 2013, the term of which is extended after March 20, 2013, as if the agreement or arrangement were entered into at the time of the extension.

(3) In respect of an agreement or arrangement referred to in subsection (2), that is entered into before September 13, 2013 and the term of which is not extended after September 12, 2013, subsection 126(4.6) of the Act, as enacted by subsection (1), is to be read as follows:

(4.6) Subsection (4.5) does not apply in respect of a property owned by a taxpayer in respect of a synthetic disposition arrangement if the taxpayer owned the property throughout the one-year period that ended immediately before the synthetic disposition period of the arrangement.

57. (1) The definition “non-government assistance” in subsection 127(9) of the Act is replaced by the following:

“non-government assistance” means an amount that would be included in income under paragraph 12(1)(x) if that paragraph were read without reference to subparagraphs 12(1)(x)(v) to (vii);

(2) Paragraphs (j) and (k) of the definition “investment tax credit” in subsection 127(9) of the Act are replaced by the following:

(j) if the taxpayer is subject to a loss restriction event at any time before the end of the year, the amount determined under subsection (9.1) in respect of the taxpayer, and

(k) if the taxpayer is subject to a loss restriction event at any time after the end of the year, the amount determined under subsection (9.2) in respect of the taxpayer,

(3) The definition “pre-production mining expenditure” in subsection 127(9) of the Act is amended by striking out “or” at the end of subparagraph (a)(i) and by replacing subparagraph (a)(ii) with the following:

(ii) described in paragraph (g), (g.3) or (g.4) and not in paragraph (f), of the definition “Canadian exploration expense” in subsection 66.1(6) if the expression “mineral resource” in paragraph (g) of that definition were defined to mean a mineral deposit from which the principal mineral to be extracted is diamond, a base or precious metal deposit, or a mineral deposit from which the principal mineral to be extracted is an industrial mineral that, when refined, results in a base or precious metal, and

(4) Clause (k)(iii)(B) of the definition “specified percentage” in subsection 127(9) of the Act is replaced by the following:

(B) in 2015, 5% if the expense is described in paragraph (a)(ii) of the definition “pre-production mining expenditure” because of paragraph (g.4) of the definition “Canadian exploration expense” in subsection 66.1(6), and 4% otherwise, and

(5) The portion of subsection 127(9.1) of the Act before paragraph (a) is replaced by the following:

(9.1) If a taxpayer is subject to a loss restriction event at any time (in this subsection referred to as “that time”) before the end of a taxation year of the taxpayer, the amount determined for the purposes of paragraph (j) of the definition “investment tax credit” in subsection (9) with respect to the taxpayer is the amount, if any, by which

(6) Subparagraph 127(9.1)(d)(i) of the Act is replaced by the following:

(i) if throughout the year the taxpayer carried on a particular business in the course of which a property was acquired, or an expenditure was made, before that time in respect of which an amount is included in computing its investment tax credit at the end of the year, the amount, if any, by which the total of all amounts each of which is

(A) its income for the year from the particular business, or

(B) its income for the year from any other business substantially all the income of which was derived from the sale, leasing, rental or development of properties or the rendering of services similar to the properties sold, leased, rented or developed, or the services rendered, as the case may be, by the taxpayer in carrying on the particular business before that time

exceeds

(C) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the year by the taxpayer in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of the particular business or the other business,

(7) The portion of subsection 127(9.2) of the Act before paragraph (a) is replaced by the following:

(9.2) If a taxpayer is subject to a loss restriction event at any time (in this subsection referred to as “that time”) after the end of a taxation year of the taxpayer, the amount determined for the purposes of paragraph (k) of the definition “investment tax credit” in subsection (9) is the amount, if any, by which

(8) Subparagraph 127(9.2)(d)(i) of the Act is replaced by the following:

(i) if the taxpayer acquired a property or made an expenditure, in the course of carrying on a particular business throughout the portion of a taxation year that is after that time, in respect of which an amount is included in computing its investment tax credit at the end of the year, the amount, if any, by which the total of all amounts each of which is

(A) its income for the year from the particular business, or

(B) if the taxpayer carried on a partic- ular business in the year, its income for the year from any other business substantially all the income of which was derived from the sale, leasing, rental or development of properties or the rendering of services similar to the properties sold, leased, rented or developed, or the services rendered, as the case may be, by the taxpayer in carrying on the particular business before that time

exceeds

(C) the total of all amounts each of which is an amount deducted under paragraph 111(1)(a) or (d) for the year by the taxpayer in respect of a non-capital loss or a farm loss, as the case may be, for a taxation year in respect of the particular business or the other business

(9) Subsection (1) is deemed to have come into force on December 21, 2012.

(10) Subsections (2) to (8) are deemed to have come into force on March 21, 2013.

58. (1) The definition “qualifying corporation” in subsection 127.1(2) of the Act is replaced by the following:

“qualifying corporation”, for a particular taxation year that ends in a calendar year, means a particular corporation that is a Canadian-controlled private corporation in the particular taxation year the taxable income of which for its immediately preceding taxation year — together with, if the particular corporation is associated in the particular taxation year with one or more other corporations (in this subsection referred to as “associated corporations”), the taxable income of each associated corporation for its last taxation year that ended in the preceding calendar year (determined before taking into consideration the specified future tax consequences for that last year) — does not exceed the qualifying income limit, if any, of the particular corporation for the particular taxation year;

(2) Subsection (1) applies to taxation years that begin after December 21, 2012.

59. (1) Subsection 127.4(2) of the Act is repealed.

(2) Paragraph 127.4(5)(a) of the Act is replaced by the following:

(a) $500, and

(3) Paragraph 127.4(5)(a) of the Act, as enacted by subsection (2), is replaced by the following:

(a) $250, and

(4) Subsection 127.4(5) of the Act, as amended by subsection (3), is repealed.

(5) Paragraph 127.4(6)(a) of the Act is replaced by the following:

(a) 10% of the net cost to the individual (or to a qualifying trust for the individual in respect of the share) for the original acquisition of the share by the individual or by the trust, if the taxation year for which a claim is made under subsection (2) in respect of the original acquisition is 2015,

(a.1) 5% of the net cost to the individual (or to a qualifying trust for the individual in respect of the share) for the original acquisition of the share by the individual or by the trust, if the taxation year for which a claim is made under subsection (2) in respect of the original acquisition is 2016,

(6) Subsection 127.4(6) of the Act, as amended by subsection (5), is repealed.

(7) Subsections (1), (4) and (6) apply to the 2017 and subsequent taxation years.

(8) Subsection (2) applies to the 2015 taxation year.

(9) Subsection (3) applies to the 2016 taxation year.

(10) Subsection (5) applies to the 2015 and 2016 taxation years.

60. (1) The portion of paragraph 127.52(1)(c.1) of the Act before subparagraph (i) is replaced by the following:

(c.1) if, during a partnership’s fiscal period that ends in the year (other than a fiscal period that ends because of subsection 99(1)), the individual’s interest in the partnership is an interest for which an identification number is required to be, or has been, obtained under section 237.1,

(2) Clause 127.52(1)(i)(i)(B) of the Act is amended by striking out “and” at the end of subclause (I) and by replacing subclause (II) with the following:

(II) paragraphs (b) to (c.3), (e) and (e.1) of this subsection, as they read in respect of taxation years that began after 1994 and ended before 2012, applied in computing the individual’s non-capital loss, restricted farm loss, farm loss and limited partnership loss for any of those years, and

(III) paragraphs (b) to (c.3), (e) and (e.1) of this subsection applied in computing the individual’s non-capital loss, restricted farm loss, farm loss and limited partnership loss for any taxation year that ends after 2011, and

(3) Clause 127.52(1)(i)(ii)(B) of the Act is amended by striking out “and” at the end of subclause (I) and by replacing subclause (II) with the following:

(II) paragraphs (c.1) and (d) of this subsection, as they read in respect of taxation years that began after 1994 and ended before 2012, applied in computing the individual’s net capital loss for any of those years, and

(III) paragraphs (c.1) and (d) of this subsection applied in computing the individual’s net capital loss for any taxation year that ends after 2011; and

(4) Subsections (1) to (3) apply to the 2012 and subsequent taxation years and, if an individual files an election in writing with the Minister of National Revenue before the day that is 90 days after the day on which this Act receives royal assent, for the individual

(a) subsections (1) to (3) also apply to the 2006 to 2011 taxation years; and

(b) the references in clauses 127.52(1)(i)(i)(B) and (ii)(B) of the Act, as amended by subsections (2) and (3), to “2011” and “2012” are to be read as “2005” and “2006”, respectively.

(5) Notwithstanding subsection 152(4) of the Act, the Minister of National Revenue may make such assessments, reassessments and determinations under Part I of the Act as are necessary to give effect to an election under subsection (4).

