C-10 2 40 57-58 Elizabeth II 2009

An Act to implement certain provisions of the budget tabled in Parliament on January 27, 2009 and related fiscal measures

Budget Implementation Act, 2009

Budget Implementation, 2009 2009 3 12 2 2009 90490

SUMMARY

Part 1 implements income tax measures proposed in the January 27, 2009 Budget. In particular, it

(

a) increases by 7.5% above their 2008 levels the basic personal amount and the upper limits for the two lowest personal income tax brackets, thereby also increasing the income levels at which income testing begins for the base benefit under the Canada Child Tax Credit and the National Child Benefit supplement;

(

b) increases by $1,000 the amount on which the Age Credit is calculated;

(

c) increases to $25,000 the maximum amount eligible for withdrawal under the Home Buyers’ Plan;

(

d) introduces amendments to the rules related to Registered Retirement Savings Plans and Registered Retirement Income Funds to allow for recognition of losses in accounts between the time of the annuitant’s death and final distribution of property from the account;

(

e) repeals the interest deductibility constraints in

section 18.2 of the Income Tax Act ;

(

f) extends the mineral exploration tax credit for one year;

(

g) increases to $500,000 the annual amount of active business income eligible for the 11% small business income tax rate and makes related amendments;

(

h) clarifies rules relating to timing of acquisition of control of a corporation; and

(

i) creates cost savings through electronic filing of tax information.

In addition,

Part 1 implements income tax measures that were referenced in the January 27, 2009 Budget and that were originally proposed in the February 26, 2008 Budget but not included in the Budget Implementation Act, 2008 . In particular, it

(

a) clarifies the application of the excess corporate holdings rules for private foundations;

(

b) increases the amount that corporations will be able to pay as “eligible dividends”;

(

c) enacts several regulatory amendments that complement and complete measures enacted in the Budget Implementation Act, 2008 ;

(

d) introduces minor adjustments to the Tax-Free Savings Account rules and the scientific research and experimental development investment tax credit rules included in the Budget Implementation Act, 2008 ;

(

e) implements rules in respect of donations of medicines; and

(

f) reduces the paper burden on businesses by allowing a larger number of government entities to share Business Number-related information in connection with government programs and services.

Part 1 also implements other income tax measures referred to in the January 27, 2009 Budget that either were themselves previously announced or flow directly from previously announced measures. In particular, it

(

a) implements technical changes relating to specified investment flow-through trusts and partnerships and new tax rules to facilitate the conversion of these entities into corporations;

(

b) contains amendments to take into account financial institution accounting changes;

(

c) extends the general treatment of capital gains and losses on an acquisition of control of a corporation to gains and losses that result from fluctuations in foreign exchange rates in respect of debt denominated in foreign currency;

(

d) enhances the carry-forward for investment tax credits;

(

e) implements amendments relating to the computation of income, gains and losses of a foreign affiliate;

(

f) implements amendments to the functional currency tax reporting rules;

(

g) implements minor tax amendments relating to interprovincial allocation of corporate taxable income, the Wage Earner Protection Program and the Canada-United States tax treaty’s rules for cross-border pensions;

(

h) provides for an extension of time for income tax assessments that are consequential to provincial reassessments;

(

i) ensures the appropriate application of the Income Tax Act ’s trust rules to certain arrangements and institutions under Quebec civil law;

(

j) enacts regulatory amendments relating to prescribed amounts for automobile expenses and benefits, eligible medical expenses, and the tax treatment of foreign affiliate active business income earned in a jurisdiction with which Canada has concluded a tax information exchange agreement;

(

k) introduces rules to reduce the required minimum amount that must be withdrawn from a Registered Retirement Income Fund or from a variable benefit money purchase pension plan by 25% for 2008, and allows related re-contributions;

(

l) extends the deadline for Registered Disability Savings Plan contributions; and

(

m) modifies the provisions relating to amateur athletic trusts.

Part 2 amends the Excise Act, 2001 and the Excise Tax Act to implement measures to reduce the paper burden on businesses by allowing a larger number of government entities to share Business Number-related information in connection with government programs and services.

Part 3 amends the Customs Tariff to implement measures announced in the January 27, 2009 Budget to

(

a) reduce Most-Favoured-Nation rates of duty and, if applicable, rates of duty under other tariff treatments on a number of tariff items relating to machinery and equipment imported on or after January 28, 2009;

(

b) divide tariff item 9801.10.00 into two separate tariff items pertaining to conveyances and containers, respectively, and make two technical corrections, effective January 28, 2009; and

(

c) modify the tariff treatment of milk protein substances, effective September 8, 2008.

Part 4 amends the Employment Insurance Act until September 11, 2010 to extend regular benefit entitlements by five weeks. It also provides that a pilot project ceases to have effect. In addition, it amends that Act to provide that the cost of benefit enhancement measures under that Act, provided for in the budget tabled in Parliament on January 27, 2009, are not to be charged to the Employment Insurance Account. Finally, it sets the premium rate provided for under that Act for the years 2002, 2003, 2005 and 2010.

Division 1 of

Part 5 amends the Financial Administration Act to authorize the Minister of Finance to take, subject to certain conditions, a number of measures intended to promote the stability or maintain the efficiency of the financial system, including financial markets, in Canada.

Division 2 of

Part 5 amends the Canada Deposit Insurance Corporation Act to provide the Canada Deposit Insurance Corporation with greater flexibility to enhance its ability to safeguard financial stability in Canada. The Division also adds Tax-Free Saving Accounts as a distinct category for the purposes of deposit insurance. It also makes consequential amendments to other acts.

Division 3 of

Part 5 amends the Export Development Act to, among other things, expand the Export Development Corporation’s mandate to include the support and development of domestic trade and business opportunities for a period of two years. The period may be extended by the Governor in Council. Division 3 also increases the Corporation’s authorized capital.

Division 4 of

Part 5 amends the Business Development Bank of Canada Act to increase the maximum amount of the paid-in capital of the Business Development Bank of Canada.

Division 5 of

Part 5 amends the Canada Small Business Financing Act to increase the maximum outstanding loan amount in relation to a borrower. It also increases individual lenders’ cap on claims. These amendments will apply to new loans made after March 31, 2009.

Division 6 of

Part 5 amends a number of Acts governing federal financial institutions to improve access to credit and strengthen the financial system in Canada, including amendments that will

(

a) provide new authority for further safeguards to promote the stability of the financial system;

(

b) enhance consumer protection by establishing new measures to help consumers of financial products; and

(

c) implement other technical measures to strengthen the financial sector framework in Canada.

Division 7 of

Part 5 provides for payments to be made to provinces and territories, provides authority to the Minister of Finance to enter into agreements respecting securities regulation with provinces and territories and enacts the Canadian Securities Regulation Regime Transition Office Act .

Part 6 authorizes payments to be made out of the Consolidated Revenue Fund for various purposes, including infrastructure and housing.

Part 7 amends

Part I of the Navigable Waters Protection Act to create a tiered approval process for works in order to streamline the approval process and to exclude certain classes of works and works on certain classes of navigable waters from the approval process. This Part further amends

Part I of the Act to clarify the scope of the application of that Part to works owned or previously owned by the Crown, to provide for the application of the Act to bridges over the St. Lawrence River and to add certain regulation-making powers.

Part 7 also amends the Act to clarify the provisions related to obstacles and obstructions to navigation. The Act is also amended by adding administration and enforcement powers, consolidating all offence provisions, increasing fines and requiring a review of the Act within five years of the amendments coming into force.

Division 1 of

Part 8 amends the Wage Earner Protection Program Act and the Wage Earner Protection Program Regulations to provide that unpaid wages for which an individual may receive payment under the Wage Earner Protection Program include unpaid severance pay and termination pay.

Division 2 of

Part 8 amends the Canada Student Financial Assistance Act to, among other things,

(

a) require the Chief Actuary of the Office of the Superintendent of Financial Institutions to report on financial assistance provided under that Act; and

(

b) authorize the Minister of Human Resources and Skills Development to suspend or deny financial assistance to all those who are qualifying students in respect of a designated educational institution.

Division 2 of

Part 8 also amends both the Canada Student Financial Assistance Act and the Canada Student Loans Act to, among other things,

(

a) terminate all obligations of a borrower with respect to risk-shared loans and guaranteed loans if the borrower dies;

(

b) authorize the Minister of Human Resources and Skills Development to require any person who has received financial assistance or a guaranteed student loan to provide that Minister with documents or information for the purpose of verifying compliance with those Acts; and

(

c) authorize that Minister to terminate or deny financial assistance in certain circumstances.

Division 3 of

Part 8 amends the Financial Administration Act to provide express authority for agent Crown corporations to lease their property, restrict the appointment of employees of a Crown corporation to its board of directors, require Crown corporations to hold annual public meetings, clarify Treasury Board’s duties to indemnify Crown corporation directors and officers, permit more flexibility in the frequency of special examinations of Crown corporations, and require the reports of special examinations to be submitted to the appropriate Minister and Treasury Board and made public. This Division also makes consequential amendments to other Acts.

Part 9 amends the Federal-Provincial Fiscal Arrangements Act to set out the amount of the fiscal equalization payments to the provinces for the fiscal year beginning on April 1, 2009 and amends the method by which fiscal equalization payments will be calculated for subsequent fiscal years. It also amends the method by which the Canada Health Transfer is calculated for each fiscal year in the period beginning on April 1, 2009 and ending on March 31, 2014.

Part 10 enacts the Expenditure Restraint Act . The purpose of that Act is to put in place a reasonable and an affordable approach to compensation across the federal public sector in support of responsible fiscal management in a difficult economic environment.

It sets out rules governing economic increases to the rates of pay of unionized and non-unionized employees for periods that begin during the period that begins on April 1, 2006 and ends on March 31, 2011. It also continues certain other terms and conditions at their current levels. It preserves the right of collective bargaining with regard to other matters and it does not affect the right to strike.

The Act does not preclude the continued development of workplace improvements by employers and employees’ bargaining agents through the National Joint Council or other bodies that they may agree on. It also permits bargaining agents and employers to agree to the amendment of certain terms and conditions of collective agreements or arbitral awards.

Part 11 enacts the Public Sector Equitable Compensation Act and makes consequential amendments to other Acts. The purpose of the Act is to ensure that proactive measures are taken to provide employees in female predominant job groups with equitable compensation.

It requires public sector employers that have non-unionized employees to determine periodically whether any equitable compensation matters exist in the workplace and, if so, to prepare a plan to resolve them. With respect to public sector employers that have unionized employees, the employers and the bargaining agents are to resolve those matters through the collective bargaining process.

It sets out the procedure for informing employees as to whether an equitable compensation assessment was required to be conducted and, if so, how it was conducted, and how any equitable compensation matters were resolved. It also establishes a recourse process for employees if the Act is not complied with.

Finally, since the Act puts in place a comprehensive equitable compensation scheme for public sector employees, this Part amends the Canadian Human Rights Act so that the provisions of that Act dealing with gender-based wage discrimination no longer apply to public sector employers. It extends the mandate of the Public Service Labour Relations Board to allow it to hear equitable compensation complaints and to provide other services related to equitable compensation in the public sector.

