Bill C-43

2nd Session, 41st Parliament,

62-63 Elizabeth II, 2013-2014

house of commons of canada

BILL C-43

A second Act to implement certain provisions of the budget tabled in Parliament on February 11, 2014 and other measures

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 2014 Act, No. 2.

PART 1

AMENDMENTS TO THE INCOME TAX ACT AND A RELATED TEXT

Income Tax Act

2. (1) Subparagraph (a)(i) of the description of B in subsection 12(10.2) of the Income Tax Act is replaced by the following:

(i) deemed by subsection (10.4) or 104(5.1) or (14.1) (as it read for the taxpayer’s 2015 taxation year) to have been paid out of the taxpayer’s NISA Fund No. 2 before the particular time, or

(2) Subsection (1) applies to the 2016 and subsequent taxation years.

3. (1) Paragraph 14(1.01)(c) of the Act is replaced by the following:

(c) if the eligible capital property is a qualified farm or fishing property (within the meaning assigned by subsection 110.6(1)) of the taxpayer at that time, the capital property deemed by paragraph (b) to have been disposed of by the taxpayer is deemed to be a qualified farm or fishing property of the taxpayer at that time.

(2) Paragraph 14(1.02)(c) of the Act is replaced by the following:

(c) if the eligible capital property is a qualified farm or fishing property (within the meaning assigned by subsection 110.6(1)) of the taxpayer at that time, the capital property deemed by paragraph (b) to have been disposed of by the taxpayer is deemed to be a qualified farm or fishing property of the taxpayer at that time.

(3) The portion of subsection 14(1.1) of the Act before paragraph (a) is replaced by the following:

(1.1) For the purposes of section 110.6 and paragraph 3(b) as it applies for the purposes of that section, an amount included under paragraph (1)(b) in computing a taxpayer’s income for a particular taxation year from a business is deemed to be a taxable capital gain of the taxpayer for the year from the disposition in the year of qualified farm or fishing property to the extent of the lesser of

(4) The descriptions of A and B in paragraph 14(1.1)(b) of the Act are replaced by the following:

A      is the amount by which the total of

(i) 3/4 of the total of all amounts each of which is the taxpayer’s proceeds from a disposition in a preceding taxation year that began after 1987 and ended before February 28, 2000 of eligible capital property in respect of the business that, at the time of the disposition, was a qualified farm property (within the meaning assigned by subsection 110.6(1)) of the taxpayer,

(ii) 2/3 of the total of all amounts each of which is the taxpayer’s proceeds from a disposition in the particular year or a preceding taxation year that ended after February 27, 2000 and before October 18, 2000 of eligible capital property in respect of the business that, at the time of the disposition, was a qualified farm property (within the meaning assigned by subsection 110.6(1)) of the taxpayer, and

(iii) 1/2 of the total of all amounts each of which is the taxpayer’s proceeds from a disposition in the particular year or a preceding taxation year that ended after October 17, 2000 of eligible capital property in respect of the business that, at the time of the disposition, was a qualified farm property, a qualified fishing property or a qualified farm or fishing property (within the meaning assigned by subsection 110.6(1)) of the taxpayer

exceeds the total of

(iv) 3/4 of the total of all amounts each of which is

(A) an eligible capital expenditure of the taxpayer in respect of the business that was made or incurred in respect of a property that was, at the time of disposition, a qualified farm property disposed of by the taxpayer in a preceding taxation year that began after 1987 and ended before February 28, 2000, or

(B) an outlay or expense of the taxpayer that was not deductible in computing the taxpayer’s income and that was made or incurred for the purpose of making a disposition referred to in clause (A),

(v) 2/3 of the total of all amounts each of which is

(A) an eligible capital expenditure of the taxpayer in respect of the business that was made or incurred in respect of a property that was, at the time of disposition, a qualified farm property disposed of by the taxpayer in the particular year or a preceding taxation year that ended after February 27, 2000 and before October 18, 2000, or

(B) an outlay or expense of the taxpayer that was not deductible in computing the taxpayer’s income and that was made or incurred for the purpose of making a disposition referred to in clause (A), and

(vi) 1/2 of the total of all amounts each of which is

(A) an eligible capital expenditure of the taxpayer in respect of the business that was made or incurred in respect of a property that was, at the time of disposition, a qualified farm property, a qualified fishing property or a qualified farm or fishing property disposed of by the taxpayer in the particular year or a preceding taxation year that ended after October 17, 2000, or

(B) an outlay or expense of the taxpayer that was not deductible in computing the taxpayer’s income and that was made or incurred for the purpose of making a disposition referred to in clause (A), and

B      is the total of all amounts each of which is

(i) that portion of an amount deemed by subparagraph (1)(a)(v) (as it applied in respect of the business to fiscal periods that began after 1987 and ended before February 23, 1994) to be a taxable capital gain of the taxpayer that can reasonably be attributed to a disposition of a property that was, at the time of disposition, a qualified farm property of the taxpayer, or

(ii) an amount deemed by this section to be a taxable capital gain of the taxpayer for a taxation year preceding the partic-ular year from the disposition of a property that was, at the time of disposition, a qualified farm property, a qualified fishing property or a qualified farm or fishing property of the taxpayer.

(5) Subsection 14(1.2) of the Act is repealed.

(6) Subsections (1) to (5) apply to dispositions and transfers that occur in the 2014 and subsequent taxation years.

4. (1) The portion of subsection 15(2.14) of the Act before paragraph (a) is replaced by the following:

(2.14) For purposes of this subsection, subsection (2.11), section 17.1 and subsection 18(5),

(2) Subsection (1) applies to taxation years that end after March 28, 2012, except that, if an election is made by a taxpayer under subsection 49(3) of the Jobs and Growth Act, 2012, subsection (1) does not apply to taxation years of the taxpayer that end before August 14, 2012.

5. (1) Subsection 17(1) of the Act is replaced by the following:

(2) The portion of paragraph 17(2)(b) of the Act before subparagraph (i) is replaced by the following:

(b) it is reasonable to conclude that the amount or a portion of the amount became owing, or was permitted to remain owing, to the particular person or partnership because

(3) The portion of subsection 17(2) of the Act after paragraph (b) is replaced by the following:

the non-resident person is deemed at that time to owe to the corporation an amount equal to the amount, or the portion of the amount, as the case may be, owing to the particular person or partnership.

(4) Subsection (1) applies to taxation years that begin after February 23, 1998.

(5) Subsections (2) and (3) apply to taxation years that begin after July 12, 2013.

6. (1) The portion of subsection 18(5) of the Act before the first definition is replaced by the following:

(5) Notwithstanding any other provision of this Act (other than subsection (5.1)), in this subsection and subsections (4) and (5.1) to (6.1),

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

(b) an amount outstanding at the particular time as or on account of a debt or other obligation

(i) to pay an amount to

(A) a non-resident insurance corporation to the extent that the obligation was, for the non-resident insurance corporation’s taxation year that included the particular time, designated insurance property in respect of an insurance business carried on in Canada through a permanent establishment as defined by regulation, or

(B) an authorized foreign bank, if the bank uses or holds the obligation at the particular time in its Canadian banking business, or

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

(4) Subsection 18(6) of the Act is replaced by the following:

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

(7) For the purposes of this subsection, paragraph (4)(a), subsections (5) to (6.1) and paragraph 12(1)(l.1), each member of a partnership at any time is deemed at that time

(6) Subsections (1) and (3) to (5) apply to taxation years that begin after 2014.

(7) Subsection (2) applies to taxation years that end after March 28, 2012, except that, if an election is made by a taxpayer under subsection 49(3) of the Jobs and Growth Act, 2012, subsection (2) does not apply to taxation years of the taxpayer that end before August 14, 2012.

7. (1) Paragraph 28(1)(g) of the Act is replaced by the following:

(g) the total of all amounts each of which is an amount deducted for the year under paragraph 20(1)(a), (b) or (uu), subsection 20(16) or 24(1), section 30 or subsection 80.3(2), (4) or (4.1) in respect of the business,

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

8. (1) Paragraph 34.1(1)(a) of the Act is replaced by the following:

(a) an individual (other than a graduated rate estate) carries on a business in a taxation year,

(2) Paragraph 34.1(2)(a) of the Act is replaced by the following:

(a) an individual (other than a graduated rate estate) begins carrying on a business in a taxation year and not earlier than the beginning of the first fiscal period of the business that begins in the year and ends after the end of the year (in this subsection referred to as the “particular period”), and

(3) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.

9. (1) Subparagraph 38(a.1)(ii) of the Act is replaced by the following:

(ii) the disposition is deemed by section 70 to have occurred and the property is

(A) a security described in subparagraph (i), and

(B) the subject of a gift to which subsection 118.1(5.1) applies and that is made by the taxpayer’s graduated rate estate to a qualified donee, or

(2) Subparagraph 38(a.2)(ii) of the Act is replaced by the following:

(ii) the disposition is deemed by section 70 to have occurred and the property is

(3) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.