61. (1) Subsection 136(1) of the Act is replaced by the following:

136. (1) Notwithstanding any other provision of this Act, a cooperative corporation that would, but for this section, be a private corporation is deemed not to be a private corporation except for the purposes of section 15.1, paragraphs 87(2)(vv) and (ww) (including, for greater certainty, in applying those paragraphs as provided under paragraph 88(1)(e.2)), the definitions “excessive eligible dividend designation”, “general rate income pool” and “low rate income pool” in subsection 89(1), subsections 89(4) to (6) and (8) to (10), sections 123.4, 125, 125.1, 127 and 127.1, the definition “mark-to-market property” in subsection 142.2(1), sections 152 and 157, subsection 185.2(3), the definition “small business corporation” in subsection 248(1) (as it applies for the purposes of paragraph 39(1)(c)) and subsection 249(3.1).

(2) Subsection (1) applies to taxation years that begin after December 21, 2012.

62. (1) Subsection 137(4.1) of the Act is replaced by the following:

(4.1) Notwithstanding any other provision of this Act, an amount paid or payable by a credit union to a person is deemed to be paid or payable, as the case may be, by the credit union as interest and to be received or receivable, as the case may be, by the person as interest, if

(a) the amount is in respect of a share held by the person of the capital stock of the credit union, other than an amount paid or payable as or on account of a reduction of the paid-up capital, redemption, acquisition or cancellation of the share by the credit union to the extent of the paid-up capital of the share;

(b) the share is not listed on a stock exchange; and

(c) the person is

(i) a member of the credit union, or

(ii) a member of another credit union if the share is issued by the credit union after March 28, 2012 and the other credit union is a member of the credit union.

(2) Subsection (1) applies to the 2012 and subsequent taxation years.

63. The portion of subsection 142.2(2) of the Act before paragraph (a) is replaced by the following:

(2) For the purposes of the definitions “excluded property” and “specified debt obligation” in subsection (1) and subsection 142.6(1.6), a taxpayer has a significant interest in a corporation at any time if

64. (1) Section 147.1 of the Act is amended by adding the following after subsection (18):

(19) The administrator of a registered pension plan may make a payment (other than a payment made to avoid the revocation of the registration of the plan) that is a return of all or a portion of a contribution made by a member of the plan, or an employer who participates in the plan, if

(a) the contribution was made to the plan as a consequence of a reasonable error;

(b) the payment is made to the member or employer, as the case may be, who made the contribution; and

(c) the payment is made no later than December 31 of the year following the year in which the contribution was made.

(2) Subsection (1) applies to contributions made on or after the later of January 1, 2014 and the day on which this Act receives royal assent.

65. (1) Section 148 of the Act is amended by adding the following after subsection (4):

(5) If a policyholder has after March 20, 2013 and before April 2014 disposed of an interest in a 10/8 policy because of a partial or complete surrender of the policy, the policyholder may deduct in computing their income for the taxation year in which the disposition occurs an amount that does not exceed the least of

(a) the portion of an amount, included under subsection (1) in computing their income for the year in respect of the disposition, that is attributable to an investment account described in paragraph (b) of the definition “10/8 policy” in subsection 248(1) in respect of the policy,

(b) the total of all amounts each of which is an amount, to the extent that the amount has not otherwise been included in determining an amount under this paragraph, of a payment made after March 20, 2013 and before April 2014 that reduces the amount outstanding of a borrowing or policy loan, as the case may be, described in paragraph (a) of the definition “10/8 policy” in subsection 248(1) in respect of the policy, and

(c) the total of all amounts each of which is an amount, to the extent that the amount has not otherwise been included in determining an amount under this paragraph, that the policyholder is entitled to receive as a result of the disposition and that is paid after March 20, 2013 and before April 2014 out of an investment account described in paragraph (b) of the definition “10/8 policy” in subsection 248(1) in respect of the policy.

(2) Subsection (1) applies to taxation years that end after March 20, 2013.

66. (1) Subsection 149(10) of the Act is replaced by the following:

(10) If at any time (in this subsection referred to as “that time”), a person — that is a corporation or, if that time is after September 12, 2013, a trust — becomes or ceases to be exempt from tax under this Part on its taxable income otherwise than by reason of paragraph (1)(t), the following rules apply:

(a) the taxation year of the person that would, but for this paragraph, have included that time is deemed to end immediately before that time, a new taxation year of the person is deemed to begin at that time and, for the purpose of determining the person’s fiscal period after that time, the person is deemed not to have established a fiscal period before that time;

(a.1) for the purpose of computing the person’s income for its first taxation year that ends after that time, the person is deemed to have deducted under sections 20, 138 and 140 in computing the person’s income for its taxation year that ended immediately before that time, the greatest amount that could have been claimed or deducted by the person for that year as a reserve under those sections;

(b) the person is deemed to have disposed, at the time (in this subsection referred to as the “disposition time”) that is immediately before the time that is immediately before that time, of each property held by the person immediately before that time for an amount equal to its fair market value at that time and to have reacquired the property at that time at a cost equal to that fair market value;

(c) for the purposes of applying sections 37, 65 to 66.4, 66.7, 111 and 126, subsections 127(5) to (36) and section 127.3 to the person, the person is deemed to be a new corporation or trust, as the case may be, the first taxation year of which began at that time; and

(d) there is to be deducted under paragraph 20(1)(b) in computing the person’s income from a business for the taxation year that ended immediately before that time the amount, if any, by which the person’s cumulative eligible capital immediately before the disposition time in respect of the business exceeds the total of

(i) 3/4 of the fair market value of the eligible capital property in respect of the business, and

(ii) the amount otherwise deducted under paragraph 20(1)(b) in computing the person’s income from the business for the taxation year that ended immediately before that time.

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

67. (1) Paragraph 152(4)(c) of the Act is replaced by the following:

(b.1) an information return described in subsection 237.1(7) or 237.3(2) that is required to be filed in respect of a deduction or claim made by the taxpayer in relation to a tax shelter, or in respect of a tax benefit (as defined in subsection 245(1)) to the taxpayer from an avoidance transaction (as defined in subsection 245(3)), is not filed as and when required, and the assessment, reassessment or additional assessment is made before the day that is three years after the day on which the information return is filed;

(b.2) the assessment, reassessment or additional assessment is made before the day that is three years after the end of the normal reassessment period for the taxpayer in respect of the year and if

(i) the taxpayer, or a partnership of which the taxpayer is a member, has failed to file for the year a prescribed form as and when required under subsection 233.3(3) or to report on the prescribed form the information required in respect of a specified foreign property (as defined in subsection 233.3(1)) held by the taxpayer at any time during the year, and

(ii) the taxpayer has failed to report, in the return of income for the year, an amount in respect of a specified foreign property that is required to be included in computing the taxpayer’s income for the year;

(c) the taxpayer or person filing the return of income has filed with the Minister a waiver in prescribed form within the additional three-year period referred to in paragraph (b) or (b.1);

(c.1) the taxpayer or person filing the return of income has filed with the Minister a waiver in prescribed form within the additional three-year period referred to in paragraph (b.2); or

(2) The portion of subsection 152(4.01) of the Act before paragraph (a) is replaced by the following:

(4.01) Notwithstanding subsections (4) and (5), an assessment, reassessment or additional assessment to which paragraph (4)(a), (b), (b.1) or (c) applies in respect of a taxpayer for a taxation year may be made after the taxpayer’s normal reassessment period in respect of the year to the extent that, but only to the extent that, it can reasonably be regarded as relating to,

(3) The portion of paragraph 152(4.01)(b) of the Act before subparagraph (i) is replaced by the following:

(b) if paragraph (4)(b), (b.1) or (c) applies to the assessment, reassessment or additional assessment,

(4) Paragraph 152(4.01)(b) of the Act is amended by striking out “or” at the end of subparagraph (v), by adding “or” at the end of subparagraph (vi) and by adding the following after subparagraph (vi):

(vii) the deduction, claim or tax benefit referred to in paragraph (4)(b.1).

(5) Subsection 152(4.1) of the Act is replaced by the following:

(4.1) If the Minister would, but for this subsection, be entitled to reassess, make an additional assessment or assess tax, interest or penalties by virtue only of the filing of a waiver under subparagraph (4)(a)(ii) or paragraph (4)(c) or (c.1), the Minister may not make such a reassessment, additional assessment or assessment after the day that is six months after the date on which a notice of revocation of the waiver in prescribed form is filed.

(6) Subsections (1) and (5) apply to the 2013 and subsequent taxation years, except that, in its application to taxation years that end before March 21, 2013, subsection 152(4) of the Act, as amended by subsection (1), is to be read without reference to paragraph (b.1).

(7) Subsections (2) to (4) apply to taxation years that end after March 20, 2013.

68. (1) Section 156 of the Act is amended by adding the following after subsection (3):

(4) Subsections (1) to (3) and section 156.1 do not apply to a SIFT trust.

(2) Subsection (1) applies to taxation years that begin after July 20, 2011.