Part 12 amends the Competition Act . The amendments include

(

a) introducing a dual-track approach to agreements between competitors, with a limited criminal anti-cartel provision and a civil provision to address other agreements that substantially lessen or prevent competition;

(

b) providing that bid-rigging includes agreements or arrangements to withdraw bids or tenders;

(

c) repealing the provisions dealing with price discrimination and predatory pricing, replacing the criminal resale price maintenance provision with a new civil provision to address price maintenance practices that have an adverse effect on competition, and repealing all provisions dealing specifically with the airline industry;

(

d) introducing an administrative monetary penalty for cases of abuse of dominant position, increasing the maximum amount of administrative monetary penalties for deceptive marketing cases, and increasing the maximum fines or terms of imprisonment, or both, for agreements or arrangements between competitors, bid-rigging, criminal false or misleading representations, deceptive telemarketing, deceptive notice of winning a prize, obstruction of Competition Bureau investigations and failure to comply with prohibition orders or production orders;

(

e) clarifying that, in proceedings under

section 52, 74.01 or 74.02, it is not necessary to establish that false or misleading representations are made to the public in Canada or are made in a place to which the public has access, and clarifying that the “general impression test” applies to all deceptive marketing practices in sections 74.01 and 74.02;

(

f) providing that the court may make an order in respect of cases of false or misleading representations to require the person who engaged in the conduct to compensate persons affected by the conduct, and may issue an interim injunction to freeze assets if the Commissioner of Competition intends to ask for such a compensation order; and

(

g) introducing a two-stage merger review process for notifiable transactions, increased merger pre-notification thresholds and a reduced merger review limitation period.

Part 13 amends the Investment Canada Act so that the review of an investment will be applied only to the more significant investments. It also amends the Act to allow more information to be made public. This Part also provides for the review of foreign investments in Canada that could threaten national security and allows the Governor in Council to take any measures that the Governor in Council considers advisable to protect national security, such as prohibiting a non-Canadian from implementing an investment.

Part 14 amends the Canada Transportation Act to provide the Governor in Council with flexibility to increase the foreign ownership limit from the existing levels to a maximum of 49%.

Part 15 amends the Air Canada Public Participation Act in relation to the mandatory provisions in the articles of Air Canada regarding constraints imposed on the issue, transfer and ownership of shares. It provides for the repeal of the provisions requiring that the articles of Air Canada contain provisions imposing limits on non-resident share ownership and the repeal of the provisions requiring that the articles of Air Canada contain provisions respecting the enforcement of these constraints.

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

SHORT TITLE

Short title

This Act may be cited as the Budget Implementation Act, 2009 .

PART 1

AMENDMENTS IN RESPECT OF INCOME TAX

R.S., c. 1 (5th Supp.)

Income Tax Act

(1) Subparagraph 6(1)( g )(ii) of the Income Tax Act is replaced by the following:

(ii)

a return of amounts contributed to the plan by the taxpayer or a deceased employee of whom the taxpayer is an heir or legal representative, to the extent that the amounts were not deducted in computing the taxable income of the taxpayer or the deceased employee for any taxation year, or

(2) Subsection (1) applies to the 2009 and subsequent taxation years.

(1) Paragraph 7(1.4)(

b) of the Act is amended by striking out “or” at the end of subparagraph (iv), by adding “or” at the end of subparagraph (

v) and by adding the following after subparagraph (v):

(vi)

if the disposition is before 2013 and the old securities were equity in a SIFT wind-up entity that was at the time of the disposition a mutual fund trust, a SIFT wind-up corporation in respect of the SIFT wind-up entity

(2) Subsection (1) applies after December 19, 2007.

(1) Subsection 12(1) of the Act is amended by adding the following after paragraph ( z.4 ):

Former TFSA

( z.5 )

any amount required because of subsection 146.2(9) to be included in computing the taxpayer’s income for the year; and

(2) The definition investment contract in subsection 12(11) of the Act is amended by adding the following after paragraph ( d ):

( d.1 )

a TFSA,

(3) Subsections (1) and (2) apply to the 2009 and subsequent taxation years.

(1) The Act is amended by adding the following after

section 12.4:

Definitions

12.5

(1) The

definitions in this

section apply for the purposes of this

section and

section 20.4.

base year

année de base

base year of an insurer means the insurer’s taxation year that immediately precedes its transition year.

insurance business

entreprise d’assurance

insurance business of an insurer, is an insurance business carried on by the insurer, other than a life insurance business.

reserve transition amount

montant transitoire

reserve transition amount of an insurer, in respect of an insurance business carried on by it in Canada in its transition year, is the positive or negative amount determined by the formula

A – B where A

is the maximum amount that the insurer would be permitted to claim under paragraph 20(7)( c ) (and that would be prescribed by

section 1400 of the Regulations for the purpose of paragraph 20(7)( c )) as a policy reserve for its base year in respect of its insurance policies if

(

a) the generally accepted accounting principles that applied to the insurer in valuing its assets and liabilities for its transition year had applied to it for its base year, and

(

b) section 1400 of the Regulations were read in respect of the insurer’s base year as it reads in respect of its transition year; and

is the maximum amount that the insurer is permitted to claim under paragraph 20(7)(

c) as a policy reserve for its base year.

transition year

année transitoire

transition year of an insurer means the insurer’s first taxation year that begins after September 2006.

Transition year income inclusion

(2) There shall be included in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada in the transition year, the positive amount, if any, of the insurer’s reserve transition amount in respect of that insurance business.

Transition year income deduction reversal

(3) If an amount has been deducted under subsection 20.4(2) in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada, there shall be included in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula

A × B/1825 where A

is the amount deducted under subsection 20.4(2) in computing the insurer’s income for the transition year from that insurance business; and

is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Winding-up

(4) If an insurer has, in a winding-up to which subsection 88(1) has applied, been wound-up into another corporation (referred to in this subsection as the “parent”), and immediately after the winding-up the parent carries on an insurance business, in applying subsections (3) and 20.4(3) in computing the incomes of the insurer and of the parent for particular taxation years that end on or after the first day (referred to in this subsection as the “start day”) on which assets of the insurer were distributed to the parent on the winding-up,

(

a) the parent is, on and after the start day, deemed to be the same corporation as and a continuation of the insurer in respect of

(

i) any amount included under subsection (2) or deducted under subsection 20.4(2) in computing the insurer’s income from an insurance business for its transition year,

(ii)

any amount included under subsection (3) or deducted under subsection 20.4(3) in computing the insurer’s income from an insurance business for a taxation year of the insurer that begins before the start day, and

(iii)

any amount that would — in the absence of this subsection and if the insurer existed and carried on an insurance business on each day that is the start day or a subsequent day and on which the parent carries on an insurance business — be required to be included or deducted, in respect of any of those days, under subsection (3) or 20.4(3) in computing the insurer’s income from an insurance business; and

(

b) the insurer is, in respect of each of its particular taxation years, to determine the value for B in the formulas in subsections (3) and 20.4(3) without reference to the start day and days after the start day.

Amalgamations

(5) If there is an amalgamation (within the meaning assigned by subsection 87(1)) of an insurer with one or more other corporations to form one corporation (referred to in this subsection as the “new corporation”), and immediately after the amalgamation the new corporation carries on an insurance business, in applying subsections (3) and 20.4(3) in computing the new corporation’s income for particular taxation years that begin on or after the day on which the amalgamation occurred, the new corporation is, on and after that day, deemed to be the same corporation as and a continuation of the insurer in respect of

(

a) any amount included under subsection (2) or deducted under subsection 20.4(2) in computing the insurer’s income from an insurance business for its transition year;

(

b) any amount included under subsection (3) or deducted under subsection 20.4(3) in computing the insurer’s income from an insurance business for a taxation year of the insurer that begins before the day on which the amalgamation occurred; and

(

c) any amount that would — in the absence of this subsection and if the insurer existed and carried on an insurance business on each day that is the day on which the amalgamation occurred or a subsequent day and on which the new corporation carries on an insurance business — be required to be included or deducted, in respect of any of those days, under subsection (3) or 20.4(3) in computing the insurer’s income from an insurance business.

Application of subsection (7)

(6) Subsection (7) applies if, at any time, an insurer (referred to in this subsection and subsection (7) as the “transferor”) transfers, to a corporation (referred to in this subsection and subsection (7) as the “transferee”) that is related to the transferor, property in respect of an insurance business carried on by the transferor in Canada (referred to in this subsection and subsection (7) as the “transferred business”) and

( a )

subsection 138(11.5) or (11.94) applies to the transfer; or

( b )

subsection 85(1) applies to the transfer, the transfer includes all or substantially all of the property and liabilities of the transferred business and, immediately after the transfer, the transferee carries on an insurance business.

Transfer of insurance business

(7) If this subsection applies in respect of the transfer, at any time, of property

(

a) the transferee is, at and after that time, deemed to be the same corporation as and a continuation of the transferor in respect of

(

i) any amount included under subsection (2) or deducted under subsection 20.4(2) in computing the transferor’s income for its transition year that can reasonably be attributed to the transferred business,

(ii)

any amount included under subsection (3) or deducted under subsection 20.4(3) in computing the transferor’s income for a taxation year of the transferor that begins before that time that can reasonably be attributed to the transferred business,

(iii)

any amount that would — in the absence of this subsection and if the transferor existed and carried on an insurance business on each day that includes that time or is a subsequent day and on which the transferee carries on an insurance business — be required to be included or deducted, in respect of any of those days, under subsection (3) or 20.4(3) in computing the transferor’s income that can reasonably be attributed to the transferred business; and

(

b) in determining, in respect of the day that includes that time or any subsequent day, any amount that is required under subsection (3) or 20.4(3) to be included or deducted in computing the transferor’s income for each particular taxation year from the transferred business, the description of A in the formulas in those subsections is deemed to be nil.

Ceasing to carry on business

(8) If at any time an insurer ceases to carry on all or substantially all of an insurance business (referred to in this subsection as the “discontinued business”), and none of subsections (4) to (6) apply, there shall be included in computing the insurer’s income from the discontinued business for the insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

A – B where A

is the amount deducted under subsection 20.4(2) in computing the insurer’s income from the discontinued business for its transition year; and

is the total of all amounts each of which is an amount included under subsection (3) in computing the insurer’s income from the discontinued business for a taxation year that began before that time.

Ceasing to exist

(9) If at any time an insurer that carried on an insurance business ceases to exist (otherwise than as a result of a winding-up or amalgamation described in subsection (4) or (5)), for the purposes of subsections (8) and 20.4(4), the insurer is deemed to have ceased to carry on the insurance business at the earlier of

(

a) the time (determined without reference to this subsection) at which the insurer ceased to carry on the insurance business, and

(

b) the time that is immediately before the end of the last taxation year of the insurer that ended at or before the time at which the insurer ceased to exist.

(2) Subsection (1) applies to taxation years that begin after September 2006.

(1) Section 18.2 of the Act is repealed.

(2) Subsection (1) applies in respect of interest and other borrowing costs paid or payable in respect of a period or periods that begin after 2011.

(1) Subsection 20(3) of the Act is replaced by the following:

Borrowed money

(3) For greater certainty, if a taxpayer uses borrowed money to repay money previously borrowed, or to pay an amount payable for property described in subparagraph (1)( c )(ii) previously acquired (which previously borrowed money or amount payable in respect of previously acquired property is, in this subsection, referred to as the previous indebtedness ), subject to subsection 20.1(6), for the purposes of paragraphs (1)( c ), (

e) and ( e.1 ), subsections 20.1(1) and (2),

section 21 and subparagraph 95(2)( a )(ii), and for the purpose of paragraph 20(1)(

k) of the Income Tax Act ,

Chapter 148 of the Revised Statutes of Canada, 1952, the borrowed money is deemed to be used for the purpose for which the previous indebtedness was used or incurred, or was deemed by this subsection to have been used or incurred.