10. (1) Subparagraph 39(1)(a)(i.1) of the Act is replaced by the following:

(i.1) an object that the Canadian Cultural Property Export Review Board has determined meets the criteria set out in paragraphs 29(3)(b) and (c) of the Cultural Property Export and Import Act if

(A) the disposition is to an institution or a public authority in Canada that was, at the time of the disposition, designated under subsection 32(2) of that Act either generally or for a specified purpose related to that object, or

(2) Subparagraph 39(1)(c)(vii) of the Act is replaced by the following:

(vii) in the case of a share to which subparagraph (vi) applies and where the taxpayer is a trust referred to in paragraph 104(4)(a) or (a.4), the total of all amounts each of which is an amount received after 1971 or receivable at the time of the disposition by the settlor (within the meaning assigned by subsection 108(1)) or by the settlor’s spouse as a taxable dividend on the share or on any other share in respect of which it is a substituted share, and

(3) Subparagraph 39(1)(c)(vii) of the Act, as enacted by subsection (2), is replaced by the following:

(vii) in the case of a share to which subparagraph (vi) applies and where the taxpayer is a trust for which a day is to be, or has been, determined under paragraph 104(4)(a), or (a.4) by reference to a death or later death, as the case may be, the total of all amounts each of which is an amount received after 1971 or receivable at the time of the disposition, as a taxable dividend on the share or on any other share in respect of which it is a substituted share, by an individual whose death is that death or later death, as the case may be, or a spouse or common-law partner of the individual, and

(4) Subsections (1) and (3) apply to the 2016 and subsequent taxation years.

(5) Subsection (2) applies to the 2014 and 2015 taxation years.

11. (1) Subparagraph 40(1.1)(c)(ii) of the Act is replaced by the following:

(ii) a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer (such a share or an interest having the meaning assigned by subsection 70(10)), or

(2) Paragraph 40(1.1)(c) of the Act is amended by striking out “or” at the end of subparagraph (iii) and by repealing subparagraph (iv).

(3) The portion of subsection 40(3.12) of the Act before paragraph (a) is replaced by the following:

(3.12) If a corporation, an individual (other than a trust) or a graduated rate estate (each of which is referred to in this subsection as the “taxpayer”) is a member of a partnership at the end of a fiscal period of the partnership, the taxpayer is deemed to have a loss from the disposition at that time of the member’s interest in the partnership equal to the amount that the taxpayer elects in the taxpayer’s return of income under this Part for the taxation year that includes that time, not exceeding the lesser of

(4) Subsections (1) and (2) apply to dispositions and transfers that occur in the 2014 and subsequent taxation years.

(5) Subsection (3) applies to the 2016 and subsequent taxation years.

12. (1) Subparagraph 69(1)(b)(ii) of the Act is replaced by the following:

(ii) to any person by way of gift, or

(2) Subsection (1) applies to the 2016 and subsequent taxation years.

13. (1) Paragraph 70(9)(a) of the English version of the Act is replaced by the following:

(a) the property was, before the death of the taxpayer, used principally in a farming or fishing business carried on in Canada in which the taxpayer, the spouse or common-law partner of the taxpayer or a child or parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot);

(2) Paragraph 70(9.1)(c) of the English version of the Act is replaced by the following:

(c) the property is, immediately before the beneficiary’s death, land or a depreciable property of a prescribed class of the trust that was used in a farming or fishing business carried on in Canada;

(3) Paragraph 70(9.2)(a) of the Act is replaced by the following:

(a) the property was, immediately before the death of the taxpayer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer;

(4) The portion of subparagraph 70(9.21)(a)(ii) of the Act before clause (A) is replaced by the following:

(ii) where the property is, immediately before the death of the taxpayer, a share of the capital stock of a family farm or fishing corporation of the taxpayer,

(5) The portion of subparagraph 70(9.21)(b)(ii) of the Act before clause (A) is replaced by the following:

(ii) subject to subparagraph (iii), where the property is, immediately before the taxpayer’s death, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer,

(6) Paragraph 70(9.3)(a) of the Act is replaced by the following:

(a) the property (or property for which the property was substituted) was transferred to the trust by the settlor and was, immediately before that transfer, a share of the capital stock of a family farm or fishing corporation of the settlor or an interest in a family farm or fishing partnership of the settlor;

(7) Subparagraphs 70(9.3)(c)(i) and (ii) of the Act are replaced by the following:

(i) a share of the capital stock of a Canadian corporation that would, immediately before that beneficiary’s death, be a share of the capital stock of a family farm or fishing corporation of the settlor, if the settlor owned the share at that time and paragraph (a) of the definition “share of the capital stock of a family farm or fishing corporation” in subsection (10) were read without the words “in which the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot)”, or

(8) Subparagraph 70(9.3)(c)(iii) of the Act is replaced by the following:

(iii) a partnership interest in a partnership that carried on in Canada a farming or fishing business in which it used all or substantially all of the property;

(9) The portion of subparagraph 70(9.31)(a)(ii) of the Act before clause (A) is replaced by the following:

(ii) where the property is, immediately before the beneficiary’s death, a share described in subparagraph (9.3)(c)(i),

(10) The portion of subparagraph 70(9.31)(b)(ii) of the Act before clause (A) is replaced by the following:

(ii) subject to subparagraph (iii), where the property is, immediately before the beneficiary’s death, a share described in subparagraph (9.3)(c)(i) or a partnership interest described in subparagraph (9.3)(c)(iii),

(11) Subsection 70(9.8) of the Act is replaced by the following:

(9.8) For the purposes of subsections (9) and 14(1), paragraph 20(1)(b), subsection 73(3) and paragraph (d) of the definition “qualified farm or fishing property” in subsection 110.6(1), a property of an individual is, at a particular time, deemed to be used by the individual in a farming or fishing business carried on in Canada if, at that particular time, the property is being used, principally in the course of carrying on a farming or fishing business in Canada, by

(a) a corporation, a share of the capital stock of which is a share of the capital stock of a family farm or fishing corporation of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual; or

(b) a partnership, a partnership interest in which is an interest in a family farm or fishing partnership of the individual, the individual’s spouse or common-law partner, a child of the individual or a parent of the individual.

(12) The definitions “interest in a family farm partnership”, “interest in a family fishing partnership”, “share of the capital stock of a family farm corporation” and “share of the capital stock of a family fishing corporation” in subsection 70(10) of the Act are repealed.

(13) The definition “child” in subsection 70(10) of the Act is amended by striking out “and” at the end of paragraph (b) and by adding the following after that paragraph:

(14) Subsection 70(10) of the Act is amended by adding the following in alphabetical order:

(15) Subsection 70(12) of the Act is replaced by the following:

(12) For the purpose of the definition “share of the capital stock of a family farm or fishing corporation” in subsection (10), the fair market value of a net income stabilization account is deemed to be nil.

(16) Subsections (1) to (10) and (12) to (15) are deemed to have come into force on January 1, 2014.

(17) Subsection (11) applies to dispositions and transfers that occur in the 2014 and subsequent taxation years.

14. (1) Paragraph 73(3)(a) of the English version of the Act is replaced by the following:

(a) the property was, before the transfer, land in Canada or depreciable property in Canada of a prescribed class, of the taxpayer, or any eligible capital property in respect of a farming or fishing business carried on in Canada by the taxpayer;

(2) Paragraph 73(3)(c) of the English version of the Act is replaced by the following:

(c) the property has been used principally in a farming or fishing business in which the taxpayer, the taxpayer’s spouse or common-law partner, a child of the taxpayer or a parent of the taxpayer was actively engaged on a regular and continuous basis (or, in the case of property used in the operation of a woodlot, was engaged to the extent required by a prescribed forest management plan in respect of that woodlot).

(3) Paragraph 73(4)(b) of the Act is replaced by the following:

(b) the property was, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer (as defined in subsection 70(10)).

(4) The portion of paragraph 73(4.1)(a) of the Act before subparagraph (i) is replaced by the following:

(a) subject to paragraph (c), where the property was, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer, the taxpayer is deemed to have disposed of the property at the time of the transfer for proceeds of disposition equal to,

(5) Paragraph 73(4.1)(b) of the Act is replaced by the following:

(b) subject to paragraph (c), where the property is, immediately before the transfer, a share of the capital stock of a family farm or fishing corporation of the taxpayer or an interest in a family farm or fishing partnership of the taxpayer, the child is deemed to have acquired the property for an amount equal to the taxpayer’s proceeds of disposition in respect of the disposition of the property determined under paragraph (a);

(6) The portion of paragraph 73(4.1)(c) of the Act before subparagraph (i) is replaced by the following:

(c) where the property is, immediately before the transfer, an interest in a family farm or fishing partnership of the taxpayer (other than a partnership interest to which subsection 100(3) applies), the taxpayer receives no consideration in respect of the transfer of the property and the taxpayer elects, in the taxpayer’s return of income under this Part for the taxation year which includes the time of the transfer, to have this paragraph apply in respect of the transfer of the property,

(7) Subsections (1) to (6) apply to transfers that occur in the 2014 and subsequent taxation years.

15. (1) Subsection 80.03(8) of the Act is replaced by the following:

(8) If, as a consequence of the disposition at any time by an individual of a property that is a qualified farm or fishing property of the individual or a qualified small business corporation share of the individual (as defined in subsection 110.6(1)), the individual is deemed by subsection (2) to have a capital gain at that time from the disposition of another property, for the purposes of sections 3, 74.3 and 111, as they apply for the purposes of section 110.6, the other property is deemed to be a qualified farm or fishing property of the individual or a qualified small business corporation share of the individual, as the case may be.

(2) Subsection (1) applies to dispositions that occur in the 2014 and subsequent taxation years.

16. (1) Clause 80.04(6)(a)(ii)(B) of the Act is replaced by the following:

(B) if the debtor is an individual (other than a trust) or a graduated rate estate, the day that is one year after the taxpayer’s filing-due date for the year;

(2) Subsection (1) applies to the 2016 and subsequent taxation years.