69. (1) Clause 157(1.5)(a)(ii)(B) of the English version of the Act is replaced by the following:

(B) the amount obtained when the estimated tax payable by the corporation, if any, under Parts 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

(2) Paragraph 157(1.5)(b) of the English version 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 taxation 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 (1.5):

(2) Subsections (1), (2.1) and (4) apply to a SIFT trust with any modifications that the circumstances require.

(4) Subsections (1) and (2) apply to taxation years that begin after 2007.

(5) Subsection (3) applies to taxation years that begin after July 20, 2011.

70. (1) Section 162 of the Act is amended by adding the following after subsection (5):

(5.1) Every person or partnership who makes, or participates in, assents to or acquiesces in the making of, a false statement or omission in respect of claim preparer information required to be included in an SR&ED form is jointly and severally, or solidarily, liable, together with any claim preparer of the form, to a penalty equal to $1,000.

(5.2) A claim preparer of an SR&ED form is not liable for a penalty under subsection (5.1) in respect of a false statement or omission if the claim preparer has exercised the degree of care, diligence and skill to prevent the making of the false statement or omission that a reasonably prudent person would have exercised in comparable circumstances.

(5.3) The following definitions apply in this subsection and subsections (5.1) and (5.2).

“claim preparer”, of an SR&ED form, means a person or partnership who agrees to accept consideration to prepare, or assist in the preparation of, the form but does not include an employee who prepares, or assists in the preparation of, the form in the course of performing their duties of employment.

“claim preparer information” means prescribed information regarding

(a) the identity of the claim preparer, if any, of an SR&ED form, and

(b) the arrangement under which the claim preparer agrees to accept consideration in respect of the preparation of the form.

“SR&ED form” means a prescribed form required to be filed under subsection 37(11).

(2) Subsection (1) comes into force on the later of January 1, 2014 and the day on which this Act receives royal assent.

71. (1) The Act is amended by adding the following after section 163.2:

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

“electronic cash register” means a device that keeps a register or supporting documents through the means of an electronic device or computer system designed to record transaction data or any other electronic point-of-sale system.

“electronic suppression of sales device” means

(a) a software program that falsifies the records of electronic cash registers, including transaction data and transaction reports; or

(b) a hidden programming option, whether preinstalled or installed at a later time, embedded in the operating system of an electronic cash register or hardwired into the electronic cash register that

(i) may be used to create a virtual second till, or

(ii) may eliminate or manipulate transaction records, which may or may not be preserved in digital formats, in order to represent the actual or manipulated record of transactions in the electronic cash register.

“service” has the same meaning as in subsection 123(1) of the Excise Tax Act.

(2) Every person that uses, or that knowingly, or under circumstances attributable to neglect, carelessness or wilful default, participates in, assents to or acquiesces in the use of, an electronic suppression of sales device or a similar device or software in relation to records that are required to be kept by any person under section 230 is liable to a penalty of

(a) unless paragraph (b) applies, $5,000; or

(b) $50,000 if the action of the person occurs after the Minister has assessed a penalty payable by the person under this section or section 285.01 of the Excise Tax Act.

(3) Every person that acquires or possesses an electronic suppression of sales device or a right in respect of an electronic suppression of sales device that is, or is intended to be, capable of being used in relation to records that are required to be kept by any person under section 230 is liable to a penalty of

(a) unless paragraph (b) applies, $5,000; or

(b) $50,000 if the action of the person occurs after the Minister has assessed a penalty payable by the person under this section or section 285.01 of the Excise Tax Act.

(4) Every person that designs, develops, manufactures, possesses for sale, offers for sale, sells, transfers or otherwise makes available to another person, or that supplies installation, upgrade or maintenance services for, an elec- tronic suppression of sales device that is, or is intended to be, capable of being used in relation to records that are required to be kept by any person under section 230 is liable to a penalty of

(a) unless paragraph (b) or (c) applies, $10,000;

(b) unless paragraph (c) applies, $50,000 if the action of the person occurs after the Minister has assessed a penalty payable by the person under subsection (2) or (3) or subsection 285.01(2) or (3) of the Excise Tax Act; or

(c) $100,000 if the action of the person occurs after the Minister has assessed a penalty payable by the person under this subsection or subsection 285.01(4) of the Excise Tax Act.

(5) The Minister may at any time assess a taxpayer in respect of any penalty payable by a person under subsections (2) to (4), and the provisions of this Division apply, with any modifications that the circumstances require, in respect of an assessment made under subsections (2) to (4) as though it had been made under section 152.

(6) Despite section 152, if at any time the Minister assesses a penalty payable by a person under subsections (2) to (4), the Minister is not to assess, at or after that time, another penalty payable by the person under subsections (2) to (4) that is in respect of an action of the person that occurred before that time.

(7) Except as otherwise provided in subsection (8), a person does not have a defence in relation to a penalty assessed under subsections (2) to (4) by reason that the person exercised due diligence to prevent the action from occurring.

(8) A person is not liable for a penalty under subsection (3) or (4) in respect of an action of the person if the person exercised the degree of care, diligence and skill that a reasonably prudent person would have exercised in comparable circumstances to prevent the action from occurring.

(9) For the purposes of subsections (2) to (8), if an assessment of a penalty under subsections (2) to (4) is vacated, the penalty is deemed to have never been assessed.

(2) Subsection (1) comes into force on the later of the day on which this Act receives royal assent and January 1, 2014.

72. (1) The portion of subsection 197(6) of the Act before paragraph (a) is replaced by the following:

(6) Subsection 150(2), section 152, subsections 157(1), (2.1) and (4), sections 158, 159 and 161 to 167 and Division J of Part I apply to this Part, with any modifications that the circumstances require, and for greater certainty,

(2) Subsection (1) applies to taxation years that begin after July 20, 2011.

73. (1) The portion of subsection 204.81(1) of the Act before paragraph (a) is replaced by the following:

204.81 (1) The Minister may register a corporation for the purposes of this Part if the corporation’s application for registration was received before March 21, 2013 and if, in the opinion of the Minister, it complies with the following conditions:

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

74. (1) The portion of subsection 207.01(1) of the Act before the first definition is replaced by the following:

207.01 (1) The following definitions and the definitions in subsections 146(1) (other than the definition “benefit”), 146.2(1) and 146.3(1) apply in this Part and Part XLIX of the Income Tax Regulations.

(2) The definition “specified non-qualified investment income” in subsection 207.01(1) of the Act is replaced by the following:

“specified non-qualified investment income”, in respect of a registered plan and its controlling individual, means income (determined without reference to paragraph 82(1)(b)), or a capital gain, that is reasonably attributable, directly or indirectly, to an amount in respect of which tax was payable under Part I by a trust governed by the registered plan or by any other registered plan of the controlling individual.

(3) Paragraph (a) of the definition “advantage” in subsection 207.01(1) of the Act is amended by striking out “and” at the end of subparagraph (iii), by adding “and” at the end of subparagraph (iv) and by adding the following after subparagraph (iv):

(v) a benefit provided under an incentive program that is — in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willing-ly — offered to a broad class of persons, if it is reasonable to conclude that none of the main purposes of the program is to enable a person or partnership to benefit from the exemption from tax under Part I of any amount in respect of the plan;

(4) Clause (b)(i)(A) of the definition “advantage” in subsection 207.01(1) of the Act is replaced by the following:

(A) would not have occurred in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and

(5) The portion of paragraph (c) of the definition “advantage” in subsection 207.01(1) of the Act before subparagraph (i) is replaced by the following:

(c) a benefit that is income (determined without reference to paragraph 82(1)(b)), or a capital gain, that is reasonably attributable, directly or indirectly, to

(6) Paragraph (c) of the definition “exempt contribution” in subsection 207.01(1) of the Act is replaced by the following:

(c) the survivor designates, in prescribed form filed in prescribed manner within 30 days after the day on which the contribution is made (or at any later time that is acceptable to the Minister), the contribution in relation to the survivor payment; and

(7) The portion of the definition “prohibited investment” in subsection 207.01(1) of the Act before paragraph (a) is replaced by the following:

“prohibited investment”, at any time for a trust governed by a registered plan, means property (other than excluded property for the trust) that is at that time

(8) Subparagraph (b)(ii) of the defini-tion “prohibited investment” in subsection 207.01(1) of the Act is replaced by the following:

(ii) a person or partnership that does not deal at arm’s length with the controlling individual;

(9) The portion of the definition “RRSP strip” in subsection 207.01(1) of the Act before paragraph (a) is replaced by the following:

“RRSP strip”, in respect of a RRIF or RRSP, means the amount of a reduction in the fair market value of property held in connection with the RRIF or RRSP, if the value is reduced as part of a transaction or event or a series of transactions or events one of the main purposes of which is to enable the controlling individual of the RRIF or RRSP, or a person who does not deal at arm’s length with the controlling individual, to obtain a benefit in respect of property held in connection with the RRIF or RRSP or to obtain a benefit as a result of the reduction, but does not include an amount that is

(10) The definition “RRSP strip” in subsection 207.01(1) of the Act is amended by adding “or” at the end of paragraph (b), by striking out “or” at the end of paragraph (c) and by repealing paragraph (d).