(2) Subsection (1) applies in respect of interest paid or payable in respect of a period or periods that begin after January 27, 2009.

(1) The Act is amended by adding the following after

section 20.3:

Definitions

20.4

(1) The

definitions in

section 12.5 apply for the purposes of this section.

Transition year income deduction

(2) There shall be deducted in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada in the transition year the absolute value of the negative amount, if any, of the insurer’s reserve transition amount in respect of that insurance business.

Transition year income inclusion reversal

(3) If an amount has been included under subsection 12.5(2) in computing an insurer’s income for its transition year from an insurance business carried on by it in Canada, there shall be deducted in computing the insurer’s income, for each particular taxation year of the insurer that ends after the beginning of the transition year, from that insurance business, the amount determined by the formula

A × B/1825 where A

is the amount included under subsection 12.5(2) in computing the insurer’s income for the transition year from that insurance business; and

is the number of days in the particular taxation year that are before the day that is 1825 days after the first day of the transition year.

Ceasing to carry on business

(4) If at any time an insurer ceases to carry on all or substantially all of an insurance business (referred to in this subsection as the “discontinued business”), and none of subsections 12.5(4) to (6) apply, there shall be deducted in computing the insurer’s income from the discontinued business for the insurer’s taxation year that includes the time that is immediately before that time, the amount determined by the formula

A – B where A

is any amount included under subsection 12.5(2) in computing the insurer’s income from the discontinued business for its transition year; and

is the total of all amounts each of which is an amount deducted under subsection (3) in computing the insurer’s income from the discontinued business for a taxation year that began before that time.

(2) Subsection (1) applies to taxation years that begin after September 2006.

(1) Subparagraph 39(1)( a )(ii.2) of the Act is replaced by the following:

(ii.2)

a property if the disposition is a disposition to which subsection 142.4(4) or (5) or 142.5(1) applies,

(2) Subsection (1) applies to taxation years that begin after September 2006.

(1) Subsection 40(3.5) of the Act is amended by adding the following after paragraph ( b ):

( b.1 )

a share of the capital stock of a SIFT wind-up corporation in respect of a SIFT wind-up entity is, if the share was acquired before 2013, deemed to be a property that is identical to equity in the SIFT wind-up entity;

(2) Section 40 of the Act is amended by adding the following after subsection (9):

Application

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

Gain or loss on foreign currency debt

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

A + B – C where A

(

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

(

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

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

(

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

(

b) the forgiven amount, if any, (within the meaning assigned by subsection 80(1)) in respect of the foreign currency debt at the particular time; and

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

(

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

(

b) the forgiven amount, if any, (within the meaning assigned by subsection 80(1)) in respect of the foreign currency debt at the particular time.

(3) Subsection (1) applies to dispositions that occur on or after November 28, 2008.

(4) Subsection (2) applies after 2005.

(1) Paragraph 53(1)(

e) of the Act is amended by adding “and” at the end of subparagraph (xii), by striking out “and” at the end of subparagraph (xiii) and by repealing subparagraph (xiv).

(2) Paragraph 53(2)(

c) of the Act is amended by adding “and” at the end of subparagraph (xi), by striking out “and” at the end of subparagraph (xii) and by repealing subparagraph (xiii).

(3) Subsections (1) and (2) apply after 2011.

(1) Paragraph (

c) of the definition superficial loss in

section 54 of the Act is replaced by the following:

(

c) a disposition deemed to have been made by paragraph 33.1(11)( a ), subsection 45(1),

section 48 as it read in its application before 1993,

section 50 or 70, subsection 104(4),

section 128.1, paragraph 132.2(1)( f ), subsection 138(11.3) or 142.5(2),

section 142.6, or any of subsections 144(4.1) and (4.2) and 149(10),

(2) The portion of the definition superficial loss in

section 54 of the Act after paragraph (

h) is replaced by the following:

and, for the purpose of this definition,

(

i) a right to acquire a property (other than a right, as security only, derived from a mortgage, hypothec, agreement for sale or similar obligation) is deemed to be a property that is identical to the property, and

(

j) a share of the capital stock of a SIFT wind-up corporation in respect of a SIFT wind-up entity is, if the share was acquired before 2013, deemed to be a property that is identical to equity in the SIFT wind-up entity.

(3) Subsection (1) applies to taxation years that begin after September 2006.

(4) Subsection (2) applies to dispositions that occur after February 2, 2009.

(1) Paragraph 56(1)(

d) of the Act is amended by striking out “or” at the end of subparagraph (i), by adding “or” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(iii)

received out of or under an annuity contract issued or effected as a TFSA;

(2) Paragraph 56(1)(

r) of the Act is amended by striking out “or” at the end of subparagraph (ii) and by adding the following after subparagraph (iii):

(iv)

financial assistance provided under a program established by a government, or government agency, in Canada that provides income replacement benefits similar to income replacement benefits provided under a program established under the Employment Insurance Act , or

(

v) amounts received by the taxpayer in the year under the Wage Earner Protection Program Act in respect of wages (within the meaning of that Act);

(3) Subsection (1) applies to the 2009 and subsequent taxation years.

(4) Subsection (2) applies to the 2003 and subsequent taxation years except that, in its application to the 2003 to 2007 taxation years, paragraph 56(1)(

r) of the Act, as amended by subsection (2), is to be read without reference to its subparagraph (v).

(1) Paragraph 60 (

i) of the Act is replaced by the following:

Premium or payment under RRSP or RRIF

(

i) any amount that is deductible under

section 146 or 146.3 or subsection 147.3(13.1) in computing the income of the taxpayer for the year;

(2) Subsection (1) applies in respect of a registered retirement income fund in respect of which the last payment out of the fund is made after 2008.

(1) The Act is amended by adding the following after

section 60.02:

Additions to clause 60( l )(v)(B.2) for 2008

60.021

(1) In determining the amount that may be deducted because of paragraph 60(

l) in computing a taxpayer’s income for the 2008 taxation year, clause 60( l )(v)(B.2) shall be read as follows:

(B.2)

the total of all amounts each of which is

(

I) the taxpayer’s eligible amount (within the meaning assigned by subsection 146.3(6.11)) for the year in respect of a registered retirement income fund,

(II)

the taxpayer’s eligible RRIF withdrawal amount (within the meaning assigned by subsection 60.021(2)) for the year in respect of a registered retirement income fund, or

(III)

the taxpayer’s eligible variable benefit withdrawal amount (within the meaning assigned by subsection 60.021(3)) for the year in respect of an account of the taxpayer under a money purchase provision of a registered pension plan,

Meaning of eligible RRIF withdrawal amount

(2) A taxpayer’s eligible RRIF withdrawal amount for a taxation year in respect of a registered retirement income fund under which the taxpayer is the annuitant at the beginning of the taxation year is

(

a) except where paragraph (

b) applies, the amount determined by the formula

A – B where A

is the lesser of

(

i) the total of all amounts included, because of subsection 146.3(5), in computing the income of the taxpayer for the taxation year in respect of amounts received out of or under the fund (other than an amount paid by direct transfer from the fund to another fund or to a registered retirement savings plan), and

(ii)

the amount that would, in the absence of subsection 146.3(1.1), be the minimum amount under the fund for the taxation year, and

is the minimum amount under the fund for the taxation year; and

(

b) if the taxpayer attained 70 years of age in 2007, nil.

Meaning of eligible variable benefit withdrawal amount

(3) A taxpayer’s eligible variable benefit withdrawal amount for a taxation year in respect of an account of the taxpayer under a money purchase provision of a registered pension plan is the amount determined by the formula

A – B – C where A

is the lesser of

(

a) the total of all amounts each of which is the amount of a retirement benefit (other than a retirement benefit permissible under any of paragraphs 8506(1)(

a) to (

e) of the Regulations) paid from the plan in the taxation year in respect of the account and included, because of paragraph 56(1)( a ), in computing the taxpayer’s income for the taxation year, and

(

b) the amount that would, in the absence of paragraph 8506(7)(

b) of the Regulations, be the minimum amount for the account for the taxation year;

is the minimum amount for the account for the taxation year; and

is the total of all contributions made by the taxpayer under the provision and designated for the purposes of subsection 8506(10) of the Regulations.

Expressions used in this section

(4) For the purposes of this section,

(

a) the term “money purchase provision” has the meaning assigned by subsection 147.1(1);

(

b) the term “retirement benefit” has the meaning assigned by subsection 8500(1) of the Regulations; and

(

c) the minimum amount for an account of a taxpayer under a money purchase provision of a registered pension plan is the amount determined in accordance with subsection 8506(5) of the Regulations.

(2) Amounts paid by a taxpayer, to a registered retirement savings plan or registered retirement income fund under which the taxpayer is the annuitant, during the period that begins on March 2, 2009 and that ends on the day that is 30 days after the day on which this Act is assented to, are deemed for the purpose of paragraph 60(

l) of the Act to have been made on March 1, 2009, and not when they were actually made, except that the amounts so deemed shall not exceed the total of all amounts each of which is

(

a) the taxpayer’s eligible RRIF withdrawal amount for 2008 in respect of a registered retirement income fund, or

(

b) the taxpayer’s eligible variable benefit withdrawal amount for 2008 in respect of an account of the taxpayer under a money purchase provision of a registered pension plan.

(1) Subparagraph 62(1)( c )(

i) of the Act is replaced by the following:

(

i) in any case described in subparagraph ( a )(

i) of the definition eligible relocation in subsection 248(1), the total of all amounts, each of which is an amount included in computing the taxpayer’s income for the taxation year from the taxpayer’s employment at a new work location or from carrying on the business at the new work location, or because of subparagraph 56(1)( r )(

v) in respect of the taxpayer’s employment at the new work location, and

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

(1) Section 80.01 of the Act is amended by adding the following after subsection (5):

Deemed settlement on SIFT trust wind-up event

(5.1) If a trust that is a SIFT wind-up entity is the only beneficiary under another trust (in this subsection referred to as the “subsidiary trust”), and a capital property that is a debt or other obligation (in this subsection referred to as the “subsidiary trust’s obligation”) of the subsidiary trust to pay an amount to the SIFT wind-up entity is, as a consequence of a distribution from the subsidiary trust that is a SIFT trust wind-up event, settled at a particular time without any payment of an amount or by the payment of an amount that is less than the principal amount of the subsidiary trust’s obligation

(

a) paragraph (

b) applies if

(

i) the payment is less than the amount that would have been the adjusted cost base to the SIFT wind-up entity of the subsidiary trust’s obligation immediately before the particular time, and

(ii)

the SIFT wind-up entity elects, in prescribed form on or before the SIFT wind-up entity’s filing-due date for the taxation year that includes the particular time, to have paragraph (

b) apply;

(

b) if this paragraph applies, the amount paid at the particular time in satisfaction of the principal amount of the subsidiary trust’s obligation is deemed to be equal to the amount that would be the adjusted cost base to the SIFT wind-up entity of the subsidiary trust’s obligation immediately before the particular time if that adjusted cost base included amounts added in computing the SIFT wind-up entity’s income in respect of the portion of the indebtedness representing unpaid interest, to the extent that the SIFT wind-up entity has not deducted any amounts as bad debts in respect of that unpaid interest; and

(

c) for the purposes of applying

section 80 to the subsidiary trust’s obligation, the subsidiary trust’s obligation is deemed to have been settled immediately before the time that is immediately before the distribution.

(2) Subsection (1) applies after July 14, 2008.

(1) Section 85.1 of the Act is amended by adding the following after subsection (6):

Application of subsection (8)

(7) Subsection (8) applies in respect of the disposition before 2013 by a taxpayer of SIFT wind-up entity equity (referred to subsection (8) as the “particular unit”) to a taxable Canadian corporation if

(

a) the disposition occurs during a period (referred to in this subsection and subsection (8) as the “exchange period”) of no more than 60 days at the end of which all of the equity in the SIFT wind-up entity is owned by the corporation;

(

b) the taxpayer receives no consideration for the disposition other than a share (referred to in this subsection and subsection (8) as the “exchange share”) of the capital stock of the corporation that is issued during the exchange period to the taxpayer by the corporation;

(

c) neither of subsections 85(1) and (2) applies to the disposition; and

(

d) all of the exchange shares issued to holders of equity in the SIFT wind-up entity are shares of a single class of the capital stock of the corporation.

Rollover on SIFT unit for share exchange

(8) If this subsection applies in respect of a disposition by a taxpayer of a particular unit of a SIFT wind-up entity to a corporation for consideration that is an exchange share, the following rules apply:

(

a) the taxpayer’s proceeds of disposition of the particular unit, and cost of the exchange share, are deemed to be equal to the cost amount to the taxpayer of the particular unit immediately before the disposition;

(

b) if the particular unit was immediately before the disposition taxable Canadian property of the taxpayer, the exchange share is deemed to be taxable Canadian property of the taxpayer;

(

c) if the exchange share’s fair market value immediately after the disposition exceeds the particular unit’s fair market value at the time of the disposition, the excess is deemed to be an amount that

section 15 requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs;

(

d) if the particular unit’s fair market value at the time of the disposition exceeds the exchange share’s fair market value immediately after the disposition, and it is reasonable to regard any part of the excess as a benefit that the taxpayer desired to have conferred on a person, or partnership, with whom the taxpayer does not deal at arm’s length, the excess is deemed to be an amount that

section 15 requires to be included in computing the taxpayer’s income for the taxpayer’s taxation year in which the disposition occurs;

(

e) the cost to the corporation of the particular unit is deemed to be the lesser of

(

i) the fair market value of the particular unit immediately before the disposition, and

(ii)

the amount determined for B in the formula in paragraph (

f) in respect of the particular unit; and

(

f) in computing the paid up capital in respect of each class of shares of the capital stock of the corporation at any time after the disposition there shall be deducted the amount determined by the formula

(A – B) × C/A where A

is the increase, if any, as a result of the disposition, in the paid-up capital in respect of all the shares of the capital stock of the corporation, computed without reference to this paragraph as it applies to the disposition,

is the amount determined by the formula

D – E where D

(

i) unless subparagraph (ii) applies, the total of all amounts each of which is

(

A) if the SIFT wind-up entity is a trust, the fair market value of property received by the SIFT wind-up entity on the issuance of the particular unit, or

(

B) if the SIFT wind-up entity is a partnership,

(

I) an amount that has at any time been added, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(1)( e )(iv) or (x), or

(II)

an amount that would at any time have been added, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(1)( e )(

i) if subsection 96(1) were read without reference to its paragraph (

d) and the partnership deducted all amounts otherwise deductible because of that paragraph, and

(ii)

if the SIFT wind-up entity has on or after the end of the exchange period issued a unit, nil, and

is the total of all amounts each of which

(

i) if the SIFT wind-up entity is a trust, has become payable by the SIFT wind-up entity, in respect of the particular unit, to any holder of the unit on or before the disposition, other than an amount that has become payable out of its income (determined without reference to subsection 104(6)) or capital gains, and

(ii)

if the SIFT wind-up entity is a partnership,

(

A) has at any time been deducted, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(2)( c )(iv) or (v), or

(

B) would have at any time been deducted, in computing the adjusted cost base to any taxpayer of the particular unit on or before the disposition, because of subparagraph 53(2)( c )(

i) if subsection 96(1) were read without reference to its paragraph (

d) and the partnership deducted all amounts otherwise deductible because of that paragraph, and

is the increase, if any, as a result of the disposition, in the paid-up capital in respect of the class of shares, computed without reference to this paragraph as it applies to the disposition.

(2) Subsection (1) applies to

(

a) dispositions that occur on or after July 14, 2008; and

(

b) a disposition, by a taxpayer to a corporation, that occurs on or after December 20, 2007 and before July 14, 2008, if the corporation (jointly with the taxpayer, if the taxpayer and the corporation have validly elected that subsection 85(1) or (2) of the Act apply to the disposition) elects in writing, filed with the Minister of National Revenue on or before the corporation’s filing-due date for its taxation year that includes the day on which this Act is assented to, that this subsection apply to the disposition.

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

Financial institution rules

( g.2 )

for the purposes of paragraphs 142.4(4)(

c) and (

d) and subsections 142.5(5) and (7), 142.51(11) and 142.6(1), the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

(2) Subsection 87(2) of the Act is amended by adding the following after paragraph ( s ):

Deemed SIFT wind-up corporation

( s.1 )

if a predecessor corporation was a SIFT wind-up corporation immediately before the amalgamation, the new corporation is deemed to be a SIFT wind-up corporation;

(3) Subsection 87(2.2) of the Act is replaced by the following:

Amalgamation of insurers

(2.2) Where there has been an amalgamation and one or more of the predecessor corporations was an insurer, the new corporation is, notwithstanding subsection (2), deemed, for the purposes of paragraphs 12(1)( d ), ( e ), ( e.1 ), (

i) and ( s ), subsection 12.5(8), paragraphs 20(1)( l ), ( l.1 ), (

p) and ( jj ) and 20(7)( c ), subsections 20(22) and 20.4(4), sections 138, 138.1, 140, 142 and 148 and

Part XII.3, to be the same corporation as, and a continuation of, each of those predecessor corporations.

(4) Subsections (1) and (3) apply to taxation years that begin after September 2006.

(5) Subsection (2) applies after December 19, 2007.

(1) Subparagraph 88(1)( g )(

i) of the Act is replaced by the following:

(

i) for the purposes of paragraphs 12(1)( d ), ( e ), ( e.1 ), (

i) and ( s ), subsection 12.5(8), paragraphs 20(1)( l ), ( l.1 ), (

p) and ( jj ) and 20(7)( c ), subsections 20(22) and 20.4(4), sections 138, 138.1, 140, 142 and 148 and

Part XII.3, the parent is deemed to be the same corporation as, and a continuation of, the subsidiary, and

(2) Subsection (1) applies to taxation years that begin after September 2006.

(1) The Act is amended by adding the following after

section 88:

Application

88.1

(1) Subsection (2) applies to a trust’s distribution of property to a taxpayer if

(

a) the distribution is a SIFT trust wind-up event;

(

b) the trust is

(

i) a SIFT wind-up entity whose only beneficiary, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, is a taxable Canadian corporation, or

(ii)

a trust whose only beneficiary, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, is another trust described by subparagraph (i);

(

c) where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the earlier of

(

i) the first SIFT trust wind-up event of the trust, and

(ii)

the first distribution to the trust that is a SIFT trust wind-up event of another trust; and

(

d) if the property is shares of the capital stock of a taxable Canadian corporation,

(

i) the property was not acquired by the trust on a distribution to which subsection 107(3.1) applies, and

(ii)

the trust elects in writing, filed with the Minister on or before the trust’s filing-due date for its taxation year that includes the time of the distribution, that this

section apply to the distribution.

SIFT trust wind-up event

(2) If this subsection applies to a trust’s distribution of property to a taxpayer, subsections 88(1) to (1.7), and

section 87 and paragraphs 256(7)(

a) to (

e) as they apply for the purposes of those subsections, apply, with any modifications that the circumstances require, as if

(

a) the trust were a taxable Canadian corporation (in this subsection referred to as the “subsidiary”) that is not a private corporation;

(

b) where the taxpayer is a SIFT wind-up entity, the taxpayer were a taxable Canadian corporation that is not a private corporation;

(

c) the distribution were a winding-up of the subsidiary;

(

d) the taxpayer’s interest as a beneficiary under the trust were shares of a single class of shares of the capital stock of the subsidiary owned by the taxpayer;

( e )

paragraph 88(1)(

b) deemed the taxpayer’s proceeds of disposition of the shares described in paragraph (

d) and owned by the taxpayer immediately before the distribution to be equal to the adjusted cost base to the taxpayer of the taxpayer’s interest as a beneficiary under the trust immediately before the distribution;

(

f) each trust, a majority-interest beneficiary (in this subsection, within the meaning assigned by

section 251.1) of which is another trust that is by operation of this subsection treated as if it were a corporation, were a corporation; and

(

g) except for the purposes of subsections 88(1.1) and (1.2), the taxpayer last acquired control of the subsidiary and of each corporation (including a trust that is by operation of this subsection treated as if it were a corporation) controlled by the subsidiary at the time, if any, at which the taxpayer last became a majority-interest beneficiary of the trust.

(2) Subsection (1) applies after July 14, 2008, except that subsection 88.1(1) of the Act, as enacted by subsection (1), is to be read without reference to its paragraph (

c) in its application to a trust’s distribution of property, if the distribution occurs no more than 60 days after the day on which this Act is assented to.

(1) The definition general rate income pool in subsection 89(1) of the Act is replaced by the following:

general rate income pool

compte de revenu à taux général

general rate income pool at the end of a particular taxation year, of a taxable Canadian corporation that is a Canadian-controlled private corporation or a deposit insurance corporation in the particular taxation year, is the positive or negative amount determined by the formula

A – B where A

is the positive or negative amount that would, before taking into consideration the specified future tax consequences for the particular taxation year, be determined by the formula

C + D + E + F – G where C

is the corporation’s general rate income pool at the end of its preceding taxation year,

is the amount, if any, that is the product of the corporation’s general rate factor for the particular taxation year multiplied by its adjusted taxable income for the particular taxation year,

is the total of all amounts each of which is

(

a) an eligible dividend received by the corporation in the particular taxation year, or

(

b) an amount deductible under

section 113 in computing the taxable income of the corporation for the particular taxation year,

is the total of all amounts determined under subsections (4) to (6) in respect of the corporation for the particular taxation year, and

(

a) unless paragraph (

b) applies, the amount, if any, by which

(

i) the total of all amounts each of which is the amount of an eligible dividend paid by the corporation in its preceding taxation year

exceeds

(ii)

the total of all amounts each of which is an excessive eligible dividend designation made by the corporation in its preceding taxation year, or

(

b) if subsection (4) applies to the corporation in the particular taxation year, nil, and

is the amount determined by the formula

H × (I –

J) where H

is the corporation’s general rate factor for the particular taxation year,

is the total of the corporation’s full rate taxable incomes (as would be defined in the definition full rate taxable income in subsection 123.4(1), if that definition were read without reference to its subparagraphs ( a )(

i) to (iii)) for the corporation’s preceding three taxation years, determined without taking into consideration the specified future tax consequences, for those preceding taxation years, that arise in respect of the particular taxation year, and

is the total of the corporation’s full rate taxable incomes (as would be defined in the definition full rate taxable income in subsection 123.4(1), if that definition were read without reference to its subparagraphs ( a )(

i) to (iii)) for those preceding taxation years;

(2) Subparagraph ( b )(iii) of the definition paid-up capital in subsection 89(1) of the Act is replaced by the following:

(iii)

where the particular time is after March 31, 1977, an amount equal to the paid-up capital in respect of that class of shares at the particular time, computed without reference to the provisions of this Act except subsections 51(3) and 66.3(2) and (4), sections 84.1 and 84.2, subsections 85(2.1), 85.1(2.1) and (8), 86(2.1), 87(3) and (9), 128.1(2) and (3), 138(11.7), 139.1(6) and (7), 192(4.1) and 194(4.1) and

section 212.1,

(3) Subsection 89(1) of the Act is amended by adding the following in alphabetical order:

adjusted taxable income

revenu imposable rajusté

adjusted taxable income of a corporation for a taxation year is the amount determined by the formula

A – B – C where A

(

a) unless paragraph (

b) applies, the corporation’s taxable income for the taxation year, and

(

b) if the corporation is a deposit insurance corporation in the taxation year, nil,

is the amount determined by multiplying the amount, if any, deducted by the corporation under subsection 125(1) for the taxation year by the quotient obtained by dividing 100 by the rate of the deduction provided under that subsection for the taxation year, and

(

a) if the corporation is a Canadian-controlled private corporation in the taxation year, the lesser of the corporation’s aggregate investment income for the taxation year and the corporation’s taxable income for the taxation year, and

(

b) in any other case, nil;

general rate factor

facteur du taux géneral

general rate factor of a corporation for a taxation year is the total of

(

a) that proportion of 0.68 that the number of days in the taxation year that are before 2010 is of the number of days in the taxation year,

(

b) that proportion of 0.69 that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year,

(

c) that proportion of 0.70 that the number of days in the taxation year that are in 2011 is of the number of days in the taxation year, and

(

d) that proportion of 0.72 that the number of days in the taxation year that are after 2011 is of the number of days in the taxation year;

(4) Subsections (1) and (3) apply to the 2006 and subsequent taxation years.

(5) Subsection (2) applies after December 19, 2007.

(1) Subsections 91(5.1) to (5.3) of the Act are repealed.

(2) Subsection (1) applies after 2011.

(1) Subsection 92(1) of the Act is replaced by the following:

Adjusted cost base of share of foreign affiliate

(1) In computing, at any time in a taxation year, the adjusted cost base to a taxpayer resident in Canada of any share owned by the taxpayer of the capital stock of a foreign affiliate of the taxpayer,

(

a) there shall be added in respect of that share any amount included in respect of that share under subsection 91(1) or (3) in computing the taxpayer’s income for the year or any preceding taxation year (or that would have been required to have been so included in computing the taxpayer’s income but for subsection 56(4.1) and sections 74.1 to 75 of this Act and

section 74 of the Income Tax Act ,

chapter 148 of the Revised Statutes of Canada, 1952); and

(

b) there shall be deducted in respect of that share

(

i) any amount deducted by the taxpayer under subsection 91(2) or (4), and

(ii)

any dividend received by the taxpayer before that time, to the extent of the amount deducted by the taxpayer, in respect of the dividend, under subsection 91(5)

in computing the taxpayer’s income for the year or any preceding taxation year (or that would have been deductible by the taxpayer but for subsection 56(4.1) and sections 74.1 to 75 of this Act and

section 74 of the Income Tax Act ,

chapter 148 of the Revised Statutes of Canada, 1952).

(2) Subsection (1) applies after 2011.

(1) Subsection 95(1) of the Act is amended by adding the following in alphabetical order:

antecedent corporation

société antécédente

antecedent corporation of a particular corporation means

(

a) a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation to which subsection 87(11) applied and by which the particular corporation was formed,

(

b) a predecessor corporation (within the meaning of subsection 87(1)) of the corporation (referred to in this definition as the “first amalco”) that was formed on an amalgamation of the predecessor corporation and another corporation, where

(

i) shares of the capital stock of the predecessor corporation that were not owned by the other corporation, or by a corporation of which the other corporation is a subsidiary wholly-owned corporation, were exchanged on the amalgamation for shares of the capital stock of the first amalco that were, during the series of transactions or events that includes the amalgamation, redeemed, acquired or cancelled by the first amalco for money,

(ii)

the first amalco was a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation to which subsection 87(11) applied and by which the particular corporation was formed, and

(iii)

the amalgamation referred to in subparagraph (

i) occurred in a series of transactions or events that included the amalgamation referred to in subparagraph (ii),

(

c) a corporation that was wound-up into the particular corporation in a winding-up to which subsection 88(1) applied, or

(

d) an antecedent corporation of an antecedent corporation of the particular corporation;

calculating currency

monnaie de calcul

calculating currency for a taxation year of a foreign affiliate of a taxpayer means

(

a) the currency of the country in which the foreign affiliate is resident at the end of the taxation year, or

(

b) any currency that the taxpayer demonstrates to be reasonable in the circumstances;

designated acquired corporation

société acquise désignée

designated acquired corporation of a taxpayer means a particular antecedent corporation of the taxpayer if

(

a) the taxpayer or another antecedent corporation of the taxpayer acquired control of

(

i) the particular antecedent corporation, or

(ii)

a corporation (referred to in this definition as a “successor corporation”) of which the particular antecedent corporation is an antecedent corporation, and

(

b) immediately before the acquisition of control or a series of transactions or events that includes the acquisition of control, the taxpayer, the other antecedent corporation or a corporation resident in Canada of which the taxpayer or the other antecedent corporation is a subsidiary wholly-owned corporation, as the case may be, dealt at arm’s length (otherwise than because of a right referred to in paragraph 251(5)( b )) with the particular antecedent corporation or the successor corporation, as the case may be;

specified person or partnership

personne ou société de personnes déterminée

specified person or partnership , in respect of a taxpayer, at any time means the taxpayer or a person (other than a designated acquired corporation of the taxpayer), or a partnership, that is at that time

(

a) a person (other than a partnership) that is resident in Canada and does not, at that time, deal at arm’s length with the taxpayer,

(

b) a specified predecessor corporation of the taxpayer or of a specified person or partnership in respect of the taxpayer,

(

c) a foreign affiliate of

(

i) the taxpayer,

(ii)

a person that is at that time a specified person or partnership in respect of the taxpayer under this definition because of paragraph (

a) or ( b ), or

(iii)

a partnership that is at that time a specified person or partnership in respect of the taxpayer under this definition because of paragraph ( d ), or

(

d) a partnership a member of which is at that time a specified person or partnership in respect of the taxpayer under this definition;

specified predecessor corporation

société remplacée déterminée

specified predecessor corporation of a particular corporation means

(

a) an antecedent corporation of the particular corporation,

(

b) a predecessor corporation (within the meaning assigned by subsection 87(1)) in respect of an amalgamation by which the particular corporation was formed, or

(

c) a specified predecessor corporation of a specified predecessor corporation of the particular corporation;

(2) Paragraph 95(2)(

f) of the Act is replaced by the following:

(

f) except as otherwise provided in this subdivision and except to the extent that the context otherwise requires, a foreign affiliate of a taxpayer is deemed to be at all times resident in Canada for the purposes of determining, in respect of the taxpayer for a taxation year of the foreign affiliate, each amount that is the foreign affiliate’s

(

i) capital gain, capital loss, taxable capital gain or allowable capital loss from a disposition of a property, or

(ii)

income or loss from a property, from a business other than an active business or from a non-qualifying business;

( f . 1 )

in computing an amount described in paragraph (

f) in respect of a property or a business, there is not to be included any portion of that amount that can reasonably be considered to have accrued, in respect of the property (including for the purposes of this paragraph any property for which the property was substituted) or the business, while no person or partnership that held the property or carried on the business was a specified person or partnership in respect of the taxpayer referred to in paragraph ( f );

( f . 11 )

in determining an amount described in paragraph (

f) for a taxation year of a foreign affiliate of a taxpayer,

(

i) if the amount is described in subparagraph ( f )(i), this Act is to be read without reference to

section 26 of the Income Tax Application Rules , and

(ii)

if the amount is described in subparagraph ( f )(ii),

(

A) this Act is to be read without reference to subsections 14(1.01) to (1.03), 17(1) and 18(4) and

section 91, except that, where the foreign affiliate is a member of a partnership,

section 91 is to be applied to determine the income or loss of the partnership and for that purpose subsection 96(1) is to be applied to determine the foreign affiliate’s share of that income or loss of the partnership, and

(

B) if the foreign affiliate has, in the taxation year, disposed of a foreign resource property in respect of a country, it is deemed to have designated, in respect of the disposition and in accordance with subparagraph 59(1)( b )(ii) for the taxation year, the amount, if any, by which

(

I) the amount determined under paragraph 59(1)(

a) in respect of the disposition

exceeds

(II)

the amount determined under subparagraph 59(1)( b )(

i) in respect of the disposition;

( f.12 )

a foreign affiliate of a taxpayer shall determine each of the following amounts using its calculating currency for a taxation year:

(

i) subject to paragraph ( f.13 ), each capital gain, capital loss, taxable capital gain and allowable capital loss of the foreign affiliate for the taxation year from the disposition, at any time, of a property that, at that time, was an excluded property of the foreign affiliate,

(ii)

its income or loss for the taxation year from each active business carried on by it in the taxation year in a country, and

(iii)

its income or loss that is included in computing its income or loss from an active business for the taxation year because of paragraph ( a );

( f.13 )

where the calculating currency of a foreign affiliate of a taxpayer is a currency other than Canadian currency, the foreign affiliate shall determine the amount included in computing its foreign accrual property income, in respect of the taxpayer for a taxation year of the foreign affiliate, attributable to its capital gain or taxable capital gain, from the disposition of an excluded property in the taxation year, in Canadian currency by converting the amount of the capital gain, or taxable capital gain, otherwise determined under subparagraph ( f.12 )(

i) using its calculating currency for the taxation year into Canadian currency using the rate of exchange quoted by the Bank of Canada at noon on the day on which the disposition was made;

( f.14 )

a foreign affiliate of a taxpayer shall determine using Canadian currency each amount of its income, loss, capital gain, capital loss, taxable capital gain or allowable capital loss for a taxation year, other than an amount to which paragraph ( f.12 ) or ( f.13 ) applies;

( f.15 )

for the purpose of applying subparagraph ( f.12 )(i), the reference in subsection 39(2) to “the currency or currencies of one or more countries other than Canada relative to Canadian currency” is to be read as a reference to “one or more currencies other than the calculating currency relative to the calculating currency” and the references in that subsection to “of a country other than Canada” are to be read as references to “other than the calculating currency”;

(3) The portion of subsection 95(2.2) of the Act before paragraph (

a) is replaced by the following:

Qualifying interest throughout year

(2.2) For the purposes of paragraphs (2)(

a) and ( g ), a non-resident corporation that is not a foreign affiliate of a taxpayer in respect of which the taxpayer has a qualifying interest throughout a particular taxation year is deemed to be a foreign affiliate of the taxpayer in respect of which the taxpayer has a qualifying interest throughout that particular taxation year if

(4) Section 95 of the Act is amended by adding the following after subsection (2.2):

Controlled foreign affiliate throughout year

(2.201) For the purposes of paragraphs (2)(

a) and ( g ), a non-resident corporation is deemed to be a controlled foreign affiliate of a taxpayer throughout a taxation year of the non-resident corporation if

(

a) in the taxation year, a person or partnership acquires or disposes of shares of the capital stock of a corporation and, because of the acquisition or disposition, the non-resident corporation becomes or ceases to be a controlled foreign affiliate of the taxpayer; and

(

b) at either or both of the beginning and end of the taxation year, the non-resident corporation is a controlled foreign affiliate of the taxpayer.

(5) Section 95 of the Act is amended by adding the following after subsection (2.5):

Rule for the definition specified person or partnership

(2.6) For the purposes of paragraphs (

a) to (

d) of the definition specified person or partnership in subsection (1), if a person or partnership (referred to in this subsection as the taxpayer ) is not dealing at arm’s length with another person or partnership (referred to in this subsection as the particular person ) at a particular time, the taxpayer is deemed to have existed and not to have dealt at arm’s length with the particular person, nor with each specified predecessor corporation of the particular person, throughout the period that began when the particular person or the specified predecessor corporation, as the case may be, came into existence and that ends at the particular time.

(6) Subsections (1), (2) and (5) apply to taxation years of a foreign affiliate of a taxpayer that begin after October 2, 2007. However,

(

a) for taxation years of a foreign affiliate that begin before 2009, subparagraph 95(2)( f )(ii) of the Act, as enacted by subsection (2), shall be read as follows:

(ii)

income or loss from a property or from a business other than an active business;

(

b) if the taxpayer elects in writing in respect of all of its foreign affiliates and files the election with the Minister of National Revenue on or before the day (referred to in this subsection as the taxpayer’s “election 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 is assented to and the day that is one year after the day on which this Act is assented to, subsection 95(2.6) of the Act, as enacted by subsection (5), shall, in its application to a taxation year of a foreign affiliate of the taxpayer that begins after October 2, 2007 and before July 14, 2008, be read as follows:

(2.6) For the purposes of paragraphs (

a) to (

d) of the definition specified person or partnership in subsection (1), in determining whether, at a particular time, a person was not, at a time (referred to in this subsection as the prior time ) that is before the particular time and at which that person did not exist, dealing at arm’s length with another person, where the person exists at the particular time but did not exist at the prior time

(

a) the person is deemed to exist at the prior time; and

(

b) where the person is related to another person at the particular time, the person is deemed to have been related to that other person at the prior time.

(

c) if the taxpayer elects in writing in respect of all of its foreign affiliates and files the election with the Minister of National Revenue on or before the taxpayer’s election day, subsections (1), (2) and (5) also apply to taxation years of a foreign affiliate of the taxpayer that begin before October 2, 2007 and after the date chosen by the taxpayer under paragraph ( d ), except that subparagraph 95(2)( f )(ii) of the Act, as enacted by subsection (2), shall be read in its application to those taxation years in the manner described in paragraph ( a ); and

(

d) to be valid, an election under paragraph (

c) must include the identification by the taxpayer of its choice of one of the following dates:

(

i) December 31, 1994,

(ii)

December 20, 2002, or

(iii)

February 27, 2004.

(7) Subsection (3) applies to taxation years of a foreign affiliate of a taxpayer that begin after 1994. However, the portion of subsection 95(2.2) of the Act before paragraph ( a ), as enacted by subsection (3), shall, in its application to taxation years of a foreign affiliate that begin after 1994 and before 2009, be read as follows:

(2.2) For the purposes of paragraphs (2)(

a) and ( g ),

(8) Subsection (4) applies to taxation years of a foreign affiliate of a taxpayer that end after 1999. However,

(

a) subject to paragraph ( b ), for taxation years of a foreign affiliate that begin before December 21, 2002, the reference to “for the purposes of paragraphs (2)(

a) and ( g )” in subsection 95(2.201) of the Act, as enacted by subsection (4), shall be read as a reference to “for the purpose of paragraph (2)( a )”; and

(

b) if the taxpayer has made a valid election under subsection 26(46) of the Budget and Economic Statement Implementation Act, 2007, subsection (4) applies to taxation years of a foreign affiliate of the taxpayer that begin after 1994.

(9) Notwithstanding subsections 152(4) to (5) of the Act, any assessment of a taxpayer’s tax, interest and penalties payable under the Act for any taxation year shall be made that is necessary to take into account the provisions of subsections (1) to (8).

(1) The portion of subsection 107(2) of the Act before paragraph (

a) is replaced by the following:

Distribution by personal trust

(2) Subject to subsections (2.001), (2.002) and (4) to (5), if at any time a property of a personal trust or a prescribed trust is distributed (otherwise than as a SIFT trust wind-up event) by the trust to a taxpayer who was a beneficiary under the trust and there is a resulting disposition of all or any part of the taxpayer’s capital interest in the trust,

(2) The portion of subsection 107(2.1) of the Act before paragraph (

a) is replaced by the following:

Other distributions

(2.1) Where at any time a property of a trust is distributed by the trust to a beneficiary under the trust, there would, if this Act were read without reference to paragraphs (

h) and (

i) of the definition disposition in subsection 248(1), be a resulting disposition of all or any part of the beneficiary’s capital interest in the trust (which interest or part, as the case may be, is in this subsection referred to as the “former interest”) and the rules in subsections (2) and (3.1) and sections 88.1 and 132.2 do not apply in respect of the distribution,

(3) Section 107 of the Act is amended by adding the following after subsection (2.2):

Application of subsection (3.1)

(3) Subsection (3.1) applies to a trust’s distribution of property to a taxpayer if

(

a) the distribution is a SIFT trust wind-up event to which

section 88.1 does not apply;

(

b) the property is a share and the only shares distributed on any SIFT trust wind-up event of the trust are of a single class of the capital stock of a taxable Canadian corporation; and

(

c) where the trust is a SIFT wind-up entity, the distribution occurs no more than 60 days after the earlier of

(

i) the first SIFT trust wind-up event of the trust, and

(ii)

the first distribution to the trust that is a SIFT trust wind-up event of another trust.

SIFT trust wind-up event

(3.1) If this subsection applies to a trust’s distribution of property, the following rules apply:

(

a) the trust is deemed to have disposed of the property for proceeds of disposition equal to the adjusted cost base to the trust of the property immediately before the distribution;

(

b) the taxpayer is deemed to have disposed of the taxpayer’s interest as a beneficiary under the trust for proceeds of disposition equal to the cost amount to the taxpayer of the interest immediately before the distribution;

(

c) the taxpayer is deemed to have acquired the property at a cost equal to

(

i) if, at all times at which the trust makes a distribution that is a SIFT trust wind-up event, the taxpayer is the only beneficiary under the trust and is a SIFT wind-up entity or a taxable Canadian corporation, the adjusted cost base to the trust of the property immediately before the distribution, and

(ii)

in any other case, the cost amount to the taxpayer of the taxpayer’s interest as a beneficiary under the trust immediately before the distribution;

(

d) if the taxpayer’s interest as a beneficiary under the trust was immediately before the disposition taxable Canadian property of the taxpayer, the property is deemed to be taxable Canadian property of the taxpayer; and

(

e) if a liability of the trust becomes as a consequence of the distribution a liability of the corporation described in paragraph (3)(

b) in respect of the distribution, and the amount payable by the corporation on the maturity of the liability is the same as the amount that would have been payable by the trust on its maturity,

(

i) the transfer of the liability by the trust to the corporation is deemed not to have occurred, and

(ii)

the liability is deemed

(

A) to have been incurred or issued by the corporation at the time at which, and under the agreement under which, it was incurred or issued by the trust, and

(

B) not to have been incurred or issued by the trust.

(4) Subsections (1) to (3) apply after July 14, 2008, except that

( a )

paragraph 107(3)(

b) of the Act, as enacted by subsection (3), is to be read without reference to “of a single class” in its application to a trust’s distribution of property before February 3, 2009; and

( b )

subsection 107(3) of the Act, as enacted by subsection (3), is to be read without reference to its paragraph (

c) in its application to a trust’s distribution of property, if the distribution occurs no more than 60 days after the day on which this Act is assented to.

(1) Paragraph 107.4(3)(

f) of the Act is replaced by the following:

(

f) if the property was deemed to be taxable Canadian property of the transferor by this paragraph or paragraph 44.1(2)( c ), 51(1)( f ), 85(1)(

i) or 85.1(1)(

a) or (8)( b ), subsection 85.1(5) or 87(4) or (5) or paragraph 97(2)(

c) or 107(2)( d.1 ) or (3.1)( d ), the property is deemed to be taxable Canadian property of the transferee trust;

(2) Subsection (1) applies

(

a) to dispositions that occur after December 23, 1998; and

(

b) in respect of the 1996 and subsequent taxation years, to transfers of capital property that occurred before December 24, 1998.

(1) The portion of the definition cost amount in subsection 108(1) of the Act before paragraph (

a) is replaced by the following:

cost amount

coût indiqué

cost amount to a taxpayer at any time of a capital interest or part of it, as the case may be, in a trust, means (notwithstanding subsection 248(1) and except for the purposes of subsection 107(3.1) and

section 107.4 and except in respect of a capital interest in a trust that is at that time a foreign affiliate of the taxpayer),

(2) Subsection (1) applies after July 14, 2008.

(1) Paragraph 110.1(8)(

e) of the English version of the Act is replaced by the following:

(

e) the donee is a registered charity that, in the opinion of the Minister for International Cooperation (or, if there is no such Minister, the Minister responsible for the Canadian International Development Agency) meets conditions prescribed by regulation.

(2) Section 110.1 of the Act is amended by adding the following after subsection (8):

Rules governing international medical charities

(9) For the purpose of paragraph (8)( e ),

(

a) for greater certainty, nothing in paragraph (8)(

b) modifies the application to a registered charity of the prescribed conditions referred to in paragraph (8)( e );

(

b) if, in respect of a registered charity, the Minister referred to in paragraph (8)(

e) is of the opinion described in that paragraph

(

i) that Minister may also designate a period of time during which that opinion is valid, and

(ii)

notwithstanding subparagraph (i), the opinion may be revoked at any time by that Minister if

(

A) that Minister is of the opinion that the registered charity no longer meets prescribed conditions referred to in paragraph (8)( e ), or

(

B) any person has made any misrepresentation that is attributable to neglect, carelessness or wilful default for the purpose of obtaining the opinion; and

(

c) a revocation referred to in subparagraph ( b )(ii) is effective as of the time that notice, in writing, of the revocation is issued by that Minister to the registered charity.

(3) Subsections (1) and (2) apply in respect of gifts made after June 2008.

(1) Subsection 111(8) of the Act is amended by adding the following in alphabetical order:

exchange rate

taux de change

exchange rate at any time in respect of a currency of a country other than Canada means the rate of exchange between that currency and Canadian currency quoted by the Bank of Canada at noon on the day that includes that time or, if that day is not a business day, on the day that immediately precedes that day, or a rate of exchange acceptable to the Minister;

foreign currency debt

dette en monnaie étrangère

foreign currency debt means a debt obligation denominated in a currency of a country other than Canada;

(2) Section 111 of the Act is amended by adding the following after subsection (11):

Foreign currency debt on acquisition of control

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

(

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

A + B – C where A

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

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

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

(

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

(3) Subsections (1) and (2) apply to any acquisition of control of a corporation that occurs

(

a) after March 7, 2008, other than an acquisition of control that occurs before 2009 under the terms of an agreement made in writing on or before March 7, 2008; or

(

b) after 2005, if the corporation so elects in writing and files the election with the Minister of National Revenue on or before the corporation’s filing-due date for the corporation’s taxation year that includes the day on which this Act is assented to.

(4) If an election under paragraph (3)(

b) is made by the corporation in respect of an acquisition of control, a designation under paragraph 111(4)(

e) of the Act by the corporation for its taxation year that ended immediately before the acquisition of control is deemed to have been made in a timely manner if that designation is made on or before the corporation’s filing-due date for its taxation year that includes the day on which this Act is assented to.

(1) Subparagraph 115(1)( a )(iii.21) of the Act is replaced by the following:

(iii.21)

the total of all amounts, each of which is an amount included under subparagraph 56(1)( r )(

v) or

section 56.3 in computing the non-resident person’s income for the year,

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

(1) Paragraph 116(6)(

b) of the Act is replaced by the following:

(

b) a security that is

(

i) listed on a recognized stock exchange, and

(ii)

either

(

A) a share of the capital stock of a corporation, or

(

B) SIFT wind-up entity equity;

(2) Subsection (1) applies after July 14, 2008.

(1) Subsection 117(2) of the Act is replaced by the following:

Rates for taxation years after 2008

(2) The tax payable under this Part by an individual on the individual’s taxable income or taxable income earned in Canada, as the case may be (in this subdivision referred to as the “amount taxable”) for a taxation year is

( a )

15% of the amount taxable, if the amount taxable is equal to or less than the amount determined for the taxation year in respect of $40,726;

(

b) if the amount taxable is greater than $40,726 and is equal to or less than $81,452, the maximum amount determinable in respect of the taxation year under paragraph ( a ), plus 22% of the amount by which the amount taxable exceeds $40,726 for the year;

(

c) if the amount taxable is greater than $81,452, but is equal to or less than $126,264, the maximum amount determinable in respect of the taxation year under paragraph ( b ), plus 26% of the amount by which the amount taxable exceeds $81,452 for the year; and

(

d) if the amount taxable is greater than $126,264, the maximum amount determinable in respect of the taxation year under paragraph ( c ), plus 29% of the amount by which the amount taxable exceeds $126,264 for the year.

(2) Subsection (1) applies to the 2009 and subsequent taxation years.

(1) The portion of paragraph (

a) of the description of B in subsection 118(1) of the Act before the description of C in subparagraph (ii) is replaced by the following:

Married or common-law partnership status

(

a) in the case of an individual who at any time in the year is a married person or a person who is in a common-law partnership who supports the individual’s spouse or common-law partner and is not living separate and apart from the spouse or common-law partner by reason of a breakdown of their marriage or common-law partnership, an amount equal to the total of

(i)

$10,320, and

(ii)

the amount determined by the formula

$10,320 – C where

(2) The description of C in subparagraph ( a )(ii) of the description of B in subsection 118(1) of the English version of the Act is replaced by the following:

is the income of the individual’s spouse or common-law partner for the year or, where the individual and the individual’s spouse or common-law partner are living separate and apart at the end of the year because of a breakdown of their marriage or common-law partnership, the spouse’s or common-law partner’s income for the year while married to, or in a common-law partnership with, the individual and not so separated,

(3) The portion of paragraph 118(1)(

b) of the French version of the Act before the description of D is replaced by the following:

Crédit équivalent pour personne entièrement à charge

b) le total de 10 320 $ et de la somme obtenue par la formule suivante :

10 320 $ – D où :

(4) Subparagraphs ( b )(iii) and (iv) of the description of B in subsection 118(1) of the English version of the Act are replaced by the following:

(iii)

$10,320, and

(iv)

the amount determined by the formula

$10,320 – D where D

is the dependent person’s income for the year,

(5) Paragraph (

c) of the description of B in subsection 118(1) of the Act is replaced by the following:

Single status

(

c) except in the case of an individual entitled to a deduction because of paragraph (

a) or ( b ), $10,320,

(6) The formula in subsection 118(2) of the Act is replaced by the following:

A × ($6,408 – B)

(7) Subsections 118(3.1), (3.2) and (9) of the Act are repealed.

(8) Paragraph (

b) of the description of B in subsection 118(10) of the Act is replaced by the following:

(

b) the total of all amounts, each of which is an amount included in computing the individual’s income for the taxation year from an office or employment or an amount included in the taxpayer’s income for the taxation year because of subparagraph 56(1)( r )(v).

(9) Subsections (1) and (2) to (7) apply to the 2009 and subsequent taxation years.

(10) Subsection (3) applies to the 2007 and subsequent taxation years.

(11) Subsection (8) applies to the 2008 and subsequent taxation years.

(1) The portion of subsection 118.1(5.3) of the Act before paragraph (

a) is replaced by the following:

Direct designation — RRSPs, RRIFs and TFSAs

(5.3) If as a consequence of an individual’s death, a transfer of money, or a transfer by means of a negotiable instrument, is made, from an arrangement (other than an arrangement of which a licensed annuities provider is the issuer or carrier) that is a registered retirement savings plan or registered retirement income fund or that was, immediately before the individual’s death, a TFSA to a qualified donee, solely because of the donee’s interest or, for civil law, a right as a beneficiary under the arrangement, the individual was the annuitant under, or the holder of, the arrangement immediately before the individual’s death and the transfer occurs within the 36-month period that begins at the time of the death (or, where written application to extend the period has been made to the Minister by the individual’s legal representative, within such longer period as the Minister considers reasonable in the circumstances),

(2) Subsection (1) applies to the 2009 and subsequent taxation years.

(1) The definition investment in subsection 122.1(1) of the Act is replaced by the following:

investment

placement

investment , in a trust or partnership,

(

a) means

(

i) a property that is a security of the trust or partnership, or

(ii)

a right which may reasonably be considered to replicate a return on, or the value of, a security of the trust or partnership; but

(

b) does not include

(

i) an unaffiliated publicly-traded liability of the trust or partnership, nor

(ii)

regulated innovative capital.

(2) The portion of paragraph (

a) of the definition non-portfolio property in subsection 122.1(1) of the Act before subparagraph (

i) is replaced by the following:

(

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

(3) Paragraph (

a) of the definition qualified REIT property in subsection 122.1(1) of the Act is replaced by the following:

(

a) a real or immovable property;

(4) Subparagraph ( c )(

i) of the definition qualified REIT property in subsection 122.1(1) of the Act is replaced by the following:

(

i) legal title to real or immovable property of the trust or of another subject entity all of the securities of which are held by the trust (including real or immovable property that the trust or the other subject entity holds together with one or more other persons or partnerships), and

(5) Paragraphs (

c) and (

d) of the definition real estate investment trust in subsection 122.1(1) of the Act are replaced by the following:

(

c) not less than 75% of the trust’s revenues for the taxation year are derived from one or more of the following:

(

i) rent from real or immovable properties,

(ii)

interest from mortgages, or hypothecs, on real or immovable properties, and

(iii)

capital gains from dispositions of real or immovable properties; and

(

d) at each time in the taxation year an amount, that is equal to 75% or more of the equity value of the trust at that time, is the amount that is the total fair market value of all properties held by the trust each of which is real or immovable property, indebtedness of a Canadian corporation represented by a bankers’ acceptance, property described by either paragraph (

a) or (

b) of the definition qualified investment in

section 204, or a deposit with a credit union.

(6) Subparagraph ( a )(ii) of the definition rent from real or immovable properties in subsection 122.1(1) of the Act is replaced by the following:

(ii)

payment for services ancillary to the rental of real or immovable properties and customarily supplied or rendered in connection with the rental of real or immovable properties, and

(iii)

a payment that is included under paragraph 104(13)(

a) in computing the recipient’s income and that was made from the part of a trust’s income (determined without reference to subsection 104(6)) that was derived from rent from real or immovable properties; but

(7) The portion of the definition SIFT trust in subsection 122.1(1) of the Act before paragraph (

a) is replaced by the following:

SIFT trust

fiducie intermédiaire de placement déterminée

SIFT trust , being a specified investment flow-through trust, for a taxation year means a trust (other than an excluded subsidiary entity, or a real estate investment trust, for the taxation year) that meets the following conditions at any time during the taxation year:

(8) Subsection 122.1(1) of the Act is amended by adding the following in alphabetical order:

equity

capitaux propres

equity , of an entity, means

(

a) if the entity is a corporation, a share of the capital stock of the corporation;

(

b) if the entity is a trust, an income or capital interest in the trust;

(

c) if the entity is a partnership, an interest as a member of the partnership;

(

d) a liability of the entity (and, for purposes of the definition publicly-traded liability in this section, a security of the entity that is a liability of another entity) if

(

i) the liability is convertible into, or exchangeable for, equity of the entity or of another entity, or

(ii)

any amount paid or payable in respect of the liability is contingent or dependent on the use of or production from property, or is computed by reference to revenue, profit, cash flow, commodity price or any other similar criterion or by reference to dividends paid or payable to shareholders of any class of shares of the capital stock of a corporation, or to income or capital paid or payable to any member of a partnership or beneficiary under a trust; and

(

e) a right to, or to acquire, anything described in this paragraph and any of paragraphs (

a) to ( d ).

excluded subsidiary entity

filiale exclue

excluded subsidiary entity , for a taxation year, means an entity none of the equity of which is at any time in the taxation year

(

a) listed or traded on a stock exchange or other public market; nor

(

b) held by any person or partnership other than

(

i) a real estate investment trust,

(ii)

a taxable Canadian corporation,

(iii)

a SIFT trust (determined without reference to subsection (2)),

(iv)

a SIFT partnership (determined without reference to subsection 197(8)), or

(

v) an excluded subsidiary entity for the taxation year.

portfolio investment entity

entité de placement de portefeuille

portfolio investment entity at any time means an entity that does not at that time hold any non-portfolio property.

publicly-traded liability

dette transigée publiquement

publicly-traded liability , of an entity, means a liability that is a security of the entity, that is not equity of the entity and that is listed or traded on a stock exchange or other public market.

regulated innovative capital

capital innovateur réglementé

regulated innovative capital means equity of a trust, where

(

a) since November 2006, the equity has been authorized, by the Superintendent of Financial Institutions or by a provincial regulatory authority having powers similar to those of the Superintendent, as Tier 1 or Tier 2 capital of a financial institution (as defined by subsection 181(1));

(

b) the terms and conditions of the equity have not changed after August 1, 2008;

(

c) the trust has not issued any equity after October 31, 2006; and

(

d) the trust does not hold any non-portfolio property other than

(

i) liabilities of the financial institution, and

(ii)

shares of the capital stock of the financial institution that were acquired by the trust for the sole purpose of satisfying a right to require the trust to accept, as demanded by a holder of the equity, the surrender of the equity.

unaffiliated publicly-traded liability

dette non affiliée transigée publiquement

unaffiliated publicly-traded liability , of an entity at any time means a publicly-traded liability of the entity if, at that time the total fair market value of all publicly-traded liabilities of the entity that are held at that time by persons or partnerships that are not affiliated with the entity is at least 90% of the total fair market value of all publicly-traded liabilities of the entity.

(9) Subsections (1) to (8) are deemed to have come into force on October 31, 2006.

(1) Paragraph (

c) of the definition eligible individual in subsection 122.51(1) of the Act is replaced by the following:

(

c) the total of whose incomes for the year from the following sources is at least $2,500:

(

i) offices and employments (computed without reference to paragraph 6(1)( f )),

(ii)

businesses each of which is a business carried on by the individual either alone or as a partner actively engaged in the business, and

(iii)

the program established under the Wage Earner Protection Program Act .

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

(1) Paragraph (

b) of the definition working income in subsection 122.7(1) of the Act is replaced by the following:

(

b) all amounts that are included, or that would, but for paragraph 81(1)( a ), be included, because of paragraph 56(1)(

n) or (

o) or subparagraph 56(1)( r )(

v) in computing the individual’s income for a period in the taxation year; and

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

(1) Subsection 125(2) of the Act is replaced by the following:

Business limit

(2) For the purpose of this section, a corporation’s business limit for a taxation year is $500,000 unless the corporation is associated in the taxation year with one or more other Canadian-controlled private corporations, in which case, except as otherwise provided in this section, its business limit is nil.

(2) Paragraph 125(3)(

a) of the Act is replaced by the following:

(

a) if the total of the percentages assigned in the agreement does not exceed 100%, $500,000 multiplied by the percentage assigned to that corporation in the agreement; and

(3) In applying subsection 125(5) of the Act to a corporation for a 2009 or 2010 taxation year of the corporation that began before 2009, subparagraph 125(5)( a )(

i) of the Act is to be read as follows:

(

i) the amount that would have been its business limit determined under subsection (3) or (4) for the first such taxation year ending in the calendar year if the reference to $400,000 in subsection (3), as it applied in respect of that first such taxation year, had been read in the same manner as it is read in respect of the particular taxation year ending in the calendar year, and

(4) The description of M in the definition specified partnership income in subsection 125(7) of the Act is replaced by the following:

is the lesser of

(i)

$500,000, and

(ii)

the product obtained when $1,370 is multiplied by the total of all amounts each of which is the number of days in a fiscal period of the partnership that ends in the year, and

(5) Subsection (1) applies to the 2009 and subsequent taxation years except that, for a 2009 or 2010 taxation year that began before 2009, the reference in subsection 125(2) of the Act, as enacted by subsection (1), to “$500,000” shall be read as a reference to the total of

(

a) that proportion of $400,000 that the number of days in the taxation year that are before 2009 is of the number of days in the taxation year, and

(

b) that proportion of $500,000 that the number of days in the taxation year that are after 2008 is of the number of days in the taxation year.

(6) Subsection (2) applies to the 2009 and subsequent taxation years except that, for a 2009 or 2010 taxation year that began before 2009, the reference in paragraph 125(3)(

a) of the Act, as enacted by subsection (2), to “$500,000” is to be read as a reference to “the amount that would, if the corporation were not associated in the year with any other corporation, be its business limit for the year determined without reference to subsections (5) and (5.1)”.

(7) Subsection (4) applies to fiscal periods of a partnership that end after 2008.

(1) Paragraph (

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

(

a) that is a Canadian exploration expense incurred by a corporation after March 2009 and before 2011 (including, for greater certainty, an expense that is deemed by subsection 66(12.66) to be incurred before 2011) in conducting mining exploration activity from or above the surface of the earth for the purpose of determining the existence, location, extent or quality of a mineral resource described in paragraph (

a) or (

d) of the definition mineral resource in subsection 248(1),

(2) Paragraphs (

c) and (

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

(

c) an amount in respect of which is renounced in accordance with subsection 66(12.6) by the corporation to the taxpayer (or a partnership of which the taxpayer is a member) under an agreement described in that subsection and made after March 2009 and before April 2010, and

(

d) that is not an expense that was renounced under subsection 66(12.6) to the corporation (or a partnership of which the corporation is a member), unless that renunciation was under an agreement described in that subsection and made after March 2009 and before April 2010;

(3) Paragraph 127(9.01)(

b) of the Act is replaced by the following:

(

b) the number that is the total of 10 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.

(4) Paragraph 127(9.02)(

b) of the Act is replaced by the following:

(

b) the number that is the total of 9 and the number of taxation years by which the number of taxation years of the taxpayer that have ended after 1997 exceeds 11.

(5) The formula in subsection 127(10.2) of the Act is replaced by the following:

($8 million – 10A) × [($40 million – B)/$40 million]

(6) Paragraph (

a) of the description of A in subsection 127(10.2) of the Act is replaced by the following:

( a )

$500,000, and

(7) Subparagraphs ( a )(

i) and (ii) of the description of B in subsection 127(10.2) of the Act are replaced by the following:

(

i) if the particular corporation is not associated with any other corporation in the particular taxation year, the amount that is its taxable capital employed in Canada (within the meaning assigned by

section 181.2 or 181.3) for its immediately preceding taxation year, or

(ii)

if the particular corporation is associated with one or more other corporations in the particular taxation year, the amount that is the total of all amounts, each of which is the taxable capital employed in Canada (within the meaning assigned by

section 181.2 or 181.3) of the particular corporation for its, or of one of the other corporations for its, last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or

(8) Subsection 127(10.22) of the Act is replaced by the following:

Deemed non-association of corporations

(10.22) If a particular Canadian-controlled private corporation is associated with another corporation in circumstances where those corporations would not be associated if the Act were read without reference to paragraph 256(1.2)( a ), the particular corporation has issued shares to one or more persons who have been issued shares by the other corporation and there is at least one shareholder of the particular corporation who is not a shareholder of the other corporation or one shareholder of the other corporation who is not a shareholder of the particular corporation, the particular corporation is deemed not to be associated with the other corporation for the purpose of determining the particular corporation’s expenditure limit under subsection (10.2).

(9) Paragraph 127(10.6)(

c) of the Act is replaced by the following:

(

c) for the purpose of subsection (10.2), where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, the taxable income of the corporation for the year shall be determined by multiplying that amount by the ratio that 365 is of the number of days in that year.

(10) Paragraph 127(36)(

b) of the Act is replaced by the following:

(

b) the number that is the total of 10 and the number of taxation years or fiscal periods, as the case may be, by which the number of taxation years or fiscal periods of the taxpayer that have ended after 1997 exceeds 11.

(11) Subsections (1) and (2) apply to expenses renounced under a flow through share agreement made after March 2009.

(12) Subsections (3), (4) and (10) apply in respect of the 2008 and subsequent taxation years.

(13) Subsections (5) and (6) apply to the 2010 and subsequent taxation years, except that the expenditure limit in subsection 127(10.2) of the Act in respect of a corporation for 2010 taxation years that begin before 2010, be determined by the formula

A + [(B – A) × (C/D)] where A

is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) of the Act as that subsection read in its application to taxation years that end in 2009;

is the expenditure limit of the corporation for the taxation year determined in accordance with the formula in subsection 127(10.2) of the Act, as that subsection would apply to the taxation year in the absence of this exception;

is the number of days in the taxation year that are after 2009; and

is the total number of days in the taxation year.

(14) Subsection (7) applies to taxation years that end on or after February 26, 2008.

(15) Subsections (8) and (9) apply to taxation years that end on or after March 9, 2009.

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

qualifying corporation

société admissible

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

(2) Subsection 127.1(2) of the Act is amended by adding the following in alphabetical order:

qualifying income limit

plafond de revenu admissible

qualifying income limit of a corporation for a particular taxation year is the amount determined by the formula

$500,000 × [($40 million – A)/$40 million] where A

(

a) nil, if $10 million is greater than or equal to the amount (in paragraph (

b) referred to as the “taxable capital amount”) that is the total of the corporation’s taxable capital employed in Canada (within the meaning assigned by

section 181.2 or 181.3) for its immediately preceding taxation year and the taxable capital employed in Canada (within the meaning assigned by

section 181.2 or 181.3) of each associated corporation for the associated corporation’s last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or

(

b) in any other case, the lesser of $40 million and the amount by which the taxable capital amount exceeds $10 million;

(3) Section 127.1 of the Act is amended by adding the following after subsection (3):

Qualifying income limit determined in certain cases

(4) For the purpose of the definition of qualifying corporation in subsection (2), where a Canadian-controlled private corporation has a taxation year that is less than 51 weeks, the taxable income of the corporation for the year shall be determined by multiplying that amount by the ratio that 365 is of the number of days in that year.

(4) Subsections (1) and (2) apply to taxation years that end on or after February 26, 2008, except that

(

a) for taxation years that include February 26, 2008, the formula in the definition qualifying income limit in subsection 127.1(2) of the Act and the portion of that definition that follows that formula, as enacted by subsection (2), shall be read as follows:

A + [($400,000 × [($40 million – B)/$40 million] – A) × (C/D)] where A

is the business limit of the corporation for the particular taxation year determined in accordance with

section 125 — together with, if the particular corporation is associated in the particular taxation year with one or more other corporations the business limit of each of those associated corporations for its last taxation year that ends in the particular taxation year (determined in accordance with

section 125),

(

a) nil, if $10 million is greater than or equal to the amount (in paragraph (

b) referred to as the “taxable capital amount”) that is the total of the corporation’s taxable capital employed in Canada (within the meaning assigned by

section 181.2 or 181.3) for its immediately preceding taxation year and the taxable capital employed in Canada (within the meaning assigned by

section 181.2 or 181.3) of each associated corporation for the associated corporation’s last taxation year that ended in the last calendar year that ended before the end of the particular taxation year, or

(

b) in any other case, the lesser of $40 million and the amount by which the taxable capital amount exceeds $10 million,

is the number of days in the particular taxation year that are after February 25, 2008, and

is the total number of days in the particular taxation year;

(

b) for taxation years that begin after February 26, 2008 and end before 2010, the reference to “$500,000” in the formula in the definition qualifying income limit in subsection 127.1(2) of the Act, as enacted by subsection (2), shall be read as a reference to “$400,000”; and

(

c) for 2010 taxation years that begin before 2010, the reference to “$500,000” in the formula in the definition qualifying income limit in subsection 127.1(2) of the Act, as enacted by subsection (2), shall be read as a reference to an amount that is the total of $400,000 and that proportion of $100,000 that the number of days in the taxation year that are in 2010 is of the number of days in the taxation year.

(5) Subsection (3) applies in respect of the 2008 and subsequent taxation years.

(1) The definition qualifying trust in subsection 127.4(1) of the Act is replaced by the following:

qualifying trust

fiducie admissible

qualifying trust for an individual in respect of a share means

(

a) a trust governed by a registered retirement savings plan, under which the individual is the annuitant, that is not a spousal or common-law partner plan (in this definition having the meaning assigned by subsection 146(1)) in relation to another individual,

(

b) a trust governed by a registered retirement savings plan, under which the individual or the individual’s spouse or common-law partner is the annuitant, that is a spousal or common-law partner plan in relation to the individual or the individual’s spouse or common-law partner, if the individual and no other person claims a deduction under subsection (2) in respect of the share, or

(

c) a trust governed by a TFSA of which the individual is the holder;

(2) Subsection (1) applies to the 2001 and subsequent taxation years, except that the definition qualifying trust in subsection 127.4(1) of the Act, as enacted by subsection (1),

(

a) shall, for taxation years before 2009, be read without reference to its paragraph ( c ); and

(

b) if a taxpayer and a person have jointly elected under

section 144 of the Modernization of Benefits and Obligations Act in respect of the 1998, 1999 or 2000 taxation year, applies to the taxpayer and the person in respect of that taxation year and subsequent taxation years.

(1) Section 128.3 of the Act is replaced by the following:

Former resident — replaced shares

128.3

If, in a transaction to which

section 51, subparagrap