17. (1) The definition “breeding animals” in subsection 80.3(1) of the Act is replaced by the following:

“breeding animals” means deer, elk and other similar grazing ungulates, bovine cattle, bison, goats, sheep and horses that are over 12 months of age and are kept for breeding;

(2) Subsection 80.3(1) of the Act is amended by adding the following in alphabetical order:

(3) Section 80.3 of the Act is amended by adding the following after subsection (4):

(4) The portion of subsection 80.3(5) of the Act before paragraph (b) is replaced by the following:

(5) An amount deducted under subsection (4) or (4.1) in computing the income of a taxpayer for a particular taxation year from a farming business carried on in a region prescribed under those subsections may, to the extent that the taxpayer so elects, be included in computing the taxpayer’s income from the business for a taxation year ending after the particular taxation year, and is, except to the extent that the amount has been included under this subsection in computing the taxpayer’s income from the business for a preceding taxation year after the particular year, deemed to be income of the taxpayer from the business for the taxation year of the taxpayer that is the earliest of

(a) the first taxation year beginning after the end of the period or series of continuous periods, as the case may be, for which the region is prescribed under those subsections,

(5) The portion of subsection 80.3(6) of the Act before paragraph (a) is replaced by the following:

(6) Subsections (2), (4) and (4.1) do not apply to a taxpayer in respect of a farming business for a taxation year

(6) Section 80.3 of the Act is amended by adding the following after subsection (6):

(7) Subsections (1) to (6) apply to the 2014 and subsequent taxation years.

18. (1) Paragraph 81(1)(c) of the Act is replaced by the following:

(c) the income for the year of a non-resident person earned in Canada from international shipping or from the operation of aircraft in international traffic, if the country in which the person is resident grants substantially similar relief for the year to persons resident in Canada;

(2) Subsection (1) applies to taxation years that begin after July 12, 2013.

19. (1) Section 87 of the Act is amended by adding the following after subsection (8.2):

(2) Subsection (1) applies to foreign mergers that occur after July 12, 2013.

20. (1) Subsection 90(8) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

(2) Section 90 of the Act is amended by adding the following after subsection (8):

(3) Subsection 90(15) of the Act is amended by adding the following in alphabetical order:

(4) Subsections (1) to (3) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after February 27, 2014.

21. (1) The portion of subsection 93.1(1) of the Act before paragraph (a) is replaced by the following:

93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2) and 20(12), sections 93 and 113, paragraph 128.1(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(2) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (1), is replaced by the following:

93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2), 20(12) and 39(2.1), sections 90, 93 and 113, paragraph 128.1(1)(d), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), paragraph 95(2)(g.04), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(3) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (2), is replaced by the following:

93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of subsections (2), 20(12) and 39(2.1), sections 90, 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2), (and any regulations made for the purposes of those provisions), section 95 (to the extent that it is applied for the purposes of those provisions), paragraph 95(2)(g.04), subsection 95(2.2) and section 126, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(4) The portion of subsection 93.1(1) of the Act before paragraph (a), as enacted by subsection (3), is replaced by the following:

93.1 (1) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of a specified provision, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(5) Section 93.1 of the Act is amended by adding the following after subsection (1):

(6) Paragraph 93.1(2)(a) of the Act is replaced by the following:

(a) for the purposes of sections 93 and 113 and any regulations made for the purposes of those sections, each member of the partnership (other than another partnership) is deemed to have received the proportion of the partnership dividend that

(i) the fair market value of the member’s interest held, directly or indirectly through one or more other partnerships, in the partnership at that time

is of

(ii) the fair market value of all the interests in the partnership held directly by members of the partnership at that time;

(7) Paragraph 93.1(3)(c) of the Act is replaced by the following:

(c) subsections 39(2.1), 40(3.6) and 87(8.3).

(8) Section 93.1 of the Act is amended by adding the following after subsection (3):

(9) Subsection (1) applies to taxation years of a foreign affiliate of a taxpayer that end after 1999.

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

(11) Subsection (3) is deemed to have come into force on March 29, 2012.

(12) Subsections (4) and (5) are deemed to have come into force on July 12, 2013. However, if a taxpayer elects under subsection (15), then in respect of the taxpayer, subsections (4) and (5) are deemed to have come into force on January 1, 2010 and subsection 93.1(1.1) of the Act, as enacted by subsection (5), is to be read

(a) in respect of any time that is after 2009 and before August 20, 2011 as follows:

(1.1) For the purposes of subsection (1), the specified provisions are

(a) subsections (2), (5) and 20(12), sections 93 and 113 and paragraph 128.1(1)(d);

(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);

(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and

(d) subsection 95(2.2) and section 126.

(b) in respect of any time that is after August 19, 2011 and before March 29, 2012 as follows:

(1.1) For the purposes of subsection (1), the specified provisions are

(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93 and 113 and paragraph 128.1(1)(d);

(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);

(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and

(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.

(c) in respect of any time that is after March 28, 2012 and before July 12, 2013 as follows:

(1.1) For the purposes of subsection (1), the specified provisions are

(a) subsections (2), (5), 20(12) and 39(2.1), sections 90, 93 and 113, paragraphs 128.1(1)(c.3) and (d), section 212.3 and subsection 219.1(2);

(b) section 95 to the extent that section is applied for the purposes of the provisions referred to in paragraph (a);

(c) any regulations made for the purposes of the provisions referred to in paragraph (a); and

(d) paragraph 95(2)(g.04), subsection 95(2.2) and section 126.

(13) Subsection (6) applies to dividends received after November 1999.

(14) Subsection (7) and subsection 93.1(4) of the Act, as enacted by subsection (8), apply in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013.

(15) Subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), apply in respect of taxation years of foreign affiliates of a taxpayer that end after July 12, 2013. However, if the taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the day that an information return referred to in subsection 229(1) of the Income Tax Regulations is required (or would be required if the taxpayer were a Canadian partnership), pursuant to subsections 229(5) and (6) of the Income Tax Regulations, to be filed in respect of the fiscal period of the taxpayer that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsections 93.1(5) and (6) of the Act, as enacted by subsection (8), are deemed to have come into force on January 1, 2010.

22. (1) The Act is amended by adding the following after section 93.1:

(2) Section 93.2 of the Act, as enacted by subsection (1), applies in respect of taxation years of non-resident corporations that end after 1994 except that

(a) if a taxpayer elects in writing under this subsection and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then section 93.2 of the Act, as enacted by subsection (1), applies, in respect of the taxpayer, in respect of taxation years of non-resident corporations that end after July 12, 2013;

(b) in respect of dispositions that occur before July 12, 2013, section 93.2 of the Act, as enacted by subsection (1), is to be read without reference to its subsection (3); and

(c) in respect of dispositions that occur after July 11, 2013 and before October 10, 2014, the reference in paragraph 93.2(3)(b), as enacted by subsection (1), to the taxpayer’s “filing-due date” is to be read as the filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent.

(3) Section 93.3 of the Act, as enacted by subsection (1), is deemed to have come into force on July 12, 2013. However, if a corporation resident in Canada and each other corporation resident in Canada that, at any time after 2005 and before July 12, 2013, was both related to the corporation and had a foreign affiliate (determined as if the reference in paragraph (b) of the definition “equity percentage” in subsection 95(4) of the Act to “any corporation” were a reference to “any corporation other than a corporation resident in Canada”) that was beneficially interested in an Australian trust (as defined in subsection 93.3(1) of the Act, as enacted by subsection (1)), jointly elect in writing under this subsection and file the election with the Minister of National Revenue on or before the day that is one year after the day on which this Act receives royal assent, then in respect of each corporation that has elected under this subsection, section 93.3 of the Act, as enacted by subsection (1),

(a) is deemed to have come into force on January 1, 2006; and

(b) before July 12, 2013 is to be read as if it contained the following after subsection (5):

(6) For the purpose of determining whether a non-resident corporation is a foreign affiliate of a corporation resident in Canada for the purposes of this section, if, based on the assumptions contained in paragraph 96(1)(c), at any time shares of a class of the capital stock of a corporation are owned by a partnership or are deemed under this subsection to be owned by a partnership, then each member of the partnership is deemed to own at that time the number of those shares that is equal to the proportion of all those shares that

(a) the fair market value of the member’s interest in the partnership at that time

is of

(b) the fair market value of all members’ interests in the partnership at that time.

23. (1) The definitions “connected contributor” and “resident contributor” in subsection 94(1) of the Act are replaced by the following:

“connected contributor”, to a trust at a particular time, means a contributor to the trust at the particular time, other than a person all of whose contributions to the trust made at or before the particular time were made at a non-resident time of the person.

“resident contributor”, to a trust at any time, means a person that is, at that time, resident in Canada and a contributor to the trust, but — if the trust was created before 1960 by a person who was non-resident when the trust was created — does not include an individual (other than a trust) who has not, after 1959, made a contribution to the trust.

(2) 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), the definition “qualified disability trust” in subsection 122(3) and paragraph (a) of the definition “mutual fund trust” in subsection 132(6);

(3) Subparagraph 94(11)(b)(ii) of the Act is replaced by the following:

(ii) would be deemed to be resident in Canada immediately before that time because of paragraph (3)(a) if this section, as it read in its application to the 2013 taxation year, were read without reference to paragraph (a) of the definition “connected contributor” in subsection (1) and paragraph (a) of the definition “resident contributor” in that subsection,

(4) Subsections (1) and (3) apply to taxation years that end after February 10, 2014, except that those subsections do not apply in respect of a trust to taxation years that end before 2015 if the following conditions are satisfied:

(a) no contributions are made to the trust after February 10, 2014 and before 2015; and

(b) if the trust were to have a particular taxation year that ended after 2013 and before February 11, 2014,

(i) the trust would be non-resident for the purpose of computing its income for the particular year, and

(ii) if the definitions “connected contrib-utor” and “resident contributor” in subsection 94(1) of the Act were read for the particular year without reference to their paragraphs (a), the trust would be resident in Canada for the purpose of computing its income for the particular year.