(11) Paragraph (c) of the definition “swap transaction” in subsection 207.01(1) of the Act is replaced by the following:

(c) a transfer of a prohibited investment or a non-qualified investment from the registered plan for consideration, in circumstances where the controlling individual is entitled to a refund under subsection 207.04(4) on the transfer;

(12) The definition “swap transaction” in subsection 207.01(1) of the Act is amended by adding the following after paragraph (d):

(e) a transfer of a prohibited investment from the registered plan for consideration, if subsection (13) applies in respect of all or part of the consideration received by the registered plan;

(f) a transfer of property from the registered plan in consideration for the issuance of a debt obligation that is an excluded property for the trust governed by the registered plan; or

(g) a payment into the registered plan that is a payment of, or in satisfaction of, the principal amount of, or interest on, a debt obligation that is an excluded property for the trust governed by the registered plan.

(13) The descriptions of A and B in the definition “transitional prohibited investment benefit” in subsection 207.01(1) of the Act are replaced by the following:

A      is the total of all amounts each of which is income (determined without reference to paragraph 82(1)(b)) earned, or a capital gain realized, in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that

(a) is reasonably attributable, directly or indirectly, to a property that is a prohibited investment, and a transitional prohibited property, for the trust, and

(b) in the case of income, is earned after March 22, 2011 and, in the case of a capital gain, accrues after March 22, 2011; and

B      is the total of all amounts each of which is a capital loss (determined without reference to subparagraph 40(2)(g)(i) and subsection 40(3.4)) realized in the taxation year by a trust governed by a RRIF or RRSP of the controlling individual that

(a) is reasonably attributable, directly or indirectly, to a property that is a prohibited investment, and a transitional prohibited property, for the trust, and

(b) accrues after March 22, 2011.

(14) Subsection 207.01(1) of the Act is amended by adding the following in alphabetical order:

“equity”, of a corporation, trust or partnership, means

(a) in the case of a corporation, a share of the capital stock of the corporation;

(b) in the case of a trust, an income or capital interest in the trust; and

(c) in the case of a partnership, an interest as a member of the partnership.

“excluded property”, at any time for a trust governed by a registered plan, means

(a) property described in paragraph 4900(1)(j.1) of the Income Tax Regulations;

(b) an equity of a mutual fund corporation, mutual fund trust or registered investment if

(i) either

(A) the equity is equity of a mutual fund corporation or mutual fund trust that derives all or substantially all its value from one or more mutual funds that are subject to, and substantially comply with, the requirements of National Instrument 81–102 Mutual Funds, as amended from time to time, of the Canadian Securities Administrators, or

(B) the corporation, trust or registered investment follows a reasonable policy of investment diversification,

(ii) the time is

(A) during the 24-month period that begins on the day on which the first taxation year of the corporation, trust or registered investment begins,

(B) during the 24-month period that ends on the day on which the last taxation year of the corporation, trust or registered investment ends, or

(C) where the equity is a share of the capital stock of a mutual fund corporation and the share derives all or substantially all its value from a partic- ular mutual fund,

(I) during the 24-month period that begins on the day on which the particular mutual fund is established, or

(II) during the 24-month period that ends on the day on which the particular mutual fund is terminated,

(iii) it is reasonable to conclude that none of the main purposes of the structure of the corporation, trust or registered investment, or of the terms and conditions of the equity, is to accommodate transactions or events that could affect the fair market value of the property held by the trust governed by the registered plan in a manner that would not occur in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly, and

(iv) it is reasonable to conclude that none of the main purposes of the incorporation, establishment or operation of the corporation, trust or registered investment, or of the particular mutual fund, is to benefit from this paragraph; or

(c) equity of a corporation, partnership or trust (in this paragraph referred to as the “investment entity”) if at that time

(i) the fair market value of the equity (in this paragraph referred to as the “arm’s length equity”) of the investment entity that is owned by persons who deal at arm’s length with the controlling individual of the registered plan is at least 90% of the fair market value of all the equity of the investment entity,

(ii) the total fair market value of the arm’s length equity and the debt of the investment entity that is owned by persons who deal at arm’s length with the controlling individual is at least 90% of the total fair market value of all the equity and debt of the investment entity,

(iii) the controlling individual, either alone or together with persons with whom the controlling individual does not deal at arm’s length, does not have the right to cast at least 10% of the votes, if any, that could be cast regarding the governance of the investment entity,

(iv) the specific terms and conditions of each share or unit of equity of the investment entity held by the trust governed by the registered plan are the same as, or substantially similar to, the terms and conditions of particular equity that is included in the arm’s length equity,

(v) the fair market value of the particular equity referred to in subparagraph (iv) is equal to at least 10% of the total fair market value of all equity of the investment entity having the specific terms and conditions referred to in subparagraph (iv) or terms and conditions that are substantially similar to those terms and conditions,

(vi) the controlling individual deals at arm’s length with the investment entity, and

(vii) it is reasonable to conclude that none of the main purposes of the structure of the investment entity, or of the terms and conditions of the equity, is to accommodate transactions or events that could affect the fair market value of the property held by the trust governed by the registered plan in a manner that would not occur in a normal commercial or investment context in which parties deal with each other at arm’s length and act prudently, knowledgeably and willingly.

“transitional prohibited property”, at any time, for a particular trust governed by a RRIF or RRSP of a controlling individual, means a property that is held by the particular trust at that time, that was held on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual and that was a prohibited investment for that trust on March 23, 2011.

(15) Paragraph 207.01(4)(a) of the Act is replaced by the following:

(a) in the case of a corporation, the individ- ual would, at that time, be a specified shareholder of the corporation if the references in the portion of the definition “specified shareholder” in subsection 248(1) before paragraph (a) to “in a taxation year” and “at any time in the year” were read as “at any time” and “at that time”, respectively;

(16) Section 207.01 of the Act is amended by adding the following after subsection (5):

(6) If, at any time, a property held by a trust governed by a registered plan becomes, or ceases to be, a prohibited investment or non-qualified investment for the trust, the trust is deemed to have disposed of the property immediately before that time for proceeds of disposition equal to the fair market value of the property at that time and to have reacquired the property at that time at a cost equal to that fair market value.

(7) For the purpose of computing the adjusted cost base to a trust governed by a RRIF or RRSP of a property that is a transitional prohibited property for the trust, the cost to the trust of the property until the property is disposed of by the trust is deemed to be equal to the fair market value of the property at the end of March 22, 2011.

(8) Subsection (9) applies in respect of a property if

(a) the property would, in the absence of subsection (9), have ceased at any time (in this subsection and subsection (9) referred to as the “relevant time”) to be a prohibited investment for a trust governed by a RRIF or RRSP of a controlling individual;

(b) the property is a transitional prohibited property for the trust immediately before the relevant time;

(c) the controlling individual elected under subsection 207.05(4); and

(d) the controlling individual elects in prescribed form that subsection (9) apply in respect of the property and the election is filed with the Minister on or before the day that is 90 days after the end of the taxation year of the controlling individual that includes the relevant time.

(9) If this subsection applies in respect of a property, the property is deemed to be a prohibited investment at and after the relevant time for every trust governed by a RRIF or RRSP of the controlling individual referred to in paragraph (8)(a).

(10) Subsection (11) applies in respect of a property if

(a) the property is transferred at any time (in this subsection and subsection (11) referred to as the “transfer time”) by a trust (in this subsection and subsection (11) referred to as the “transferor trust”) governed by a RRIF or RRSP of a controlling individual (in this subsection and subsection (11) referred to as the “transferor”) under paragraph 146(16)(b) or subsection 146.3(14) to a trust (in subsection (11) referred to as the “recipient trust”) governed by a RRIF or RRSP of which the spouse or common-law partner or former spouse or common-law partner (in this subsection and subsection (11) referred to as the “recipient”) of the transferor is the controlling individual;

(b) the property is a prohibited investment, and a transitional prohibited property, for the transferor trust immediately before the transfer time;

(c) the transferor elected under subsection 207.05(4); and

(d) the transferor and the recipient jointly elect in prescribed form that subsection (11) apply in respect of the property and the election

(i) is filed with the Minister on or before the day that is 90 days after the end of the taxation year of the transferor that includes the transfer time; and

(ii) designates an amount (in subsec-tion (11) referred to as the “designated amount”) in respect of the property that

(A) is not less than the adjusted cost base to the transferor trust of the property immediately before the transfer time, and

(B) does not exceed the greater of the amount determined under clause (A) and the fair market value of the property at the transfer time.

(11) If this subsection applies in respect of a property,

(a) the property is deemed to be, at and after the transfer time, a property that was held on March 22, 2011 by a trust governed by a RRIF or RRSP of the recipient and that was a prohibited investment for the trust on March 23, 2011;

(b) where the property would, in the absence of this paragraph, not be a prohibited investment for the recipient trust immediately after the transfer time, the property is deemed to be a prohibited investment at and after the transfer time for every trust governed by a RRIF or RRSP of the recipient;

(c) the recipient is deemed to have elected under subsection 207.05(4); and

(d) notwithstanding any other provision of this Act, the designated amount is deemed to be

(i) the proceeds of disposition to the transferor trust from the transfer described in paragraph (10)(a), and

(ii) the cost of the property to a trust governed by a RRIF or RRSP of the recipient until the property is disposed of by the trust.

(12) Subsection (13) applies in respect of a property other than money if

(a) the property is acquired at any time (in this subsection and subsection (13) referred to as the “exchange time”) by a trust (in this section and subsection (13) referred to as the “exchanging trust”) governed by a RRIF or RRSP of a controlling individual in exchange for another property (in this subsection referred to as the “exchanged property”) in a transaction to which any of section 51, subsection 85(1) and sections 85.1, 86 and 87 apply;

(b) the exchanged property is a prohibited investment, and a transitional prohibited property, for the exchanging trust immediately before the exchange time;

(c) the property is, or would be, if subsection 4900(14) of the Income Tax Regulations were read without reference to its paragraph (b), a qualified investment for the exchanging trust immediately after the exchange time; and

(d) the controlling individual elected under subsection 207.05(4).

(13) If this subsection applies in respect of a property,

(a) other than for the purposes of subsection (7), the property is deemed to be, at and after the exchange time, a property that was held on March 22, 2011 by a trust governed by a RRIF or RRSP of the controlling individual referred to in subsection (12) and that was a prohibited investment for the trust on March 23, 2011; and

(b) where the property would, in the absence of this paragraph, not be a prohibited investment for the exchanging trust immediately after the exchange time, the property is deemed to be a prohibited investment at and after the exchange time for every trust governed by a RRIF or RRSP of the controlling individual.

(17) Subsections (1) to (6), (9), (10), (13), (14) and (16) are deemed to have come into force on March 23, 2011, except that an election referred to in paragraph 207.01(8)(d) or (10)(d) of the Act, as enacted by subsection (16), is deemed to have been filed with the Minister of National Revenue on a timely basis if it is filed with the Minister on or before the day that is 90 days after the day on which this Act receives royal assent.

(18) Subsections (7) and (8) apply after March 22, 2011 in respect of investments acquired at any time.

(19) Subsections (11) and (12) are deemed to have come into force on July 1, 2011, except that they do not apply in relation to a swap transaction undertaken before 2022 to remove a property from a RRIF or RRSP if it is reasonable to conclude that tax would be payable under Part XI.01 of the Act if

(a) that Part were read without reference to subsection 207.05(4) of the Act; and

(b) the property were retained in the RRIF or RRSP.

(20) Subsection (15) is deemed to have come into force on January 1, 2009.

75. (1) Subsection 207.04(1) of the Act is replaced by the following:

207.04 (1) The controlling individual of a registered plan that governs a trust shall pay a tax under this Part for a calendar year if, at any time in the year, the trust acquires property that is a prohibited investment, or a non-qualified investment, for the trust.

(2) Subsection 207.04(3) of the Act is replaced by the following:

(3) For the purposes of this section and subsections 146(10.1), 146.2(6), 146.3(9) and 207.01(6), if a trust governed by a registered plan holds property at any time that is, for the trust, both a prohibited investment and a non-qualified investment, the property is deemed at that time not to be a non-qualified investment, but remains a prohibited investment, for the trust.

(3) Subsection 207.04(5) of the Act is repealed.

(4) Subsections (1) to (3) are deemed to have come into force on March 23, 2011.

76. (1) The portion of subsection 207.05(4) of the Act before paragraph (b) is replaced by the following:

(4) If an individual so elects before March 2, 2013 in prescribed form, subsection (1) does not apply in respect of any advantage that is an amount included in the calculation of the transitional prohibited investment benefit of the individual for a taxation year provided that the transitional prohibited investment benefit

(a) is paid to the individual, from a RRIF or RRSP of the individual, on or before the later of April 2, 2013 and the day that is 90 days after the end of the taxation year; and

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

77. (1) Subsection 207.06(2) of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):

(c) the extent to which payments have been made from the person’s registered plan.

(2) Subsection 207.06(3) of the Act is repealed.

(3) Subsections (1) and (2) are deemed to have come into force on March 23, 2011.

78. (1) Section 207.061 of the Act is replaced by the following:

207.061 A holder of a TFSA shall include in computing the holder’s income for a taxation year under Part I any portion of a distribution made in the year that is described in subparagraph (a)(ii) of the definition “specified distribution” in subsection 207.01(1) or subparagraph 207.06(1)(b)(ii) or that is specified by the Minister as part of an agreement to waive or cancel a liability for tax under this Part.

(2) Subsection (1) is deemed to have come into force on March 23, 2011.

79. The portion of subsection 207.07(1) of the Act before paragraph (a) is replaced by the following:

207.07 (1) A person who is liable to pay tax under this Part for all or any part of a calendar year shall before July of the following calendar year

80. (1) The definition “labour-sponsored funds tax credit” in subsection 211.7(1) of the Act is amended by striking out “and” at the end of paragraph (a) and by replacing paragraph (b) with the following:

(b) if the original acquisition of the share occurred after 1995 and before March 2, 2017, the amount that would be determined under subsection 127.4(6) — as that subsection would apply in respect of a claim made by the taxpayer under subsection 127.4(2) in respect of the original acquisition if subsection 127.4(6) were read without reference to paragraphs 127.4(6)(b) and (d) — in respect of the share; and

(c) in any other case, nil.

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

81. (1) Section 211.81 of the Act is replaced by the following:

211.81 If a particular amount is payable under a prescribed provision of a provincial law for a taxation year of an individual as determined for the purposes of that provincial law (referred to in this section as the “relevant provincial year”), and an amount has been included in the computation of the labour-sponsored funds tax credit of the individual under subsection 127.4(6) in respect of an approved share that has been disposed of by a qualifying trust in respect of the individual, the individual shall pay a tax for the taxation year in which the relevant provincial year ends equal to the amount deducted by the individual under subsection 127.4(2) in respect of the share.

(2) Subsection (1) is deemed to have come into force on October 24, 2012.

82. (1) Subparagraph 212.1(3)(b)(iv) of the English version of the Act is replaced by the following:

(iv) a partnership of which the taxpayer or a person described in one of subparagraphs (i) to (iii) is a majority-interest partner or a member of a majority-interest group of partners (as defined in subsection 251.1(3))

(2) Paragraph 212.1(3)(e) of the Act is replaced by the following:

(e) a “designated partnership” means a partnership of which either a majority-interest partner or every member of a majority-interest group of partners (as defined in subsection 251.1(3)) is a non-resident person; and

83. (1) Paragraph 214(3)(f) of the Act is replaced by the following:

(f) where subsection 104(13) would, if Part I were applicable, require any part of an amount payable by a trust in its taxation year to a beneficiary to be included in computing the income of the non-resident person who is a beneficiary of the trust, that part is deemed to be an amount paid or credited to that person as income of or from the trust

(i) on, or at, the earliest of

(A) the day on which the amount was paid or credited,

(B) the day that is 90 days after the end of the taxation year, and

(C) if the taxation year is deemed by subparagraph 128.1(4)(a)(i) to end after July 25, 2012, the time that is immediately before the end of the taxation year, and

(ii) not at any later time;

(2) Subsection (1) is deemed to have come into force on July 25, 2012.

84. (1) Subparagraph 219(1)(d)(ii) of the Act is replaced by the following:

(ii) an amount deductible because of paragraphs 111(1)(b) and 115(1)(d) in computing the corporation’s base amount,

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

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

(3) Subsection (1) applies to the 1998 and subsequent taxation years.

(4) Subsection (2) is deemed to have come into force on March 5, 2010.

85. (1) Paragraph 239(2.21)(b) of the Act is replaced by the following:

(b) who is an official to whom taxpayer information has been provided for a particular purpose under paragraph 241(4)(a), (d), (f), (f.1), (i), (j.1) or (j.2)

(2) Subsection 239(3) of the Act is replaced by the following:

(3) If a person is convicted under this section, the person is not liable to pay a penalty imposed under any of sections 162, 163, 163.2 and 163.3 for the same contravention unless the penalty is assessed before the information or complaint giving rise to the conviction was laid or made.

(3) Subsection (2) comes into force on the later of the day on which this Act receives royal assent and January 1, 2014.

86. (1) The Act is amended by adding the following after section 239:

239.1 (1) The definitions in subsection 163.3(1) apply in this section.