(5) Subsection (2) applies to the 2016 and subsequent taxation years.

24. (1) The portion of subsection 94.2(1) of the Act before paragraph (a) is replaced by the following:

94.2 (1) Subsection (2) applies to a beneficiary under a trust, and to any particular person of which any such beneficiary is a controlled foreign affiliate, at any time if

(2) Subsection (1) applies to taxation years that end after February 10, 2014, except that it does not apply in respect of a trust to taxation years that end before 2015 if the following conditions are satisfied:

(a) no contributions are made to the trust after February 10, 2014 and before 2015; and

(b) if the trust were to have a particular taxation year that ended after 2013 and before February 11, 2014,

(i) the trust would be non-resident for the purpose of computing its income for the particular year, and

(ii) if the definitions “connected contrib-utor” and “resident contributor”in subsection 94(1) of the Act were read for the particular year without reference to their paragraphs (a), the trust would be resident in Canada for the purpose of computing its income for the particular year.

25. (1) The definition “foreign accrual tax” in subsection 95(1) of the Act is replaced by the following:

“foreign accrual tax” applicable to any amount included under subsection 91(1) in computing a taxpayer’s income for a taxation year of the taxpayer in respect of a particular foreign affiliate of the taxpayer means, subject to subsection 91(4.1),

(a) the portion of any income or profits tax that may reasonably be regarded as applicable to that amount and that is paid by

(i) the particular affiliate,

(iii) another foreign affiliate of the taxpayer in respect of a dividend received, directly or indirectly, from the particular affiliate, if that other affiliate has an equity percentage in the particular affiliate, and

(b) any amount prescribed in respect of the particular affiliate or the shareholder affiliate, as the case may be, to be foreign accrual tax applicable to that amount;

(2) The definition “non-qualifying country” in subsection 95(1) of the Act is replaced by the following:

“non-qualifying country”, at any time, means a country or other jurisdiction

(a) with which Canada neither has a tax treaty at that time nor has, before that time, signed an agreement that will, on coming into effect, be a tax treaty,

(b) with which Canada does not have a comprehensive tax information exchange agreement that is in force and has effect at that time, and

(c) with which Canada has, more than 60 months before that time, either

(i) begun negotiations for a comprehensive tax information exchange agreement (unless that time is before 2014 and Canada was, on March 19, 2007, in the course of negotiating a comprehensive tax information exchange agreement with that jurisdiction), or

(ii) sought, by written invitation, to enter into negotiations for a comprehensive tax information exchange agreement (unless that time is before 2014 and Canada was, on March 19, 2007, in the course of negotiating a comprehensive tax information exchange agreement with that jurisdiction);

(3) Paragraph (a) of the description of H in the definition “foreign accrual property income” in subsection 95(1) of the Act is replaced by the following:

(a) if the affiliate was a member of a partnership at the end of the fiscal period of the partnership that ended in the year and the partnership received a dividend at a particular time in that fiscal period from a corporation that would be, if the reference in subsection 93.1(1) to “corporation resident in Canada” were a reference to “taxpayer resident in Canada”, a foreign affiliate of the taxpayer for the purposes of sections 93 and 113 at that particular time, then the portion of the amount of that dividend that is included in the value determined for A in respect of the affiliate for the year and that would be, if the reference in subsection 93.1(2) to “corporation resident in Canada” were a reference to “taxpayer resident in Canada”, deemed by paragraph 93.1(2)(a) to have been received by the affiliate for the purposes of sections 93 and 113, and

(4) Section 95 of the Act is amended by adding the following after subsection (1):

(5) Subparagraph 95(2)(a)(i) of the Act is replaced by the following:

(i) the income or loss

(A) is derived by the particular foreign affiliate from activities of the particular foreign affiliate, or of a particular partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the particular partnership that can reasonably be considered to be directly related to active business activities carried on in a country other than Canada by

(I) another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year,

(II) a life insurance corporation that is resident in Canada throughout the year and that is

1. the taxpayer,

2. a person who controls the taxpayer,

3. a person controlled by the taxpayer, or

4. a person controlled by a person who controls the taxpayer,

(B) if any of subclauses (A)(I), (II) and (IV) applies, would be included in computing the amount prescribed to be the earnings or loss, from an active business carried on in a country other than Canada, of

(I) that other foreign affiliate referred to in subclause (A)(I) or (IV), if the income were earned by it, or

(II) the life insurance corporation referred to in subclause (A)(II), if that life insurance corporation were a foreign affiliate of the taxpayer and the income were earned by it,

(6) Clause 95(2)(a)(ii)(D) of the Act is amended by adding “and” at the end of subclause (III) and by replacing subclauses (IV) and (V) with the following:

(IV) in respect of each of the second affiliate and the third affiliate, for each of their taxation years (each of which is referred to in this subclause as a “relevant taxation year”) that end in the year, either

1. that affiliate is subject to income taxation in a country other than Canada in that relevant taxation year, or

2. the members or shareholders of that affiliate (which, for the purposes of this sub-subclause, includes a person that has, directly or indirectly, an interest, or for civil law a right, in a share of the capital stock of, or in an equity interest in, the affiliate) at the end of that relevant taxation year are subject to income taxation in a country other than Canada on, in aggregate, all or substantially all of the income of that affiliate for that relevant taxation year in their taxation years in which that relevant taxation year ends,

(7) The portion of subparagraph 95(2)(a.1)(ii) of the English version of the Act before clause (A) is replaced by the following:

(ii) the property was not

(8) Subparagraph 95(2)(a.1)(ii) of the Act is amended by striking out “nor” at the end of clause (A), by adding “or” at the end of clause (B) and by adding the following after clause (B):

(9) The portion of paragraph 95(2)(a.1) of the Act after subparagraph (ii) and before subparagraph (iii) is replaced by the following:

unless more than 90% of the gross revenue of the affiliate for the year from the sale of property is derived from the sale of such property (other than a property described in subparagraph (ii) the cost of which to any person is a cost referred to in subparagraph (i) or a property the income from the sale of which is not included in computing the income from a business other than an active business of the affiliate under this paragraph because of subsection (2.31)) to persons with whom the affiliate deals at arm’s length (which, for this purpose, includes a sale of property to a non-resident corporation with which the affiliate does not deal at arm’s length for sale to persons with whom the affiliate deals at arm’s length) and, where this paragraph applies to include income of the affiliate from the sale of property in the income of the affiliate from a business other than an active business,

(10) Subsection 95(2) of the Act is amended by adding the following after paragraph (a.2):

(11) The portion of paragraph 95(2)(a.3) of the Act after subparagraph (ii) and before subparagraph (iii) is replaced by the following:

unless more than 90% of the gross revenue of the affiliate derived directly or indirectly from indebtedness and lease obligations (other than excluded revenue or revenue that is not included in computing the income from a business other than an active business of the affiliate under this paragraph because of subsection (2.31)) was derived directly or indirectly from indebtedness and lease obligations of non-resident persons with whom the affiliate deals at arm’s length and, where this paragraph applies to include income of the affiliate for the year in the income of the affiliate from a business other than an active business,

(12) The portion of clause 95(2)(b)(ii)(B) of the Act before subclause (I) is replaced by the following:

(B) a relevant person who does not deal at arm’s length with

(13) Subparagraph 95(2)(l)(iv) of the Act is amended by striking out “or” at the end of clause (B), by adding “or” at the end of clause (C) and by adding the following after clause (C):

(14) The portion of paragraph 95(2)(n) of the Act before subparagraph (i) is replaced by the following:

(n) in applying paragraphs (a) and (g), paragraph (b) of the description of A in the formula in the definition “foreign accrual property income” in subsection (1), subsections (2.2), (2.21) and 93.1(5) and paragraph (d) of the definition “exempt earnings”, and paragraph (c) of the definition “exempt loss”, in subsection 5907(1) of the Income Tax Regulations, a non-resident corporation is deemed to be, at any time, a foreign affiliate of a particular corporation resident in Canada, and a foreign affiliate of the particular corporation in respect of which the particular corporation has a qualifying interest, if at that time

(15) Subparagraph 95(2)(u)(i) of the Act, as it read immediately before it was repealed by subsection 70(21) of the Technical Tax Amendments Act, 2012, is replaced by the following :

(i) the entity is deemed to be a member of the other partnership for the purposes of

(A) subparagraph (ii),

(B) applying the reference, in paragraph (a), to “a member” of a partnership,

(C) paragraphs (a.1) to (b), (g.03), (j.1) to (k.1) and (o),

(D) paragraphs (b) and (c) of the definition “investment business” in subsection (1),

(E) the definition “taxable Canadian business” in subsection (1), and

(16) Paragraph 95(2)(u) of the Act, as amended by subsection (15), is repealed.

(17) Section 95 of the Act is amended by adding the following after subsection (2.1):

(18) Section 95 of the Act is amended by adding the following after subsection (2.3):

(19) The portion of subsection 95(2.4) of the French version of the Act before subparagraph (a)(i) is replaced by the following:

(20) Paragraph 95(2.4)(b) of the Act is replaced by the following:

(b) all the following conditions are satisfied:

(i) the income is derived by the affiliate from trading or dealing in the indebtedness (which, for this purpose, consists of income from the actual trading or dealing in the indebtedness and interest earned by the affiliate during a short term holding period on indebtedness acquired by it for the purpose of the trading or dealing) directly or indirectly with persons (in this subsection referred to as “regular customers”) that

(A) deal at arm’s length with the affiliate, and

(iii) one or more persons that deal at arm’s length with the affiliate and are resident, or carry on business through a permanent establishment, in the country

(B) have a substantial market presence in the country,

(21) Section 95 of the Act is amended by adding the following after subsection (2.42):

(22) Paragraph (b) of the definition “excluded income” and “excluded revenue” in subsection 95(2.5) of the Act is replaced by the following:

(b) derived directly or indirectly from a lease obligation of a person (other than the taxpayer or a person that does not deal at arm’s length with the taxpayer) resident in Canada relating to property used by the person in the course of carrying on a business through a permanent establishment outside Canada,

(23) The definition “excluded income” and “excluded revenue” in subsection 95(2.5) of the Act is amended by striking out “or” at the end of paragraph (b), by adding “or” at the end of paragraph (c) and by adding the following after paragraph (c):

(24) The definition “specified deposit” in subsection 95(2.5) of the Act is replaced by the following:

“specified deposit”, of a foreign affiliate of a taxpayer, means a deposit of the affiliate made with a permanent establishment in a country other than Canada of a prescribed financial institution resident in Canada if the income from the deposit is income of the affiliate for the year that would, in the absence of paragraph (2)(a.3), be income from an active business carried on by the affiliate in a country other than Canada, other than a business the principal purpose of which is to derive income from property (including any interest, dividends, rents, royalties or similar returns, or any substitutes for any of those) or profits from the disposition of investment property.

(25) Section 95 of the Act is amended by adding the following after subsection (3):

(26) Section 95 of the Act is amended by adding the following after subsection (3.01):

(27) Section 95 of the Act is amended by adding the following after subsection (3.1):

(28) Subsection (1) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 2010.

(29) Subsections (2) and (4) are deemed to have come into force on January 1, 2014.

(30) Subsection (3) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 2006.

(31) Subsection (5) applies in respect of taxation years of a foreign affiliate of a taxpayer that begin after July 12, 2013. However, if the taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent,

(a) subsection (5) applies in respect of taxation years of all foreign affiliates of the taxpayer that end after 2007; and

(b) subparagraph 95(2)(a)(i) of the Act, as enacted by subsection (5), is to be read as follows in respect of taxation years of foreign affiliates of the taxpayer that end after 2007 and begin before 2009:

(i) the income or loss

(A) is derived by the particular foreign affiliate from activities of the particular foreign affiliate, or of a particular partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the particular partnership, that can reasonably be considered to be directly related to active business activities carried on in a country other than Canada by

(I) another corporation

1. that is a non-resident corporation to which the particular foreign affiliate and the taxpayer are related throughout the year, or

2. that is another foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout the year,

(II) a life insurance corporation that is resident in Canada throughout the year and that is

1. the taxpayer,

2. a person who controls the taxpayer,

3. a person controlled by the taxpayer, or

4. a person controlled by a person who controls the taxpayer,

(III) the particular foreign affiliate or a partnership of which the particular foreign affiliate is a member, to the extent that the activities occur while the particular affiliate is a qualifying member of the partnership, or

(IV) a partnership of which another foreign affiliate of the taxpayer, in respect of which the taxpayer has a qualifying interest throughout the year, is a member, to the extent that the activities occur while the other affiliate is a qualifying member of the partnership, and

(B) if any of subclauses (A)(I), (II) and (IV) applies, would be included in computing the amount prescribed to be the earnings or loss, from an active business carried on in a country other than Canada, of

(I) that other foreign affiliate referred to in sub-subclause (A)(I)2 or subclause (A)(IV), if the income were earned by it, or

(II) the non-resident corporation referred to in sub-subclause (A)(I)1 or the life insurance corporation referred to in subclause (A)(II), if that non-resident corporation or that life insurance corporation were a foreign affiliate of the taxpayer and the income were earned by it,

(32) Subsection (6) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013.

(33) Subsections (7) to (9), (11), (18) to (21), (24) and (25) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after October 2012.

(34) Subsections (12) and (26) apply in respect of taxation years of a foreign affiliate of a taxpayer that begin after July 12, 2013. However, if a taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsections (12) and (26) apply in respect of taxation years of all foreign affiliates of the taxpayer that begin after February 27, 2004.

(35) Subsection (10) applies to taxation years of a taxpayer that begin after February 10, 2014.

(36) Subsections (13) and (17) apply to taxation years of a taxpayer that begin after 2014.

(37) Subsection (14) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after July 12, 2013. However, if a taxpayer elects under subsection 21(15), subsection (14) applies in respect of taxation years of all foreign affiliates of the taxpayer that end after 2010.

(38) Subsection (15) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 1999. However, if a taxpayer has not elected under paragraph 70(29)(b) of the Technical Tax Amendments Act, 2012, then subparagraph 95(2)(u)(i) of the Act, as enacted by subsection (15), is to be read as follows in respect of taxation years of the foreign affiliate that end after 1999 and begin before December 21, 2002:

(i) the entity is deemed to be a member of the other partnership for the purposes of

(A) subparagraph (ii),

(B) applying the reference, in paragraph (a), to “a member” of a partnership,

(C) paragraphs (a.1) to (b), (g.03) and (o),

(D) paragraphs (b) and (c) of the definition “investment business” in subsection (1), and

(E) subsection 93.1(2), and

(39) Subsection (16) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after August 19, 2011.

(40) Subsection (22) applies in respect of taxation years of a foreign affiliate of a taxpayer that begin after July 12, 2013. However, if a taxpayer elects in writing under this subsection in respect of all its foreign affiliates and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for the taxpayer’s taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then subsection (22) applies in respect of taxation years of foreign affiliates of the taxpayer,

(a) if the taxpayer has elected under subsection 73(17) of the Income Tax Amendments Act, 2000, that begin after 1994; or

(b) in any other case, that begin after 1999.

(41) Subsection (23) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after February 27, 2004.

(42) Subsection (27) applies in respect of taxation years of a foreign affiliate of a taxpayer that end after 2008.

26. (1) Subsection 104(5.1) of the Act is replaced by the following:

(5.1) Every trust that holds an interest in a NISA Fund No. 2 that was transferred to it in circumstances to which paragraph 70(6.1)(b) applied is deemed, at the end of the day on which the spouse or common-law partner referred to in that paragraph dies, to have been paid an amount out of the fund equal to the balance at the end of that day in the fund so transferred.

(2) Paragraph 104(6)(a.3) of the Act is replaced by the following:

(a.3) in the case of a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, such part of its income for the year as became payable in the year to a beneficiary;

(3) Paragraph 104(6)(b) of the Act is replaced by the following:

(b) in any other case, the amount that the trust claims not exceeding the amount, if any, determined by the formula

A is the part of its income (determined without reference to this subsection and subsection (12)) for the year that became payable in the year to, or that was included under subsection 105(2) in computing the income of, a beneficiary, and

B is

(i) if the trust is a trust for which a day is to be determined under paragraph (4)(a) or (a.4) by reference to a death or later death, as the case may be, that has not occurred before the end of the year, the part of its income (determined without reference to this subsection and subsection (12)) for the year that became payable in the year to, or that was included under subsection 105(2) in computing the income of, a beneficiary (other than an individual whose death is that death or later death, as the case may be), and

(ii) if the trust is a SIFT trust for the year, the amount, if any, by which

(A) the amount determined for A for the trust for the year

exceeds

(B) the amount, if any, by which the amount determined for A for the trust for the year exceeds its non-portfolio earnings for the year.

(4) Section 104 of the Act is amended by adding the following after subsection (7.01):

(5) Section 104 of the Act is amended by adding the following after subsection (13.2):

(6) Subsections 104(14.01) to (14.1) of the Act are repealed.

(7) The portion of subsection 104(16) of the Act before paragraph (a) is replaced by the following:

(16) If an amount (in this subsection and section 122 referred to as the trust’s “non-deductible distributions amount” for the taxation year) is determined under subparagraph (ii) of the description of B in paragraph (6)(b) in respect of a SIFT trust for a taxation year

(8) The portion of clause 104(21.2)(b)(ii)(A) of the Act before the formula is replaced by the following:

(A) from a disposition of a capital property that is qualified farm or fishing property (as defined for the purpose of section 110.6) of the beneficiary equal to the amount determined by the formula

(9) Subparagraph 104(21.2)(b)(ii) of the Act is amended by adding “and” before clause (B), by striking out “and” before clause (C) and by repealing clause (C).

(10) The description of C in subparagraph 104(21.2)(b)(ii) of the Act is replaced by the following:

C      is the amount, if any, that would be determined under paragraph 3(b) for the designation year in respect of the trust’s capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties or qualified farm or fishing properties of the trust,

(11) The descriptions of E to I in subparagraph 104(21.2)(b)(ii) of the Act are replaced by the following:

E      is the total of the amounts determined for C and F for the designation year in respect of the beneficiary, and

F      is the amount, if any, that would be determined under paragraph 3(b) for the designation year in respect of the trust’s capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified small business corporation shares of the trust, other than qualified farm property, qualified fishing property or qualified farm or fishing property,

(12) Subsections 104(21.21) to (21.24) of the Act are repealed.

(13) The portion of subsection 104(23) of the Act before paragraph (c) is replaced by the following:

(23) In the case of a trust that is a graduated rate estate,

(14) Subsection 104(23) of the Act is amended by adding “and” at the end of paragraph (c), by striking out “and” at the end of paragraph (d) and by repealing paragraph (e).