(2) Every person that, without lawful excuse, the proof of which lies on the person,

(a) uses an electronic suppression of sales device or a similar device or software in relation to records that are required to be kept by any person under section 230,

(b) acquires or possesses an electronic suppression of sales device, or a right in respect of an electronic suppression of sales device, that is, or is intended to be, capable of being used in relation to records that are required to be kept by any person under section 230,

(c) designs, develops, manufactures, possesses for sale, offers for sale, sells, transfers or otherwise makes available to another person an electronic suppression of sales device that is, or is intended to be, capable of being used in relation to records that are required to be kept by any person under section 230,

(d) supplies installation, upgrade or maintenance services for an electronic suppression of sales device that is, or is intended to be, capable of being used in relation to records that are required to be kept by any person under section 230, or

(e) participates in, assents to or acquiesces in the commission of, or conspires with any person to commit, an offence described in any of paragraphs (a) to (d),

is guilty of an offence and, in addition to any penalty otherwise provided, is liable on summary conviction to a fine of not less than $10,000 and not more than $500,000 or to imprisonment for a term not exceeding two years, or to both.

(3) Every person that is charged with an offence described in subsection (2) may, at the election of the Attorney General of Canada, be prosecuted on indictment and, if convicted, is, in addition to any penalty otherwise provided, liable to a fine of not less than $50,000 and not more than $1,000,000 or to imprisonment for a term not exceeding five years, or to both.

(4) A person that is convicted of an offence under this section is not liable to pay a penalty imposed under any of sections 162, 163, 163.2 and 163.3 for the same action unless a notice of assessment for that penalty was issued before the information or complaint giving rise to the conviction was laid or made.

(5) If, in any appeal under this Act, substantially the same facts are at issue as those that are at issue in a prosecution under this section, the Minister may file a stay of proceedings with the Tax Court of Canada and, upon that filing, the proceedings before that Court are stayed pending final determination of the outcome of the prosecution.

(2) Subsection (1) comes into force on the later of the day on which this Act receives royal assent and January 1, 2014.

87. (1) Subparagraphs 241(4)(d)(ix) and (x) of the Act are replaced by the following:

(ix) to an official of a department or agency of the Government of Canada or of a province as to the name, address, telephone number, occupation, size or type of business of a taxpayer, solely for the purpose of enabling that department or agency to obtain statistical data for research and analysis,

(x) to an official of the Canada Employment Insurance Commission or the Department of Employment and Social Development, solely for the purpose of the administration or enforcement of the Employment Insurance Act, an employment program of the Government of Canada (including, for greater certainty, any activity relating to a program for temporary foreign workers for which the administration or enforcement is the responsibility of the Minister of Employ-ment and Social Development under the Immigration and Refugee Protection Regulations) or the evaluation or formation of policy for that Act or program,

(2) Paragraph 241(4)(j.1) of the Act is replaced by the following:

(j.1) provide taxpayer information to an official or a designated person solely for the purpose of permitting the making of an adjustment to a social assistance payment made on the basis of a means, needs or income test if the purpose of the adjustment is to take into account the amount determined for C in subsection 122.61(1) in respect of a person for a taxation year;

(j.2) provide information obtained under section 122.62 to an official of the government of a province solely for the purposes of the administration or enforcement of a prescribed law of the province;

88. (1) Section 247 of the Act is amended by adding the following after subsection (7):

(7.1) Subsection (2) does not apply to adjust an amount of consideration paid, payable or accruing to a corporation resident in Canada (in this subsection referred to as the “parent”) in a taxation year of the parent for the provision of a guarantee to a person or partnership (in this subsection referred to as the “lender”) for the repayment, in whole or in part, of a particular amount owing to the lender by a non-resident person, if

(a) the non-resident person is a controlled foreign affiliate of the parent for the purposes of section 17 throughout the period in the year during which the particular amount is owing; and

(b) it is established that the particular amount would be an amount owing described in paragraph 17(8)(a) or (b) if it were owed to the parent.

(2) Subsection (1) applies to taxation years that begin after 1997 and in applying subsection 247(7.1) of the Act, as enacted by subsection (1), to taxation years that begin before February 24, 1998, section 17 of the Act is to be read as it read on January 24, 2005, except that if a taxpayer elects under this subsection in writing and files the election with the Minister of National Revenue on or before the taxpayer’s filing-due date for the taxation year that includes the day on which this Act receives royal assent,

(a) notwithstanding the time limitations in subsection 152(4) of the Act, the Minister of National Revenue may make such assessments, reassessments and determinations under Part I of the Act as are necessary to give effect to this subsection for a taxation year that ends before that day; and

(b) if the taxpayer so indicates in the election, subsection (1) does not apply to taxation years of the taxpayer that begin before December 22, 2012.

89. (1) The definition “trust” in subsection 248(1) of the Act is replaced by the following:

“trust” has the meaning assigned by subsection 104(1) and, unless the context otherwise requires, includes an estate;

(2) The definition “estate” in subsection 248(1) of the English version of the Act is replaced by the following:

“estate” has the meaning assigned by subsection 104(1) and includes, for civil law, a succession;

(3) Clause (e)(iii)(B) of the definition “automobile” in subsection 248(1) of the Act is replaced by the following:

(B) at least 30 kilometres outside the nearest point on the boundary of the nearest population centre, as defined by the last census dictionary published by Statistics Canada before the year, that has a population of at least 40,000 individuals as determined in the last census published by Statistics Canada before the year;

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

“majority-interest partner”, of a particular partnership at any time, means a person or partnership (in this definition referred to as the “taxpayer”)

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

“derivative forward agreement”, of a taxpayer, means an agreement entered into by the taxpayer to purchase or sell a capital property if

(a) the term of the agreement exceeds 180 days or the agreement is part of a series of agreements with a term that exceeds 180 days,

(b) in the case of a purchase agreement, the difference between the fair market value of the property delivered on settlement, including partial settlement, of the agreement and the amount paid for the property is attribut- able, in whole or in part, to an underlying interest (including a value, price, rate, variable, index, event, probability or thing) other than

(i) revenue, income or cashflow in respect of the property over the term of the agreement, changes in the fair market value of the property over the term of the agreement, or any similar criteria in respect of the property, or

(ii) if the purchase price is denominated in the currency of a country other than Canada, changes in the value of the Canadian currency relative to that other currency, and

(c) in the case of a sale agreement,

(i) the difference between the sale price of the property and the fair market value of the property at the time the agreement is entered into by the taxpayer is attributable, in whole or in part, to an underlying interest (including a value, price, rate, variable, index, event, probability or thing) other than

(A) revenue, income or cashflow in respect of the property over the term of the agreement, changes in the fair market value of the property over the term of the agreement, or any similar criteria in respect of the property, or

(B) if the sale price is denominated in the currency of a country other than Canada, changes in the value of the Canadian currency relative to that other currency, and

(ii) the agreement is part of an arrangement that has the effect — or would have the effect if the agreements that are part of the arrangement and that were entered into by persons or partnerships not dealing at arm’s length with the taxpayer were entered into by the taxpayer instead of non-arm’s length persons or partnerships— of eliminating a majority of the taxpayer’s risk of loss and opportunity for gain or profit in respect of the property for a period of more than 180 days;

“LIA policy” means a life insurance policy (other than an annuity) where

(a) a particular person or partnership becomes obligated after March 20, 2013 to repay an amount to another person or partnership (in this definition referred to as the “lender”) at a time determined by reference to the death of a particular individ- ual whose life is insured under the policy, and

(b) the lender is assigned an interest in

(i) the policy, and

(ii) an annuity contract the terms of which provide that payments are to continue for a period that ends no earlier than the death of the particular individual;

“synthetic disposition arrangement”, in respect of a property owned by a taxpayer, means one or more agreements or other arrangements that

(a) are entered into by the taxpayer or by a person or partnership that does not deal at arm’s length with the taxpayer,

(b) have the effect, or would have the effect if entered into by the taxpayer instead of the person or partnership, of eliminating all or substantially all the taxpayer’s risk of loss and opportunity for gain or profit in respect of the property for a definite or indefinite period of time, and

(c) can, in respect of any agreement or arrangement entered into by a person or partnership that does not deal at arm’s length with the taxpayer, reasonably be considered to have been entered into, in whole or in part, with the purpose of obtaining the effect described in paragraph (b);

“synthetic disposition period”, of a synthetic disposition arrangement, means the definite or indefinite period of time during which the synthetic disposition arrangement has, or would have, the effect described in paragraph (b) of the definition “synthetic disposition arrangement” in this subsection;

“10/8 policy” means a life insurance policy (other than an annuity) where

(a) an amount is or may become

(i) payable, under the terms of a borrowing, to a person or partnership that has been assigned an interest in the policy or in an investment account in respect of the policy, or

(ii) payable (within the meaning assigned by the definition “amount payable” in subsection 138(12)) under a policy loan (as defined in subsection 148(9)) made in accordance with the terms and conditions of the policy, and

(b) either

(i) the return credited to an investment account in respect of the policy

(A) is determined by reference to the rate of interest on the borrowing or policy loan, as the case may be, described in paragraph (a), and

(B) would not be credited to the account if the borrowing or policy loan, as the case may be, were not in existence, or

(ii) the maximum amount of an investment account in respect of the policy is determined by reference to the amount of the borrowing or policy loan, as the case may be, described in paragraph (a);

(6) Subsection (3) applies to the 2013 and subsequent taxation years.

(7) Subsection (5) is deemed to have come into force on March 21, 2013, except that the definitions “LIA policy” and “10/8 policy” in subsection 248(1) of the Act, as amended by subsection (5), apply to taxation years that end after March 20, 2013.

90. (1) Subsection 249(4) of the Act is replaced by the following:

(4) If at any time a taxpayer is subject to a loss restriction event (other than a foreign affiliate, of a taxpayer resident in Canada, that did not carry on a business in Canada at any time in its last taxation year that began before that time), then for the purposes of this Act,

(a) subject to paragraph (b), the taxpayer’s taxation year that would, but for this paragraph, have included that time is deemed to end immediately before that time, a new taxation year of the taxpayer is deemed to begin at that time and, for the purpose of determining the taxpayer’s fiscal period after that time, the taxpayer is deemed not to have established a fiscal period before that time; and

(b) subject to paragraph 128(1)(d), section 128.1 and paragraphs 142.6(1)(a) and 149(10)(a), and notwithstanding subsections (1) and (3), if the taxpayer’s taxation year that would, but for this subsection, have been its last taxation year that ended before that time, would, but for this paragraph, have ended within the seven-day period that ended immediately before that time, that taxation year is, except if the taxpayer is subject to a loss restriction event within that period, deemed to end immediately before that time, provided that the taxpayer so elects in its return of income under Part I for that taxation year.

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

91. (1) Paragraph 251.1(1)(e) of the English version of the Act is replaced by the following:

(e) a partnership and a majority-interest partner of the partnership;

(2) Paragraph (a) of the definition “majority-interest group of partners” in subsection 251.1(3) of the English version of the Act is replaced by the following:

(a) if one person held the interests of all members of the group, that person would be a majority-interest partner of the partnership; and

(3) Subparagraph 251.1(4)(d)(iv) of the English version of the Act is replaced by the following:

(iv) in determining whether a contributor to one trust is affiliated with a contributor to another trust, individuals connected by blood relationship, marriage, common-law partnership or adoption are deemed to be affiliated with one another.

92. (1) The Act is amended by adding the following after section 251.1:

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

“beneficiary” has the same meaning as in subsection 251.1(3).

“equity” has the same meaning as in subsection 122.1(1) read without reference to paragraph (e) of the definition “equity” in that subsection.

“equity value” has the same meaning as in subsection 122.1(1).

“majority-interest beneficiary” has the same meaning as in subsection 251.1(3).

“majority-interest group of beneficiaries” has the same meaning as in subsection 251.1(3).

“majority-interest group of partners” has the same meaning as in subsection 251.1(3).

“person” includes a partnership.

“specified right”, held at any time by a person in respect of a trust, means a right under a contract, in equity or otherwise, to acquire, either immediately or in the future and either absolutely or contingently, equity of the trust, or to cause the trust to redeem or cancel equity of the trust, unless the right is not exercisable at that time because its exercise is contingent on the death, bankruptcy or permanent disability of an individual.

“subsidiary”, of a particular person at any time, means a corporation, partnership or trust (in this definition referred to as the “subject entity”) where

(a) the particular person holds at that time property

(i) that is equity of the subject entity, or

(ii) that derives all or part of its fair market value, directly or indirectly, from equity of the subject entity; and

(b) the total of the following amounts is at that time equal to more than 50% of the equity value of the subject entity:

(i) each amount that is the fair market value at that time of equity of the subject entity that is held at that time by the particular person or a person with whom the particular person is affiliated, and

(ii) each amount (other than an amount described in subparagraph (i)) that is the portion of the fair market value at that time — derived directly or indirectly from equity of the subject entity — of a property that is held at that time by the particular person or a person with whom the particular person is affiliated.

(2) For the purposes of this Act, a taxpayer is at any time subject to a loss restriction event if

(a) the taxpayer is a corporation and at that time control of the corporation is acquired by a person or group of persons; or

(b) the taxpayer is a trust and

(i) that time is after March 20, 2013 and after the time at which the trust is created, and

(ii) at that time a person becomes a majority-interest beneficiary, or a group of persons becomes a majority-interest group of beneficiaries, of the trust.

(3) For the purposes of paragraph (2)(b), a person is deemed not to become a majority-interest beneficiary, and a group of persons is deemed not to become a majority-interest group of beneficiaries, as the case may be, of a particular trust solely because of

(a) the acquisition of equity of the particular trust by

(i) a particular person from another person with whom the particular person was affiliated immediately before the acquisition,

(ii) a particular person who was affiliated with the particular trust immediately before the acquisition,

(iii) an estate from an individual, if the estate arose on and as a consequence of the death of the individual and the estate acquired the equity from the individual as a consequence of the death, or

(iv) a particular person from an estate that arose on and as a consequence of the death of an individual, if the estate acquired the equity from the individual as a consequence of the death and the individual was affiliated with the particular person immediately before the death;

(b) a variation in the terms of the particular trust, the satisfaction of, or failure to satisfy, a condition under the terms of the particular trust, the exercise by any person of, or the failure by any person to exercise, a power, or (without limiting the generality of the foregoing) the redemption, surrender or termination of equity of the particular trust at any time, if each majority-interest beneficiary, and each member of a majority-interest group of beneficiaries, of the particular trust immediately after that time was affiliated with the particular trust immediately before

(i) that time, or

(ii) in the case of the redemption or surrender of equity of the particular trust that was held, immediately before that time, by an estate and that was acquired by the estate from an individual as described in subparagraph (a)(iii), the individual’s death;

(c) the transfer at any time of all the equity of the particular trust to a corporation, partnership or another trust (in this paragraph referred to as the “acquirer”), if

(i) the only consideration for the transfer is equity (determined without reference to paragraph (d) of the definition “equity” in subsection 122.1(1)) of the acquirer,

(ii) at all times before that time the acquirer held no property or held only property having a nominal value, and

(iii) immediately after that time the acquirer is neither

(A) a subsidiary of any person, nor

(B) a corporation controlled, directly or indirectly in any manner whatever, by a person or group of persons;

(d) the transfer at any time of equity of the particular trust to a corporation, partnership or another trust (in this paragraph referred to as the “acquirer”), if

(i) immediately before that time a person was a majority-interest beneficiary, or a group of persons was a majority-interest group of beneficiaries, of the particular trust,

(ii) immediately after that time the person, or group of persons, as the case may be, described in subparagraph (i) in respect of the particular trust, and no other person or group of persons, is

(A) if the acquirer is a corporation, a person by whom, or a group of persons by which, the corporation is controlled directly or indirectly in any manner whatever,

(B) if the acquirer is a partnership, a majority-interest partner, or a majority-interest group of partners, of the partnership, and

(C) if the acquirer is a trust, a majority-interest beneficiary, or a majority-interest group of beneficiaries, of the trust, and

(iii) at no time during a series of transactions or events that includes the transfer does the person or group of persons, as the case may be, described in subparagraph (i) in respect of the particular trust, cease to be a person or group of persons described in any of clauses (ii)(A) to (C) in respect of the acquirer; or

(e) a transaction (other than a transaction one or more of the parties to which may be excused from completing as a result of changes to this Act) the parties to which are obligated to complete under the terms of an agreement in writing between the parties entered into before March 21, 2013.

(4) For the purposes of paragraph (2)(b) and subject to subsection (3), a person is deemed to become at a particular time a majority-interest beneficiary of a particular trust if

(a) a particular person is at and immediately before the particular time a majority-interest beneficiary, or a member of a majority-interest group of beneficiaries, of the partic- ular trust, and the particular person is at the particular time, but is not immediately before the particular time, a subsidiary of another person (in this paragraph referred to as the “acquirer”), unless

(i) the acquirer is immediately before the particular time affiliated with the particular trust, or

(ii) this paragraph previously applied to deem a person to become a majority-interest beneficiary of the particular trust because the particular person became, as part of a series of transactions or events that includes the particular person becoming at the particular time a subsidiary of the acquirer, a subsidiary of another person that is at the particular time a subsidiary of the acquirer; or

(b) at the particular time, as part of a series of transactions or events, two or more persons acquire equity of the particular trust in exchange for or upon a redemption or surrender of equity of, or as a consequence of a distribution from, a corporation, partnership or another trust, unless

(i) a person affiliated with the corporation, partnership or other trust was immediately before the particular time a majority-interest beneficiary of the particular trust,

(ii) if all the equity of the particular trust that was acquired at or before the particular time as part of the series were acquired by one person, the person would not at the particular time be a majority-interest beneficiary of the particular trust, or

(iii) this paragraph previously applied to deem a person to become a majority-interest beneficiary of the particular trust because of an acquisition of equity of the particular trust that was part of the series.

(5) For the purposes of this section,

(a) in determining whether persons are affiliated with each other

(i) except for the purposes of paragraph (b) of the definition “subsidiary” in subsection (1), section 251.1 is to be read without reference to the definition “controlled” in subsection 251.1(3),

(ii) in determining whether an individual (other than a trust) is affiliated with another individual (other than a trust), individuals connected by blood relationship, marriage or common-law partnership or adoption are deemed to be affiliated with one another, and

(iii) if, at any time as part of a series of transactions or events a person acquires equity of a corporation, partnership or trust, and it can reasonably be concluded that one of the reasons for the acquisition, or for making any agreement or undertaking in respect of the acquisition, is to cause a condition in paragraph (3)(a) or (b) or subparagraph (4)(a)(i) or (b)(i) regarding affiliation to be satisfied at a particular time, the condition is deemed not to be satisfied at the particular time; and

(b) in determining whether a particular person becomes at any time a majority-interest beneficiary, or a particular group of persons becomes at any time a majority-interest group of beneficiaries, of a trust, the fair market value of each person’s equity of the trust is to be determined at and immediately before that time

(i) without reference to the portion of that fair market value that is attributable to property acquired if it can reasonably be concluded that one of the reasons for the acquisition is to cause paragraph (2)(b), or any provision that applies by reference to a trust being subject to a loss restriction event at any time, not to apply,

(ii) without reference to the portion of that fair market value that is attributable to a change in the fair market value of all or part of any equity of the trust if it can reasonably be concluded that one of the reasons for the change is to cause paragraph (2)(b), or any provision that applies by reference to a trust being subject to a loss restriction event at any time, not to apply, and

(iii) as if each specified right held immediately before that time by the particular person, or by a member of the particular group, in respect of the trust is at that time exercised if it can reasonably be concluded that one of the reasons for the acquisition of the right is to cause paragraph (2)(b), or any provision that applies by reference to a trust being subject to a loss restriction event at any time, not to apply.

(6) For the purposes of this Act, if a trust is subject to a loss restriction event at a particular time during a day, the trust is deemed to be subject to the loss restriction event at the beginning of that day and not at the particular time unless the trust elects in its return of income under Part I filed for its taxation year that ends immediately before the loss restriction event to have this subsection not apply.

(2) Subsection (1) is deemed to have come into force on March 21, 2013.

93. (1) The portion of subsection 256(7) of the Act before paragraph (a) is replaced by the following:

(7) For the purposes of this subsection, of section 55, subsections 66(11), 66.5(3), 66.7(10) and (11), 85(1.2), 88(1.1) and (1.2), 110.1(1.2) and 111(5.4) and paragraph 251.2(2)(a) and of subsection 5905(5.2) of the Income Tax Regulations,

(2) Clause 256(7)(a)(i)(D) of the Act is replaced by the following:

(D) a particular person who acquired the shares from an estate that arose on and as a consequence of the death of an individual, if the estate acquired the shares from the individual as a consequence of the death and the individual was related to the particular person immediately before the death,

(3) Subsection 256(7) of the Act is amended by striking out “and” at the end of paragraph (f) and by adding the following after paragraph (g):

(h) if at any time after September 12, 2013 a trust is subject to a loss restriction event and immediately before that time the trust, or a group of persons a member of which is the trust, controls a corporation, control of the corporation and of each corporation controlled by it immediately before that time is deemed to have been acquired at that time by a person or group of persons; and

(i) if at any time after September 12, 2013 a trust controls a corporation, control of the corporation is deemed not to be acquired solely because of a change in the trustee or legal representative having ownership or control of the trust’s property if

(i) the change is not part of a series of transactions or events that includes a change in the beneficial ownership of the trust’s property, and

(ii) no amount of income or capital of the trust to be distributed, at any time at or after the change, in respect of any interest in the trust depends upon the exercise by any person or partnership, or the failure of any person or partnership, to exercise any discretionary power.

(4) The portion of subsection 256(8) of the French version of the Act before paragraph (a) is replaced by the following:

(5) Paragraph 256(8)(b) of the Act is replaced by the following:

(b) to avoid the application of subsection 10(10) or 13(24), paragraph 37(1)(h) or subsection 55(2) or 66(11.4) or (11.5), paragraph 88(1)(c.3) or subsection 111(4), (5.1), (5.2) or (5.3), 181.1(7), 190.1(6) or 251.2(2),

(6) The portion of subsection 256(8) of the English version of the Act after paragraph (e) is replaced by the following:

the taxpayer is deemed to be in the same position in relation to the control of the corporation as if the right were immediate and absolute and as if the taxpayer had exercised the right at that time for the purpose of determining whether control of a corporation has been acquired for the purposes of subsections 10(10) and 13(24), section 37, subsections 55(2), 66(11), (11.4) and (11.5), 66.5(3), 66.7(10) and (11), section 80, paragraph 80.04(4)(h), subparagraph 88(1)(c)(vi), paragraph 88(1)(c.3), subsections 88(1.1) and (1.2), sections 111 and 127, subsections 181.1(7), 190.1(6) and 249(4) and paragraph 251.2(2)(a) and in determining for the purposes of section 251.1 and paragraphs 251.2(3)(c) and (d) whether a corporation is controlled by any other person or group of persons.

(7) Subsections (1) and (3) to (6) are deemed to have come into force on March 21, 2013.

(8) Subsection (2) is deemed to have come into force on September 13, 2013.

94. (1) The Act is amended by adding the following after section 256:

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

“attribute trading restriction” means a restriction on the use of a tax attribute arising on the application, either alone or in combination with other provisions, of any of this section, subsections 10(10) and 13(24), section 37, subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 88(1.1) and (1.2), sections 111 and 127 and subsections 181.1(7), 190.1(6), 249(4) and 256(7).

“person” includes a partnership.

“specified provision” means any of subsections 10(10) and 13(24), paragraph 37(1)(h), subsections 66(11.4) and (11.5), 66.7(10) and (11), 69(11) and 111(4), (5), (5.1), (5.2) and (5.3), paragraphs (j) and (k) of the definition “investment tax credit” in subsection 127(9), subsections 181.1(7) and 190.1(6) and any provision of similar effect.

(2) Subsection (3) applies at a particular time in respect of a corporation if

(a) shares of the capital stock of the corporation held by a person, or the total of all shares of the capital stock of the corporation held by members of a group of persons, as the case may be, have at the particular time a fair market value that exceeds 75% of the fair market value of all the shares of the capital stock of the corporation;

(b) shares, if any, of the capital stock of the corporation held by the person, or the total of all shares, if any, of the capital stock of the corporation held by members of the group, have immediately before the particular time a fair market value that does not exceed 75% of the fair market value of all the shares of the capital stock of the corporation;

(c) the person or group does not control the corporation at the particular time; and

(d) it is reasonable to conclude that one of the main reasons that the person or group does not control the corporation is to avoid the application of one or more specified provisions.

(3) If this subsection applies at a particular time in respect of a corporation, then for the purposes of the attribute trading restrictions,

(a) the person or group referred to in subsection (2)

(i) is deemed to acquire control of the corporation, and each corporation controlled by the corporation, at the particular time, and

(ii) is not deemed to have control of the corporation, and each corporation controlled by the corporation, at any time after the particular time solely because this paragraph applied at the particular time; and

(b) during the period that the condition in paragraph (2)(a) is satisfied, each corporation referred to in paragraph (a) — and any corporation incorporated or otherwise formed subsequent to that time and controlled by that corporation — is deemed not to be related to, or affiliated with, any person to which it was related to, or affiliated with, immediately before paragraph (a) applies.

(4) For the purpose of applying paragraph (2)(a) in respect of a person or group of persons,

(a) if it is reasonable to conclude that one of the reasons that one or more transactions or events occur is to cause a person or group of persons not to hold shares having a fair market value that exceeds 75% of the fair market value of all the shares of the capital stock of a corporation, the paragraph is to be applied without reference to those transactions or events; and

(b) the person, or each member of the group, is deemed to have exercised each right that is held by the person or a member of the group and that is referred to in paragraph 251(5)(b) in respect of a share of the corporation referred to in paragraph (2)(a).

(5) For the purposes of subsections (2) to (4), if the fair market value of the shares of the capital stock of a corporation is nil at any time, then for the purpose of determining the fair market value of those shares, the corporation is deemed, at that time, to have assets net of liabilities equal to $100,000 and to have $100,000 of income for the taxation year that includes that time.

(6) If, at any time as part of a transaction or event or series of transactions or events, control of a particular corporation is acquired by a person or group of persons and it can reasonably be concluded that one of the main reasons for the acquisition of control is so that a specified provision does not apply to one or more corporations, the attribute trading restrictions are deemed to apply to each of those corporations as if control of each of those corporations were acquired at that time.

(2) Subsection (1) is deemed to have come into force on March 21, 2013, except that it does not apply to an event or transaction that occurs

(a) before March 21, 2013, or

(b) after March 20, 2013 pursuant to an obligation created by the terms of an agreement in writing entered into between parties before March 21, 2013, and for the purposes of this paragraph, parties will be considered not to be obligated if one or more of those parties may be excused from fulfilling the obligation as a result of changes to the Act.