(15) The portion of subsection 104(27) of the Act before paragraph (a) is replaced by the following:

(27) If a trust, in a taxation year in which it is resident in Canada and is the graduated rate estate of an individual, receives a superannuation or pension benefit or a benefit out of or under a foreign retirement arrangement and designates, in its return of income for the year under this Part, an amount in respect of a beneficiary under the trust equal to the portion (in this subsection referred to as the “beneficiary’s share”) of the benefit that

(16) Subparagraph 104(27)(c)(ii) of the Act is replaced by the following:

(ii) the beneficiary was a spouse or common-law partner of the individual,

(17) Subparagraph 104(27)(d)(i) of the Act is replaced by the following:

(i) is a single amount (as defined in subsection 147.1(1)), other than an amount that relates to an actuarial surplus, paid by a registered pension plan to the trust as a consequence of the individual’s death and the individual was, at the time of death, a spouse or common-law partner of the beneficiary, or

(18) Paragraph 104(27)(e) of the Act is replaced by the following:

(e) where the benefit is a single amount (as defined in subsection 147.1(1)) paid by a registered pension plan to the trust as a consequence of the individual’s death,

(i) if the beneficiary was, immediately before the death, a child or grandchild of the individual who, because of mental or physical infirmity, was financially dependent on the individual for support, the beneficiary’s share of the benefit (other than any portion of it that relates to an actuarial surplus) is deemed, for the purposes of paragraph 60(l), to be an amount from a registered pension plan included in computing the beneficiary’s income for the particular year as a payment described in clause 60(l)(v)(B.01), and

(ii) if the beneficiary was, at the time of the death, under 18 years of age and a child or grandchild of the individual, the beneficiary’s share of the benefit (other than any portion of it that relates to an actuarial surplus) is deemed, for the purposes of paragraph 60(l), to be an amount from a registered pension plan included in computing the beneficiary’s income for the particular year as a payment described in subclause 60(l)(v)(B.1)(II).

(19) Paragraphs 104(27.1)(a) and (b) of the Act are replaced by the following:

(a) a trust, in a taxation year (in this subsection referred to as the “trust year”) in which it is resident in Canada and is the graduated rate estate of an individual, receives an amount from a deferred profit sharing plan as a consequence of the individual’s death,

(b) the individual was an employee of an employer who participated in the plan on behalf of the individual, and

(20) Paragraph 104(27.1)(e) of the Act is replaced by the following:

(e) can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be part of the amount that was included under subsection (13) in computing the income for a particular taxation year of a beneficiary under the trust who was, at the time of the death, the individual’s spouse or common-law partner, and

(21) Subsection 104(28) of the Act is replaced by the following:

(28) If the graduated rate estate of an individual receives an amount on or after the individual’s death in recognition of the individual’s service in an office or employment, the portion of the amount that can reasonably be considered (having regard to all the circumstances including the terms and conditions of the trust arrangement) to be paid or payable at any time to a beneficiary under the estate is deemed

(a) to be an amount received by the beneficiary at that time on or after the death in recognition of the individual’s service in an office or employment; and

(b) except for purposes of this subsection, not to have been received by the estate.

(22) Subsections (1) to (3), (5) to (7) and (13) to (21) apply to the 2016 and subsequent taxation years.

(23) Subsection (4) applies to taxation years that end after August 28, 2014.

(24) Subsections (8) to (12) apply to dispositions that occur in the 2014 and subsequent taxation years.

27. (1) Paragraph 107.4(1)(j) of the Act is replaced by the following:

(j) if the contributor is an amateur athlete trust, a cemetery care trust, an employee life and health trust, an employee trust, a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization, a related segregated fund trust (within the meaning assigned by paragraph 138.1(1)(a)), a trust described in paragraph 149(1)(o.4) or a trust governed by an eligible funeral arrangement, an employees profit sharing plan, a registered disability savings plan, a registered education savings plan, a registered supplementary unemployment benefit plan or a TFSA, the particular trust is the same type of trust.

(2) Subsection (1) applies to the 2016 and subsequent taxation years.

28. (1) The definitions “qualified farm property”, “qualified fishing property” and “qualified small business corporation share” in subsection 108(1) of the Act are repealed.

(2) Paragraph (c) of the definition “trust” in subsection 108(1) of the Act is replaced by the following:

(c) a trust deemed by subsection 143(1) to exist in respect of a congregation that is a constituent part of a religious organization,

(3) The portion of paragraph 108(7)(b) of the Act before subparagraph (i) is replaced by the following:

(b) if all the beneficial interests in a particular trust acquired by way of the transfer, assignment or other disposition of property to the particular trust were acquired by

(4) Subsection (1) applies to dispositions that occur in the 2014 and subsequent taxation years.

(5) Subsections (2) and (3) apply to the 2016 and subsequent taxation years.

29. (1) The portion of paragraph 110.1(1)(a) of the Act before the formula is replaced by the following:

(a) the total of all amounts each of which is the eligible amount of a gift (other than a gift described in paragraph (c) or (d)) made by the corporation in the year or in any of the five preceding taxation years to a qualified donee, not exceeding the lesser of the corporation’s income for the year and the amount determined by the formula

(2) Paragraph 110.1(1)(b) of the Act is repealed.

(3) The portion of subparagraph 110.1(1)(d)(iii) of the Act before clause (A) is replaced by the following:

(iii) the gift was made by the corporation in the year or in any of the 10 preceding taxation years to a qualified donee that is

(4) Subsections (1) and (2) apply to the 2016 and subsequent taxation years.

(5) Subsection (3) applies to gifts made after February 10, 2014.

30. (1) The definitions “interest in a family farm partnership”, “interest in a family fishing partnership”, “qualified farm property”, “qualified fishing property”, “share of the capital stock of a family farm corporation” and “share of the capital stock of a family fishing corporation” in subsection 110.6(1) of the Act are repealed.

(2) Paragraph (b) of the description of A in the definition “annual gains limit” in subsection 110.6(1) of the Act is replaced by the following:

(b) the amount that would be determined in respect of the individual for the year under paragraph 3(b) in respect of capital gains and losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties, qualified farm or fishing properties and qualified small business corporation shares, and

(3) Subsection 110.6(1) is amended by adding the following in alphabetical order:

(4) Subsections 110.6(1.1) and (1.2) of the Act are replaced by the following:

(1.1) For the purposes of the definitions “qualified small business corporation share” and “share of the capital stock of a family farm or fishing corporation” in subsection (1), the fair market value of a net income stabilization account is deemed to be nil.

(5) The portion of subsection 110.6(1.3) of the Act before paragraph (c) is replaced by the following:

(1.3) For the purpose of applying the definition “qualified farm or fishing property”, in subsection (1), of an individual, at any time, a property owned at that time by the individual, the spouse or common-law partner of the individual, or a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or of the individ-ual’s spouse or common-law partner, will not be considered to have been used in the course of carrying on a farming or fishing business in Canada, unless

(a) the following apply in respect of the property or property for which the property was substituted (in this paragraph referred to as “the property”),

(i) the property was owned throughout the period of at least 24 months immediately preceding that time by one or more of

(A) the individual, or a spouse, common-law partner, child or parent of the individual,

(B) a partnership, an interest in which is an interest in a family farm or fishing partnership of the individual or of the individual’s spouse or common-law partner,

(C) if the individual is a personal trust, the individual from whom the trust acquired the property or a spouse, common-law partner, child or parent of that individual, or

(D) a personal trust from which the individual or a child or parent of the individual acquired the property, and

(ii) either

(A) in at least two years while the property was owned by one or more persons or partnerships referred to in subparagraph (i),

(I) the gross revenue of a person (in this subclause referred to as the “operator”) referred to in subparagraph (i) from the farming or fishing business referred to in subclause (II) for the period during which the property was owned by a person or partnership described in subparagraph (i) exceeded the income of the operator from all other sources for that period, and

(II) the property was used principally in a farming or fishing business carried on in Canada in which an individual referred to in subparagraph (i), or where the individual is a personal trust, a beneficiary of the trust, was actively engaged on a regular and continuous basis, or

(B) throughout a period of at least 24 months while the property was owned by one or more persons or partnerships referred to in subparagraph (i), the property was used by a corporation referred to in subparagraph (a)(iv) of the definition “qualified farm or fishing property” in subsection (1) or by a partnership referred to in subparagraph (a)(v) of that definition in a farming or fishing business in which an individual referred to in any of subparagraphs (a)(i) to (iii) of that definition was actively engaged on a regular and continuous basis; or

(6) Paragraph 110.6(1.3)(c) of the Act is replaced by the following:

(c) if the property or property for which the property was substituted was last acquired by the individual or partnership before June 18, 1987 or after June 17, 1987 under an agreement in writing entered into before that date,

(i) in the year the property was disposed of by the individual, the property was used principally in the course of carrying on the business of farming in Canada by

(A) the individual, or a spouse, common-law partner, child or parent of the individual,

(B) a beneficiary referred to in subparagraph (a)(ii) of the definition “qualified farm or fishing property” in subsection (1) or a spouse, common-law partner, child or parent of that beneficiary,

(C) a corporation referred to in subparagraph (a)(iv) of the definition “qualified farm or fishing property” in subsection (1),

(D) a partnership referred to in subparagraph (a)(v) of the definition “qualified farm or fishing property” in subsection (1), or

(E) a personal trust from which the individual acquired the property, or

(ii) in at least five years during which the property was owned by a person described in any of clauses (A) to (E), the property was used principally in the course of carrying on the business of farming in Canada by

(A) the individual, or a spouse, common-law partner, child or parent of the individual,

(B) a beneficiary referred to in subparagraph (a)(ii) of the definition “qualified farm or fishing property” in subsection (1) or a spouse, common-law partner, child or parent of that beneficiary,

(C) a corporation referred to in subparagraph (a)(iv) of the definition “qualified farm or fishing property” in subsection (1),

(D) a partnership referred to in subparagraph (a)(v) of the definition “qualified farm or fishing property” in subsection (1), or

(E) a personal trust from which the individual acquired the property.

(7) The portion of subsection 110.6(2) of the Act before paragraph (a) is replaced by the following:

(2) In computing the taxable income for a taxation year of an individual (other than a trust) who was resident in Canada throughout the year and who disposed of qualified farm or fishing property in the year or a preceding taxation year (or who disposed of before 2014 property that was qualified farm property or qualified fishing property at the time of disposition), there may be deducted such amount as the individual may claim not exceeding the least of

(8) Paragraph 110.6(2)(d) of the Act is replaced by the following:

(d) the amount that would be determined in respect of the individual for the year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm properties, qualified fishing properties or qualified farm or fishing properties.

(9) Paragraph 110.6(2.1)(d) of the Act is replaced by the following:

(d) the amount that would be determined in respect of the individual for the year under paragraph 3(b) (to the extent that that amount is not included in computing the amount determined under paragraph (2)(d) in respect of the individual) in respect of capital gains and capital losses if the only properties referred to in paragraph 3(b) were qualified small business corporation shares of the individual.

(10) Subsections 110.6(2.2) to (4) of the Act are replaced by the following:

(4) Notwithstanding subsections (2) and (2.1), the total amount that may be deducted under this section in computing an individual’s income for a taxation year shall not exceed the amount determined by the formula in paragraph (2)(a) in respect of the individual for the year.

(11) The portion of subsection 110.6(5) of the Act before paragraph (a) is replaced by the following:

(5) For the purposes of subsections (2) and (2.1), an individual is deemed to have been resident in Canada throughout a particular taxation year if

(12) The portion of subsection 110.6(6) of the Act before paragraph (a) is replaced by the following:

(6) Notwithstanding subsections (2) and (2.1), no amount may be deducted under this section in respect of a capital gain of an individual for a particular taxation year in computing the individual’s taxable income for the particular taxation year or any subsequent year, if

(13) The portion of subsection 110.6(7) of the Act before paragraph (a) is replaced by the following:

(7) Notwithstanding subsections (2) and (2.1), no amount may be deducted under this section in computing an individual’s taxable income for a taxation year in respect of a capital gain of the individual for the taxation year if the capital gain is from a disposition of property which disposition is part of a series of transactions or events

(14) Subsection 110.6(8) of the Act is replaced by the following:

(8) Notwithstanding subsections (2) and (2.1), if an individual has a capital gain for a taxation year from the disposition of a property and it can reasonably be concluded, having regard to all the circumstances, that a significant part of the capital gain is attributable to the fact that dividends were not paid on a share (other than a prescribed share) or that dividends paid on such a share in the taxation year or in any preceding taxation year were less than 90% of the average annual rate of return on that share for that year, no amount in respect of that capital gain shall be deducted under this section in computing the individual’s taxable income for the year.

(15) Paragraph 110.6(12)(b) of the Act is replaced by the following:

(b) the amount, if any, that would be determined in respect of the trust for that year under paragraph 3(b) in respect of capital gains and capital losses if the only properties referred to in that paragraph were properties that, at the time they were disposed of, were qualified farm or fishing properties, qualified small business corporation shares, qualified farm properties or qualified fishing properties, and

(16) Subsection 110.6(12) of the Act, as amended by subsection (15), is repealed.

(17) The portion of subsection 110.6(15) of the Act before paragraph (a) is replaced by the following:

(15) For the purposes of the definitions “qualified small business corporation share” and “share of the capital stock of a family farm or fishing corporation” in subsection (1), the definition “share of the capital stock of a family farm or fishing corporation” in subsection 70(10) and the definition “small business corporation” in subsection 248(1),

(18) The portion of subparagraph 110.6(15)(a)(ii) of the Act before clause (A) is replaced by the following:

(ii) the total fair market value of assets —other than assets described in any of subparagraphs (c)(i) to (iii) of the definition “qualified small business corporation share” in subsection (1), any of subparagraphs (a)(i) to (iii) of the definition “share of the capital stock of a family farm or fishing corporation” in subsection (1) or any of paragraphs (a) to (c) of the definition “small business corporation” in subsection 248(1), as the case may be — of any of those corporations that are

(19) The portion of paragraph 110.6(15)(b) of the Act after subparagraph (ii) is replaced by the following:

except that this paragraph applies only in determining whether a share of the capital stock of another corporation with which the particular corporation is connected is a qualified small business corporation share or a share of the capital stock of a family farm or fishing corporation and in determining whether the other corporation is a small business corporation.

(20) The portion of subsection 110.6(31) of the Act before the formula is replaced by the following:

(31) If an amount is included in an individual’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, at the time of the disposition, is qualified farm or fishing property, a qualified small business corporation share, qualified farm property or qualified fishing property, 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

(21) Subsections (1) to (15) and (17) to (20) apply to dispositions and transfers that occur in the 2014 and subsequent taxation years.

(22) Subsection (16) applies to the 2016 and subsequent taxation years.

31. (1) The portion of subparagraph 112(3.2)(a)(iii) of the Act before clause (A) is replaced by the following:

(iii) if the trust is an individual’s graduated rate estate, the share was acquired as a consequence of the individual’s death and the disposition occurs during the trust’s first taxation year, 1/2 of the lesser of

(2) Subsection (1) applies to the 2016 and subsequent taxation years.

32. (1) The portion of the description of B in subsection 118.03(2) of the Act before the formula is replaced by the following:

B      is the total of all amounts each of which is, in respect of a qualifying child of the individual for the taxation year, the lesser of $1,000 and the amount determined by the formula

(2) Section 118.03 of the Act is repealed.

(3) Subsection (1) applies to the 2014 taxation year.

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

33. (1) The definition “qualifying child” in subsection 118.031(1) of the Act is replaced by the following:

“qualifying child” of an individual has the meaning assigned by subsection 122.8(1).

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

34. (1) The definition “total Crown gifts” in subsection 118.1(1) of the Act is repealed.

(2) The definition “total charitable gifts” in subsection 118.1(1) of the Act is replaced by the following:

“total charitable gifts”, of an individual for a particular taxation year, means the total of all amounts each of which is the eligible amount — to the extent it is not otherwise included in determining an amount that is deducted under this section in computing any individual’s tax payable under this Part for any taxation year — of a gift (other than a gift any part of the eligible amount of which is included in the total cultural gifts or the total ecological gifts of any individual for any taxation year) that is made

(a) to a qualified donee,

(b) in a taxation year that is not a year for which an amount is deducted under subsection 110(2) in computing the individual’s taxable income, and

(c) if the individual is

(3) The portion of the definition “total cultural gifts” in subsection 118.1(1) of the Act before paragraph (a) is replaced by the following:

“total cultural gifts”, of an individual for a particular taxation year, means the total of all amounts each of which is the eligible amount — to the extent it is not otherwise included in determining an amount that is deducted under this section in computing any individual’s tax payable under this Part for any taxation year — of a gift

(4) The definition “total cultural gifts” in subsection 118.1(1) of the Act is amended by striking out “and” at the end of paragraph (a) and by replacing the portion after that paragraph with the following:

(b) that is made to an institution or a public authority in Canada that is, at the time the gift is made, designated under subsection 32(2) of the Cultural Property Export and Import Act either generally or for a specified purpose related to that object, and

(5) The portion of paragraph (c) of the definition “total ecological gifts” in subsection 118.1(1) of the Act before subparagraph (i) is replaced by the following:

(c) the gift was made by the individual in the year or in any of the 10 preceding taxation years to a qualified donee that is

(6) The definition “total ecological gifts” in subsection 118.1(1) of the Act, as amended by subsection (5), is replaced by the following:

“total ecological gifts”, of an individual for a particular taxation year, means the total of all amounts each of which is the eligible amount — to the extent it is not otherwise included in determining an amount that is deducted under this section in computing any individual’s tax payable under this Part for any taxation year — of a gift (other than a gift any part of the eligible amount of which is included in the total cultural gifts of any individual for any taxation year)

(a) of land (including a covenant or an easement to which land is subject or, in the case of land in the Province of Quebec, a real servitude)

(i) the fair market value of which is certified by the Minister of the Environment, and

(ii) that is certified by that Minister, or by a person designated by that Minister, to be ecologically sensitive land, the conservation and protection of which is, in the opinion of that Minister or the designated person, important to the preservation of Canada’s environmental heritage,

(b) that is made to a qualified donee that is

(i) Her Majesty in right of Canada or of a province, a municipality in Canada or a municipal or public body performing a function of government in Canada, or

(ii) a registered charity one of the main purposes of which is, in the opinion of that Minister, the conservation and protection of Canada’s environmental heritage, and that is approved by that Minister or the designated person in respect of the gift, and

(c) that is made

(i) if the individual is not a trust,

(A) by the individual, or the individ-ual’s spouse or common-law partner, in the particular year or any of the five preceding taxation years,

(B) by the individual in the year in which the individual dies if the particular year is the taxation year that precedes the taxation year in which the individual dies, or

(C) by the individual’s graduated rate estate if subsection (5.1) applies to the gift and the particular year is the taxation year in which the individual dies or the preceding taxation year, or

(ii) if the individual is a trust,

(A) by the trust in the particular year or any of the 10 preceding taxation years, or

(B) by the trust if the trust is a graduated rate estate, subsection (5.1) applies to the gift and the particular year is the taxation year in which the gift is made or a preceding taxation year of the estate;

(7) Paragraph (b) of the definition “total gifts” in subsection 118.1(1) of the Act is repealed.

(8) The portion of subsection 118.1(2) of the Act before paragraph (a) is replaced by the following:

(2) An eligible amount of a gift is not to be included in the total charitable gifts, total cultural gifts or total ecological gifts of an individual unless the making of the gift is evidenced by filing with the Minister

(9) Subsection 118.1(2.1) of the Act is replaced by the following:

(2.1) For the purpose of determining an individual’s total charitable gifts, total cultural gifts and total ecological gifts for a taxation year, no amount in respect of a gift described in any of the definitions of those expressions and made in a particular taxation year is to be considered to have been included in determining an amount that was deducted under this section in computing the individual’s tax payable under this Part for a taxation year until amounts in respect of such gifts made in taxation years preceding the particular year that can be so considered are so considered.

(10) Subsections 118.1(4) to (5.3) are replaced by the following:

(5.2) For the purposes of this section, money or a negotiable instrument transferred to a qualified donee is deemed to be property that is the subject of a gift, in respect of an individual’s death, made to the qualified donee, if the death occurs after 2015 and the transfer is

(a) a transfer — other than a transfer the amount of which is not included in computing the income of the individual or the individual’s estate for any taxation year but would have been included in computing the income of the individual or the estate for a taxation year if the transfer had been made to the individual’s legal representative for the estate’s benefit and this Act were read without reference to subsection 70(3) — made

(i) as a consequence of the death,

(ii) solely because of the obligations under a life insurance policy under which, immediately before the death, the individ-ual’s life was insured, and the individual’s consent would have been required to change the recipient of the transfer, and

(iii) from an insurer to a person that is the qualified donee and that was, immediately before the death, neither a policyholder under the policy nor an assignee of the individual’s interest under the policy; or

(b) a transfer made

(i) as a consequence of the death,

(ii) solely because of the qualified donee’s interest or, for civil law a right, as a beneficiary under an arrangement (other than an arrangement of which a licensed annuities provider is the issuer or carrier)

(A) that is a registered retirement savings plan or registered retirement income fund or that was, immediately before the death, a TFSA, and

(B) under which the individual was, immediately before the death, the annuitant or holder, and

(iii) from the arrangement to the qualified donee.

(11) Subparagraphs 118.1(5.4)(a)(i) and (ii) of the Act are replaced by the following:

(i) makes a gift at any time of capital property to a qualified donee, or

(ii) who is non-resident, makes a gift at any time of real or immovable property situated in Canada to a prescribed donee who provides an undertaking, in a form satisfactory to the Minister, to the effect that the property will be held for use in the public interest; and

(12) Subsections 118.1(7) and (7.1) of the Act are replaced by the following:

(7) Subsection (7.1) applies to a gift made by an individual if the gift is described in the definition “total charitable gifts” or “total cultural gifts” in subsection (1) and the property that is the subject of the gift is a work of art that

(a) was created by the individual and is in the individual’s inventory;

(b) was acquired by the individual under circumstances where subsection 70(3) applies; or

(7.1) If this subsection applies to a gift made by an individual, the following rules apply:

(a) in the case of a gift described in the definition “total cultural gifts” in subsection (1),

(i) if at the time the gift is made the fair market value of the work of art that is the subject of the gift exceeds its cost amount to the individual, the individual is deemed to receive at that time proceeds of disposition in respect of the work of art equal to the greater of its cost amount to the individual at that time and the amount of the advantage, if any, in respect of the gift, and

(ii) if the individual is the graduated rate estate of a particular individual who created the work of art that is the subject of the gift and at the time immediately before the particular individual’s death the fair market value of the work of art exceeds its cost amount to the particular individual, the particular individual is deemed to receive at that time proceeds of disposition in respect of the work of art equal to the cost amount to the particular individual at that time and the estate is deemed to have acquired the work of art at a cost equal to those proceeds; and

(b) in the case of a gift described in the definition “total charitable gifts” in subsection (1),

(i) if at the time the gift is made the fair market value of the work of art that is the subject of the gift exceeds its cost amount to the individual, then the amount designated in the individual’s return of income under section 150 for the taxation year that includes that time is deemed to be

(A) the individual’s proceeds of disposition in respect of the work of art, and

(B) the fair market value of the work of art for the purposes of subsection 248(31),

(ii) a designation under subparagraph (i) is of no effect to the extent that the amount designated

(A) exceeds the fair market value of the work of art otherwise determined, or

(B) is less than the greater of the amount of the advantage, if any, in respect of the gift, and the cost amount to the individual of the work of art,

(13) Subsection 118.1(10.1) of the Act is replaced by the following:

(10.1) For the purposes of this section, subparagraph 69(1)(b)(ii), subsection 70(5) and sections 110.1 and 207.31, if at any time the Canadian Cultural Property Export Review Board or the Minister of the Environment determines or redetermines an amount to be the fair market value of a property that is the subject of a gift described in paragraph 110.1(1)(a), or in the definition “total charitable gifts” in subsection (1), made by a taxpayer within the two-year period that begins at that time, an amount equal to the last amount so determined or redetermined within the period is deemed to be the fair market value of the gift at the time the gift was made and, subject to subsections (6), (7.1) and 110.1(3), to be the taxpayer’s proceeds of disposition of the gift.

(14) The portion of subsection 118.1(13) of the Act before paragraph (a) is replaced by the following:

(13) For the purposes of this section (other than this subsection), if at any particular time an individual makes a gift (including a gift that, but for this subsection, would be deemed by subsection (5) to be made at the particular time) of a non-qualifying security of the individual and the gift is not an excepted gift,

(15) Paragraphs 118.1(13)(b) and (c) of the Act are replaced by the following:

(b) if the security ceases to be a non-qualifying security of the individual at a subsequent time that is within 60 months after the particular time and the donee has not disposed of the security at or before the subsequent time, the individual is deemed to have made a gift to the donee of property at the subsequent time and the fair market value of that property is deemed to be the lesser of the fair market value of the security at the subsequent time and the fair market value of the security at the particular time that would, if this Act were read without reference to this subsection, have been included in calculating the individual’s total charitable gifts for a taxation year;

(c) if the security is disposed of by the donee within 60 months after the particular time and paragraph (b) does not apply to the security, the individual is deemed to have made a gift to the donee of property at the time of the disposition and the fair market value of that property is deemed to be the lesser of the fair market value of any consideration (other than a non-qualifying security of any person) received by the donee for the disposition and the fair market value of the security at the particular time that would, if this Act were read without reference to this subsection, have been included in calculating the individ-ual’s total charitable gifts for a taxation year; and

(16) Subsection 118.1(21) of the Act is replaced by the following:

(21) Subject to subsections (23) and (24), if an individual has granted an option to a qualified donee in a taxation year, no amount in respect of the option is to be included in computing the total charitable gifts, total cultural gifts or total ecological gifts in respect of any taxpayer for any taxation year.

(17) Subsections (1) to (4) and (6) to (16) apply to the 2016 and subsequent taxation years.

(18) Subsection (5) applies to gifts made after February 10, 2014.

35. (1) The description of B in section 118.62 of the Act is replaced by the following:

B      is the total of all amounts (other than any amount paid on account of or in satisfaction of a judgement) each of which is an amount of interest paid in the year (or in any of the five preceding taxation years that are after 1997, to the extent that it was not included in computing a deduction under this section for any other taxation year) by the individual or a person related to the individual on a loan made to, or other amount owing by, the individual under the Canada Student Loans Act, the Canada Student Financial Assistance Act, the Apprentice Loans Act or a law of a province governing the granting of financial assistance to students at the post-secondary school level.

(2) Subsection (1) comes into force, or is deemed to have come into force, on the day on which Division 30 of Part 6 of the Economic Action Plan 2014 Act, No. 1 comes into force.

36. (1) Section 118.92 of the Act is replaced by the following:

118.92 In computing an individual’s tax payable under this Part, the following provisions shall be applied in the following order: subsections 118(1) and (2), section 118.7, subsections 118(3) and (10) and sections 118.01, 118.02, 118.031, 118.04, 118.05, 118.06, 118.07, 118.3, 118.61, 118.5, 118.6, 118.9, 118.8, 118.2, 118.1, 118.62 and 121.

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

37. (1) Subparagraph (b)(ii) of the definition “split income” in subsection 120.4(1) of the Act is replaced by the following:

(ii) can reasonably be considered to be income derived

(A) from the provision of property or services by a partnership or trust to, or in support of, a business carried on by

(I) a person who is related to the individual at any time in the year,

(II) a corporation of which a person who is related to the individual is a specified shareholder at any time in the year, or

(III) a professional corporation of which a person related to the individ-ual is a shareholder at any time in the year, or

(2) The portion of paragraph (c) of the definition “split income” in subsection 120.4(1) of the Act before subparagraph (i) is replaced by the following:

(c) a portion of an amount included because of the application of subsection 104(13) or 105(2) in respect of a trust (other than a mutual fund trust or a trust that is deemed to be in existence by subsection 143(1)) in computing the individual’s income for the year, to the extent that the portion

(3) Subparagraph (c)(ii) of the definition “split income” in subsection 120.4(1) of the Act is amended by striking out “or” at the end of clause (B), by adding “or” at the end of clause (C) and by adding the following after clause (C):

(4) Subsections (1) to (3) apply to the 2014 and subsequent taxation years.

38. (1) The portion of subsection 122(1) of the Act before paragraph (a) is replaced by the following:

122. (1) Notwithstanding section 117, the tax payable under this Part for a taxation year by a trust (other than a graduated rate estate or qualified disability trust) is the total of

(2) Subsection 122(1) 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):

(3) Subsections 122(1.1) and (2) of the Act are replaced by the following:

(1.1) No deduction may be made under this subdivision (other than section 118.1, 120.2 or 121) in computing the tax payable by a trust for a taxation year.

(4) Subsection 122(3) of the Act is amended by adding the following in alphabetical order:

(5) Subsections (1) to (4) apply to the 2016 and subsequent taxation years.

39. (1) The Act is amended by adding the following after section 122.71: