C-4 2 41 62 Elizabeth II 2013

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

Economic Action Plan 2013 Act, No. 2

Economic Action Plan 2013, No. 2 2013 12 12 40 2013 90703

SUMMARY

Part 1 implements certain income tax measures proposed in the March 21, 2013 budget. Most notably, it

(

a) increases the lifetime capital gains exemption to $800,000 and indexes the new limit to inflation;

(

b) streamlines the process for pension plan administrators to refund a contribution made to a Registered Pension Plan as a result of a reasonable error;

(

c) extends the reassessment period for reportable tax avoidance transactions and tax shelters when information returns are not filed properly and on time;

(

d) phases out the federal Labour-Sponsored Venture Capital Corporations tax credit;

(

e) ensures that derivative transactions cannot be used to convert fully taxable ordinary income into capital gains taxed at a lower rate;

(

f) ensures that the tax consequences of disposing of a property cannot be avoided by entering into transactions that are economically equivalent to a disposition of the property;

(

g) ensures that the tax attributes of trusts cannot be inappropriately transferred among arm’s length persons;

(

h) responds to the Sommerer decision to restore the intended tax treatment with respect to non-resident trusts;

(

i) expands eligibility for the accelerated capital cost allowance for clean energy generation equipment to include a broader range of biogas production equipment and equipment used to treat gases from waste;

(

j) imposes a penalty in instances where information on tax preparers and billing arrangements is missing, incomplete or inaccurate on Scientific Research and Experimental Development tax incentive program claim forms;

(

k) phases out the accelerated capital cost allowance for capital assets used in new mines and certain mine expansions, and reduces the deduction rate for pre-production mine development expenses;

(

l) adjusts the five-year phase-out of the additional deduction for credit unions;

(

m) eliminates unintended tax benefits in respect of two types of leveraged life insurance arrangements;

(

n) clarifies the restricted farm loss rules and increases the restricted farm loss deduction limit;

(

o) enhances corporate anti-loss trading rules to address planning that avoids those rules;

(

p) extends, in certain circumstances, the reassessment period for taxpayers who have failed to correctly report income from a specified foreign property on their annual income tax return;

(

q) extends the application of Canada’s thin capitalization rules to Canadian resident trusts and non-resident entities; and

(

r) introduces new administrative monetary penalties and criminal offences to deter the use, possession, sale and development of electronic suppression of sales software that is designed to falsify records for the purpose of tax evasion.

Part 1 also implements other selected income tax measures. Most notably, it

(

a) implements measures announced on July 25, 2012, including measures that

(

i) relate to the taxation of specified investment flow-through entities, real estate investment trusts and publicly-traded corporations, and

(ii)

respond to the Lewin decision;

(

b) implements measures announced on December 21, 2012, including measures that relate to

(

i) the computation of adjusted taxable income for the purposes of the alternative minimum tax,

(ii)

the prohibited investment and advantage rules for registered plans, and

(iii)

the corporate reorganization rules; and

(

c) clarifies that information may be provided to the Department of Employment and Social Development for a program for temporary foreign workers.

Part 2 implements certain goods and services tax and harmonized sales tax (GST/HST) measures proposed in the March 21, 2013 budget by

(

a) introducing new administrative monetary penalties and criminal offences to deter the use, possession, sale and development of electronic suppression of sales software that is designed to falsify records for the purpose of tax evasion; and

(

b) clarifying that the GST/HST provision, exempting supplies by a public sector body (PSB) of a property or a service if all or substantially all of the supplies of the property or service by the PSB are made for free, does not apply to supplies of paid parking.

Part 3 enacts and amends several Acts in order to implement various measures.

Division 1 of

Part 3 amends the Employment Insurance Act to extend and expand a temporary measure to refund a portion of employer premiums for small businesses. It also amends that Act to modify the Employment Insurance premium rate-setting mechanism, including setting the 2015 and 2016 rates and requiring that the rate be set on a seven-year break-even basis by the Canada Employment Insurance Commission beginning with the 2017 rate. The Division repeals the Canada Employment Insurance Financing Board Act and related provisions of other Acts. Lastly, it makes technical amendments to the Employment Insurance (Fishing) Regulations .

Division 2 of

Part 3 amends the Trust and Loan Companies Act , the Bank Act and the Insurance Companies Act to remove the prohibition against federal and provincial Crown agents and federal and provincial government employees being directors of a federally regulated financial institution. It also amends the Office of the Superintendent of Financial Institutions Act and the Financial Consumer Agency of Canada Act to remove the obligation of certain persons to give the Minister of Finance notice of their intent to borrow money from a federally regulated financial institution or from a corporation that has deposit insurance under the Canada Deposit Insurance Corporation Act .

Division 3 of

Part 3 amends the Trust and Loan Companies Act , the Bank Act , the Insurance Companies Act and the Cooperative Credit Associations Act to clarify the rules for certain indirect acquisitions of foreign financial institutions.

Division 4 of

Part 3 amends the Criminal Code to update the definition passport in subsection 57(5) and also amends the Department of Foreign Affairs, Trade and Development Act to update the reference to the Minister in paragraph 11(1)( a ).

Division 5 of

Part 3 amends the Canada Labour Code to amend the definition of danger in subsection 122(1), to modify the refusal to work process, to remove all references to health and safety officers and to confer on the Minister of Labour their powers, duties and functions. It also makes consequential amendments to the National Energy Board Act , the Hazardous Materials Information Review Act and the Non-smokers’ Health Act .

Division 6 of

Part 3 amends the Department of Human Resources and Skills Development Act to change the name of the Department to the Department of Employment and Social Development and to reflect that name change in the title of that Act and of its responsible Minister. In addition, the Division amends

Part 6 of that Act to extend that Minister’s powers with respect to certain Acts, programs and activities and to allow the Minister of Labour to administer or enforce electronically the Canada Labour Code . The Division also adds the title of a Minister to the Salaries Act . Finally, it makes consequential amendments to several other Acts to reflect the name change.

Division 7 of

Part 3 authorizes Her Majesty in right of Canada to hold, dispose of or otherwise deal with the Dominion Coal Blocks in any manner.

Division 8 of

Part 3 authorizes the amalgamation of four Crown corporations that own or operate international bridges and gives the resulting amalgamated corporation certain powers. It also makes consequential amendments and repeals certain Acts.

Division 9 of

Part 3 amends the Financial Administration Act to provide that agent corporations designated by the Minister of Finance may, subject to any terms and conditions of the designation, pledge any securities or cash that they hold, or give deposits, as security for the payment or performance of obligations arising out of derivatives that they enter into or guarantee for the management of financial risks.

Division 10 of

Part 3 amends the National Research Council Act to reduce the number of members of the National Research Council of Canada and to create the position of Chairperson of the Council.

Division 11 of

Part 3 amends the Veterans Review and Appeal Board Act to reduce the permanent number of members of the Veterans Review and Appeal Board.

Division 12 of

Part 3 amends the Canada Pension Plan Investment Board Act to allow for the appointment of up to three directors who are not residents of Canada.

Division 13 of

Part 3 amends the Proceeds of Crime (Money Laundering) and Terrorist Financing Act to extend to the whole Act the protection for communications that are subject to solicitor-client privilege and to provide that information disclosed by the Financial Transactions and Reports Analysis Centre of Canada under subsection 65(1) of that Act may be used by a law enforcement agency referred to in that subsection only as evidence of a contravention of

Part 1 of that Act.

Division 14 of

Part 3 enacts the Mackenzie Gas Project Impacts Fund Act , which establishes the Mackenzie Gas Project Impacts Fund. The Division also repeals the Mackenzie Gas Project Impacts Act .

Division 15 of

Part 3 amends the Conflict of Interest Act to allow the Governor in Council to designate a person or class of persons as public office holders and to designate a person who is a public office holder or a class of persons who are public office holders as reporting public office holders, for the purposes of that Act.

Division 16 of

Part 3 amends the Immigration and Refugee Protection Act to establish a new regime that provides that a foreign national who wishes to apply for permanent residence as a member of a certain economic class may do so only if they have submitted an expression of interest to the Minister and have subsequently been issued an invitation to apply.

Division 17 of

Part 3 modernizes the collective bargaining and recourse systems provided by the Public Service Labour Relations Act regime. It amends the dispute resolution process for collective bargaining by removing the choice of dispute resolution method and substituting conciliation, which involves the possibility of the use of a strike as the method by which the parties may resolve impasses. In those cases where 80% or more of the positions in a bargaining unit are considered necessary for providing an essential service, the dispute resolution mechanism is to be arbitration.

The collective bargaining process is further streamlined through amendments to the provision dealing with essential services. The employer has the exclusive right to determine that a service is essential and the numbers of positions that will be required to provide that service. Bargaining agents are to be consulted as part of the essential services process. The collective bargaining process is also amended by extending the timeframe within which a notice to bargain collectively may be given before the expiry of a collective agreement or arbitral award.

In addition, the Division amends the factors that arbitration boards and public interest commissions must take into account when making awards or reports, respectively. It also amends the processes for the making of those awards and reports and removes the compensation analysis and research function from the mandate of the Public Service Labour Relations Board.

The Division streamlines the recourse process set out for grievances and complaints in

Part 2 of the Public Service Labour Relations Act and for staffing complaints under the Public Service Employment Act .

The Division also establishes a single forum for employees to challenge decisions relating to discrimination in the public service. Grievances and complaints are to be heard by the Public Service Labour Relations Board under the grievance process set out in the Public Service Labour Relations Act . The process for the review of those grievances or complaints is to be the same as the one that currently exists under the Canadian Human Rights Act . However, grievances and complaints related specifically to staffing complaints are to be heard by the Public Service Staffing Tribunal.

Grievances relating to discrimination are required to be submitted within one year or any longer period that the Public Service Labour Relations Board considers appropriate, to reflect what currently exists under the Canadian Human Rights Act .

Furthermore, the Division amends the grievance recourse process in several ways. With the sole exception of grievances relating to issues of discrimination, employees included in a bargaining unit may only present or refer an individual grievance to adjudication if they have the approval of and are represented by their bargaining agent. Also, the process as it relates to policy grievances is streamlined, including by defining more clearly an adjudicator’s remedial power when dealing with a policy grievance.

In addition, the Division provides for a clearer apportionment of the expenses of adjudication relating to the

interpretation of a collective agreement. They are to be borne in equal parts by the employer and the bargaining agent. If a grievance relates to a deputy head’s direct authority, such as with respect to discipline, termination of employment or demotion, the expenses are to be borne in equal parts by the deputy head and the bargaining agent. The expenses of adjudication for employees who are not represented by a bargaining agent are to be borne by the Public Service Labour Relations Board.

Finally, the Division amends the recourse process for staffing complaints under the Public Service Employment Act by ensuring that the right to complain is triggered only in situations when more than one employee participates in an exercise to select employees that are to be laid off. And, candidates who are found not to meet the qualifications set by a deputy head may only complain with respect to their own assessment.

Division 18 of

Part 3 establishes the Public Service Labour Relations and Employment Board to replace the Public Service Labour Relations Board and the Public Service Staffing Tribunal. The new Board will deal with matters that were previously dealt with by those former Boards under the Public Service Labour Relations Act and the Public Service Employment Act , respectively, which will permit proceedings under those Acts to be consolidated.

Division 19 of

Part 3 adds declaratory provisions to the Supreme Court Act , respecting the criteria for appointing judges to the Supreme Court of Canada.

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 Economic Action Plan 2013 Act, No. 2.

PART 1

MEASURES RELATING TO INCOME TAX

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

Income Tax Act

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

Loss restriction event

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

Loss restriction event

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

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

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

Proprietor of business

(1) Subject to

section 34.1, if an individual is a proprietor of a business, the individual’s income from the business for a taxation year is deemed to be the individual’s income from the business for the fiscal periods of the business that end in the year.

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

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

Derivative forward agreement

( z.7 )

the total of all amounts each of which is

(

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

(ii)

if the taxpayer disposes of a property under a derivative forward agreement in the year, the amount by which the proceeds of disposition (within the meaning assigned by subdivision

c) of the property exceeds the fair market value of the property at the time the agreement is entered into by the taxpayer.

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

Source of income

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

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

(

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

(

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

(

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

(

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

(ii)

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

(

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

(

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

(

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

(D)

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

(

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

(A + B + C + D + E) – (F +

G) where A

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

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

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

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

is the lesser of

(

I) either

if the prior agreement was entered into before March 21, 2013, the amount, if any, by which the amount determined under clause (

A) of the description of F in subparagraph ( b )(ii) for the prior agreement immediately before it was finally settled exceeds the total determined under clause (

B) of the description of F in subparagraph ( b )(ii) for the prior agreement immediately before it was finally settled, or

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

(II)

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

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

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

(

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

(

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

(ii)

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

(A + B + C + D + E + F) – (G +

H) where A

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

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

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

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

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

(

A) the final settlement date under the agreement is

(

I) before 2015, or

(II)

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

(B)

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

is the lesser of

(A)

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

(

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

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

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

(

c) after March 21, 2018.

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

(

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

(

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

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

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

section 12.5:

Definitions

12.6

(1) The

definitions in

section 18.3 apply in this section.

Where subsection (3) applies

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

(

a) the security becomes, at a particular time in the year, a stapled security of the entity and, as a consequence, amounts described in paragraphs 18.3(3)(

a) and (

b) are not deductible because of subsection 18.3(3);

(

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

a) and (

b) if the security were a stapled security; and

(

c) throughout the period that began immediately after the most recent time referred to in paragraph (

b) and that ends at the particular time, the security (or any security for which the security was substituted) was not a stapled security of any entity.

Income inclusion

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

(

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

(

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

Deemed excess

(4) For the purposes of subsection 161(1), if an amount described in paragraph (3)(

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

(

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

(

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

(

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

(

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

(

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

(

f) the tax payable determined under paragraph (

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

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

(1) Paragraph 13(7)(

f) of the Act is replaced by the following:

(

f) if a taxpayer is deemed under paragraph 111(4)(

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

(

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

(ii)

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

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

Ascertainment of certain property

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

(3) Clause 13(21.2)( e )(iii)(

D) of the Act is replaced by the following:

(

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

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

Loss restriction event

(24) If at any time a taxpayer is subject to a loss restriction event and, within the 12-month period that ended immediately before that time, the taxpayer, a partnership of which the taxpayer was a majority-interest partner or a trust of which the taxpayer was a majority-interest beneficiary (as defined in subsection 251.1(3)) acquired depreciable property (other than property that was held, by the taxpayer, partnership or trust or by a person that would be affiliated with the taxpayer if

section 251.1 were read without reference to the definition controlled in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer, partnership or trust) that was not used, or acquired for use, by the taxpayer, partnership or trust in a business that was carried on by it immediately before the 12-month period began

(

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

(

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

(ii)

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

(

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

Affiliation — subsection (24)

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

(

a) in existence; and

(

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

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

(24) If at any time a taxpayer is subject to a loss restriction event and, within the 12-month period that ended immediately before that time, the taxpayer or a partnership of which the taxpayer was a majority-interest partner acquired depreciable property (other than property that was held, by the taxpayer or partnership or by a person that would be affiliated with the taxpayer if

section 251.1 were read without reference to the definition controlled in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer or partnership) that was not used, or acquired for use, by the taxpayer or partnership in a business that was carried on by it immediately before the 12-month period began

(

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

(

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

(ii)

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

(

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

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

(1) Paragraph 14(12)(

f) of the Act is replaced by the following:

(

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

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

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

Limitation on deduction of interest

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

(

a) the amount, if any, by which

(

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

exceeds

(ii)

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

is of

(

b) the amount determined under subparagraph ( a )(

i) in respect of the corporation or trust for the year.

(2) The portion of the definition outstanding debts to specified non-residents in subsection 18(5) of the Act before paragraph (

b) is replaced by the following:

outstanding debts to specified non-residents

dettes impayées envers des non-résidents déterminés

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

(

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

(

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

(

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

(

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

(ii)

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

but does not include

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

beneficiary

bénéficiaire

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

equity amount

montant des capitaux propres

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

(

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

(

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

(ii)

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

(iii)

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

(

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

(

i) the total of

(

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

(

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

exceeds

(ii)

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

(

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

(

B) an amount from which tax was deducted under

Part XIII because of paragraph 212(1)( c ), or

(

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

(

c) in the case of a corporation or trust that is not resident in Canada, including a corporation or trust that files a return under this

Part in accordance with subsection 216(1) in respect of the year, 40% of the amount, if any, by which

(

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

(

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

(

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

Part in accordance with subsection 216(1) in respect of the year,

exceeds

(ii)

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

equity contribution

apport de capitaux propres

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

(

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

(

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

(

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

specified beneficiary

bénéficiaire déterminé

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

(

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

(

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

(

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

specified non-resident beneficiary

bénéficiaire non-résident déterminé

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

tax-paid earnings

bénéfices libérés d’impôt

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

A – B where A

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

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

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

Specified shareholder or specified beneficiary

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

(

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

(

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

(

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

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

Specified shareholder or specified beneficiary

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

Property used in business — cost attribution

(5.3) For the purposes of subparagraph ( c )(

i) of the definition equity amount in subsection (5),

(

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

(

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

(

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

(ii)

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

Rules — trust income

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

(

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

(

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

Loans made on condition

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

(

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

(

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

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

(

c) the amount of the first loan, and

(

d) the amount of the second loan

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

(5) The portion of paragraph 18(7)(

a) of the Act before subparagraph (

i) is replaced by the following:

(

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

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

(iii)

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

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

(

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

(

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

(ii)

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

(iii)

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

(

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

A/B × (C –

D) where A

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

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

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

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

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

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

(ii)

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

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

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

section 19:

Definitions

18.3

(1) The following

definitions apply in this section.

entity

entité

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

equity value

valeur des capitaux propres

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

real estate investment trust

fiducie de placement immobilier

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

security

titre

security , of an entity, means

(

a) a liability of the entity;

(

b) if the entity is a corporation,

(

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

(ii)

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

(

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

(

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

stapled security

titre agrafé

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

(

a) another security (referred to in this

section as the “reference security”)

(

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

(ii)

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

(

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

(

c) any of the following applies:

(

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

(ii)

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

(iii)

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

subsidiary

filiale

subsidiary , of a particular entity at any time, means

(

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

(

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

transition period

période de transition

transition period , of an entity, means

(

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

(

i) January 1, 2016,

(ii)

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

(iii)

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

(

A) a transaction

(

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

(II)

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

(

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

(

b) if paragraph (

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

(

i) July 20, 2012,

(ii)

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

(iii)

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

(

A) a transaction

(

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

(II)

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

(

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

(

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

(

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

(ii)

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

(iii)

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

(

A) a transaction

(

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

(II)

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

(

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

Property representing security

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

a) and (

b) of the definition stapled security in subsection (1) if it were a security of the entity, then

(

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

(

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

Amounts not deductible

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

(

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

(

b) that is

(

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

(ii)

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

(

A) the real estate investment trust,

(

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

(

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

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

(1) The portion of paragraph 20(1)( e.2 ) of the Act before clause (i)(

A) is replaced by the following:

Premiums on life insurance — collateral

( e.2 )

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

(

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

(2) The portion of paragraph 20(1)( e.2 ) of the Act after clause (i)(

C) is replaced by the following:

(ii)

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

(iii)

the portion, of the lesser of the amounts determined under subparagraphs (

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

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

Derivative forward agreement

( xx )

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

A – B where A

is the lesser of

(

i) the total of all amounts each of which is

(

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

(

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

c) of the property, and

(ii)

the amount that is,

(

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

(

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

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

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

Limitation of expression “interest” — 10/8 policy

(2.01) For the purposes of paragraphs (1)(

c) and ( d ), interest does not include an amount if

(

a) the amount

(

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

(ii)

is described in paragraph (

a) of the definition 10/8 policy in subsection 248(1); or

(

b) the amount

(

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

(ii)

is described in paragraph (

a) of the definition 10/8 policy in subsection 248(1).

(5) Paragraph 20(8)(

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

(

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

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

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

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

(II)

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

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

(ii)

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

(1) The portion of subsection 31(1) of the Act before paragraph (

a) is replaced by the following:

Restricted farm loss

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

(2) Subparagraph 31(1)( a )(

i) of the Act is replaced by the following:

(

i) the amount by which the total of the taxpayer’s losses for the year, determined without reference to this

section and before making any deduction under

section 37, from all farming businesses carried on by the taxpayer exceeds the total of the taxpayer’s incomes for the year, so determined from all such businesses, and

(3) Clause 31(1)( a )(ii)(

B) of the Act is replaced by the following:

(B)

$15,000, and

(4) Subparagraph 31(1)( b )(

i) of the Act is replaced by the following:

(

i) the amount that would be determined under subparagraph ( a )(

i) if it were read without reference to “and before making any deduction under

section 37”,

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

Farming and manufacturing or processing

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

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

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

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

Treatment in following year

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

(

a) the portion of the amount that, because of subparagraph (5)( a )(

i) or (ii), was income for that preceding year is deductible in computing the income of the corporation for the current taxation year; and

(

b) the portion of the amount that, because of subparagraph (5)( a )(

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

(2) Subparagraphs 34.2(5)( a )(

i) to (

v) of the Act are replaced by the following:

(

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

(ii)

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

(iii)

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

(iv)

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

(

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

(3) Paragraph 34.2(5)(

b) of the Act is replaced by the following:

(

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

(

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

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

Transitional reserve

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

(

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

(

i) the specified percentage for the particular year of the corporation’s qualifying transitional income in respect of the partnership,

(ii)

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

(

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

(

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

(iii)

the amount determined by the formula

A – B where A

is the corporation’s income for the particular year computed before deducting or claiming any amount under this subsection in respect of the partnership or under

section 61.3 and 61.4, and

is the total of all amounts each of which is an amount deductible by the corporation for the year under

section 112 or 113 in respect of a dividend received by the corporation after December 20, 2012; and

(

b) the portion of the amount claimed under paragraph (

a) for the particular year that, because of subparagraph (5)( a )(iv), has

(

i) a character other than capital is deductible in computing the income of the corporation for the particular year, and

(ii)

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

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

Inclusion of prior year reserve

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

(

a) the portion of the reserve that was deducted under subparagraph (11)( b )(

i) for that preceding year is to be included in computing the income of the corporation for the current taxation year; and

(

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

(6) The portion of subsection 34.2(13) of the Act that is before paragraph (

a) is replaced by the following

No reserve

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

(7) The portion of subsection 34.2(14) of the Act that is before paragraph (

a) is replaced by the following:

Deemed partner

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

a) to be a member of a partnership continuously until the end of the taxation year if

(8) The portion of subsection 34.2(16) of the Act that is before paragraph (

a) is replaced by the following:

Qualifying transition income adjustment — conditions for application

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

(9) The description of C in paragraph 34.2(17)(

b) of the Act is replaced by the following:

is nil,

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

(1) Section 36 of the Act is repealed.

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

(1) Paragraph 37(1)(

h) of the Act is replaced by the following:

(

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

(2) The portion of subsection 37(6.1) of the Act before paragraph (

a) is replaced by the following:

Loss restriction event

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

h) for the year with respect to the taxpayer in respect of a business is the amount, if any, by which

(3) Clauses 37(6.1)( a )(i)(

A) to (

C) of the Act are replaced by the following:

(

A) an expenditure described in paragraph (1)(

a) or (

c) that was made by the taxpayer before that time,

(

B) the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)( b )(

i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before 2014, or

(

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

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

(ii)

the total of all amounts determined in respect of the taxpayer under paragraphs (1)(

d) to (

g) for its taxation year that ended immediately before that time, or

(iii)

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

(5) Subparagraphs 37(6.1)( b )(

i) and (ii) of the Act are replaced by the following:

(

i) if the business to which the amounts described in any of clauses ( a )(i)(

A) to (

C) can reasonably be considered to have been related was carried on by the taxpayer for profit or with a reasonable expectation of profit throughout the year, the total of

(

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

(

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

(ii)

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

(

A) the amount determined under subparagraph (

i) with respect to the taxpayer in respect of the business for that preceding year, and

(

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

(6) The portion of paragraph 37(9.5)(

b) of the English version of the Act before subparagraph (

i) is replaced by the following:

(

b) partnership of which a majority-interest partner is

(7) Subsections (1) to (5) are deemed to have come into force on March 21, 2013, except that, before January 1, 2014, clause 37(6.1)( a )(i)(

B) of the Act, as enacted by subsection (3), is to be read as follows:

(

B) the lesser of the amounts determined immediately before that time in respect of the taxpayer under subparagraphs (1)( b )(

i) and (ii), as those paragraphs read on March 29, 2012, in respect of expenditures made, and property acquired, by the taxpayer before that time, or

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

(iii)

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

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

(iii)

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

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

Application of subsection (11)

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

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

(

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

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

(

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

(

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

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

(

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

(

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

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

Paragraph 44(7)(

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

(

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

(1) Subparagraph 50(1)( b )(

i) of the Act is replaced by the following:

(

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

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

(1) Clause 53(1)( e )(i)(

A) of the Act is replaced by the following:

(

A) paragraphs 38( a.1 ) to ( a.3 ) and the fractions set out in the formula in paragraph 14(1)(

b) and in subsection 14(5), paragraph 38(

a) and subsection 41(1),

(2) The portion of paragraph 53(1)(

r) of the Act before the formula is replaced by the following:

(

r) if the time is before 2005, the property is an interest in, or a share of the capital stock of, a flow-through entity described in any of paragraphs (

a) to (

f) and (

h) of the definition flow-through entity in subsection 39.1(1) and immediately after that time the taxpayer disposed of all their interests in, and shares of the capital stock of, the entity, the amount determined by the formula

(3) Subsection 53(1) of the Act is amended by striking out “and” at the end of paragraph (

q) and by adding the following after paragraph ( r ):

(

s) if the property was acquired under a derivative forward agreement, any amount required to be included in respect of the property under subparagraph 12(1)( z.7 )(

i) in computing the income of the taxpayer for a taxation year; and

(

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

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

Flow-through entity before 2005

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

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

( b.2 )

if the property is property of a taxpayer that was subject to a loss restriction event at or before that time, any amount required by paragraph 111(4)(

c) to be deducted in computing the adjusted cost base of the property;

(6) Subsection 53(2) of the Act is amended by striking out “and” at the end of paragraph (

u) and by adding the following after paragraph ( v ):

(

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

(

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

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

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

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

(1) Paragraph (

c) of the definition superficial loss in

section 54 of the Act is replaced by the following:

(

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

section 48 as it read in its application before 1993,

section 50 or 70, subsection 104(4),

section 128.1, paragraph 132.2(3)(

a) or ( c ), subsection 138(11.3) or 142.5(2),

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

(2) Paragraph (

f) of the definition superficial loss in

section 54 of the Act is replaced by the following:

(

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

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

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

(1) Clause 55(3)( a )(iii)(

B) of the Act is replaced by the following:

(

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

(2) Clause 55(3)( a )(iv)(

B) of the Act is replaced by the following:

(

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

(3) Subsection 55(3.01) of the Act is amended by striking out “and” at the end of paragraph (

d) and by adding the following after paragraph ( e ):

(

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

(

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

(

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

(ii)

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

(iii)

the disposition or increase occurred before the dividend was received,

(iv)

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

(

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

(

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

(4) The portion of paragraph 55(3.1)(

a) of the Act before subparagraph (

i) is replaced by the following:

(

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

(5) Clause 55(3.1)( c )(i)(

A) of the Act is replaced by the following:

(

A) as a result of a disposition

(

I) in the ordinary course of business, or

(II)

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

(6) Clause 55(3.1)( d )(i)(

A) of the Act is replaced by the following:

(

A) as a result of a disposition

(

I) in the ordinary course of business, or

(II)

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

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

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

(1) Subparagraph 56(1)( a )(

i) of the Act is amended by striking out “and” at the end of clause (E), by adding “and” at the end of clause (

F) and by adding the following after clause (F):

(

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

(

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

(II)

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

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

Prestations du RPC/RRQ pour années antérieures

(8) Malgré les paragraphes (1) et (6), dans le cas où une ou plusieurs sommes sont reçues par un particulier (sauf une fiducie) au cours d’une année d’imposition au

titre ou en paiement intégral ou partiel d’une prestation prévue par le Régime de pensions du Canada ou par un régime provincial de pensions au sens de l’article 3 de cette loi ou seraient incluses, en l’absence du présent paragraphe, dans le calcul de son revenu pour une année d’imposition en application du paragraphe (6) et qu’une

partie d’au moins 300 $ du total de ces sommes se rapporte à une ou plusieurs années d’imposition antérieures, le particulier n’a pas à inclure cette

partie dans son revenu, s’il en fait le choix.

(3) Paragraph 56(8)(

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

(

a) one or more amounts

(

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

section 3 of that Act, or

(ii)

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

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

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

(1) Subparagraph 60( q )(

i) of the Act is replaced by the following:

(

i) the amount has been included in computing the income of the taxpayer for the year or a preceding taxation year as an amount described in subparagraph 56(1)( n )(

i) or paragraph 56(1)(

o) paid to the taxpayer by the payer,

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

(1) Section 60.001 of the Act is repealed.

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

The portion of subsection 60.1(1) of the French version of the Act before paragraph (

a) is replaced by the following:

Pension alimentaire

60.1

(1) Pour l’application de l’alinéa 60

b) et du paragraphe 118(5), dans le cas où une ordonnance ou un accord, ou une modification s’y rapportant, prévoit le paiement d’un montant par un contribuable à une personne ou à son profit, au profit d’enfants confiés à sa garde ou à la fois au profit de la personne et de ces enfants, le montant ou une

partie de celui-ci est réputé :

Section 60.11 of the Act is repealed.

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

Loss restriction event

(11.4) (

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

(

b) within the 12-month period that ended immediately before that time, the taxpayer, a partnership of which the taxpayer was a majority-interest partner or a trust of which the taxpayer was a majority-interest beneficiary (as defined in subsection 251.1(3)) acquired a Canadian resource property or a foreign resource property (other than a property that was held, by the taxpayer, partnership or trust or by a person that would be affiliated with the taxpayer if

section 251.1 were read without reference to the definition controlled in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer, partnership or trust), and

(

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

for the purposes of subsection (4) and sections 66.2, 66.21 and 66.4, except as those provisions apply for the purposes of

section 66.7, the property is deemed not to have been acquired by the taxpayer, partnership or trust, as the case may be, before that time, except that if the property has been disposed of by it before that time and not reacquired by it before that time, the property is deemed to have been acquired by the taxpayer, partnership or trust, as the case may be, immediately before it disposed of the property.

Affiliation — subsection (11.4)

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

(

a) in existence; and

(

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

Trust loss restriction event — successor

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

(

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

(

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

(

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

(

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

(ii)

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

(iii)

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

(iv)

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

(

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

(vi)

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

(

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

(

B) for the purposes of clauses 66.7(1)( b )(i)(

C) and (2)( b )(i)(B), subparagraph 66.7(2.3)( b )(

i) and clauses 66.7(3)( b )(i)(C), (4)( b )(i)(

B) and (5)( b )(i)(

B) for a taxation year that ends after that time, the lesser of the following amounts is deemed to be income of the trust for the year that can reasonably be regarded as attributable to production from the property:

(

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

(II)

an amount that would be determined under subclause (

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

(vii)

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

(

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

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

(ii)

would be described in paragraph (

h) of the definition Canadian exploration expense in subsection 66.1(6) if the reference to “paragraphs (

a) to (

d) and (

f) to ( g.4 )” in that paragraph were read as “paragraphs ( a ), ( d ), (

f) and ( g.1 )”, or

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

(11.4) (

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

(

b) within the 12-month period that ended immediately before that time, the taxpayer or a partnership of which the taxpayer was a majority-interest partner acquired a Canadian resource property or a foreign resource property (other than a property that was held, by the taxpayer or partnership or by a person that would be affiliated with the taxpayer if

section 251.1 were read without reference to the definition controlled in subsection 251.1(3), throughout the period that began immediately before the 12-month period began and ended at the time the property was acquired by the taxpayer or partnership), and

(

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

for the purposes of subsection (4) and sections 66.2, 66.21 and 66.4, except as those provisions apply for the purposes of

section 66.7, the property is deemed not to have been acquired by the taxpayer or partnership, as the case may be, before that time, except that if the property has been disposed of by it before that time and not reacquired by it before that time, the property is deemed to have been acquired by the taxpayer or partnership, as the case may be, immediately before it disposed of the property.

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

(ii)

would be described in paragraph (

h) of the definition Canadian exploration expense in subsection 66.1(6) if the reference to “paragraphs (

a) to (

d) and (

f) to ( g.2 )” in that paragraph were read as “paragraphs ( a ), ( d ), (

f) and ( g.1 )”, or

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

Canadian renewable and conservation expense

frais liés aux énergies renouvelables et à l’économie d’énergie au Canada

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

(2) Paragraph (

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

(

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

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

( g.3 )

any expense incurred by the taxpayer that would be described in paragraph (

g) if the reference to “March 21, 2013” in that paragraph were “2017” and that is incurred

(

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

(ii)

as part of the development of a new mine, if

(

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

(

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

( g.4 )

any expense incurred by the taxpayer, the amount of which is determined by the formula

A × B where A

is an expense that would be described in paragraph (

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

(i)

100% if the expense is incurred before 2015,

(ii)

80% if the expense is incurred in 2015,

(iii)

60% if the expense is incurred in 2016, and

(iv)

30% if the expense is incurred in 2017,

(4) Paragraph (

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

(

h) subject to

section 66.8, the taxpayer’s share of any expense referred to in any of paragraphs (

a) to (

d) and (

f) to ( g.4 ) incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership, or

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

is an expense that would be a Canadian exploration expense of the taxpayer described in paragraph (

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

(6) Paragraph (

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

(

a) would be a Canadian exploration expense described in paragraph (

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

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

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

(9) Subsection (4) is deemed to have come into force on March 22, 2011, except that before March 21, 2013 paragraph (

h) of the definition Canadian exploration expense in subsection 66.1(6) of the Act, as enacted by subsection (4), is to be read as follows:

(

h) subject to

section 66.8, the taxpayer’s share of any expense referred to in any of paragraphs (

a) to (

d) and (

f) to ( g.2 ) incurred by a partnership in a fiscal period of the partnership, if at the end of the period the taxpayer is a member of the partnership, or

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

( c.2 )

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

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

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

(iii)

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

(

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

(

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

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

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

Fair market value

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

(

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

(

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

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

(1) The portion of subsection 75(2) of the Act before paragraph (

a) is replaced by the following:

Trusts

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

(2) Paragraphs 75(3)(

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

(

c) by a qualifying environmental trust; or

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

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

relevant loss balance

solde de pertes applicable

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

(

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

(

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

(ii)

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

(iii)

paragraph 111(4)(

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

(

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

(

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

(ii)

all or substantially all of the proceeds from the issue of the obligation were used to satisfy the principal amount of another obligation to which subparagraph (

i) or this subparagraph would apply if the other obligation were still outstanding;

(2) The portion of the definition unrecognized loss in subsection 80(1) of the Act before paragraph (

b) is replaced by the following:

unrecognized loss

perte non constatée

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

(

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

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

(iv)

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

(

A) subject to the application of this subparagraph to the taxpayer after the particular time and before the end of that fiscal period, the obligation referred to in subparagraph (

i) is deemed to have been issued by the member after the particular time, and

(

B) subparagraph ( b )(ii) of the definition relevant loss balance in subsection (1), paragraph (

f) of the definition successor pool in that subsection and paragraph (

b) of the definition unrecognized loss in that subsection do not apply in respect of the loss restriction event, and

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

(1) Paragraph 80.04(4)(

h) of the Act is replaced by the following:

(

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

(

i) the obligation referred to in paragraph (

e) is deemed to have been issued after the loss restriction event, and

(ii)

subparagraph ( b )(ii) of the definition relevant loss balance in subsection 80(1), paragraph (

f) of the definition successor pool in that subsection and paragraph (

b) of the definition unrecognized loss in that subsection do not apply in respect of the loss restriction event,

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

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

section 80.5:

Synthetic disposition

80.6

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

(

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

(

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

Exception

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

(

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

(

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

(

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

(

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

(

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

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

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

Continuation

( g.1 )

for the purposes of sections 12.4 and 26, subsection 97(3) and

section 256.1, the new corporation is deemed to be the same corporation as, and a continuation of, each predecessor corporation;

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

(iv)

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

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

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

(1) Subparagraph 88(1)( c.2 )(

i) of the Act is replaced by the following:

(

i) specified person , at any time, means

(

A) the parent,

(

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

(

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

(II)

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

(

C) if the time is before the incorporation of the parent, each person who is described in clause (

B) throughout the period that begins at the time the parent is incorporated and ends at the time that is immediately before the beginning of the winding-up,

(i.1)

a person described in clause (i)(

B) or (

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

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

A) and by adding the following after clause (A):

(A.1)

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

(A.2)

the definition specified shareholder in subsection 248(1) is to be read without reference to its paragraph (

a) in respect of any share of the capital stock of the subsidiary that the person would, but for this clause, be deemed to own solely because the person has a right described in paragraph 251(5)(

b) to acquire shares of the capital stock of a corporation that

(

I) is controlled by the subsidiary, and

(II)

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

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

(iv)

property that is distributed to the parent on the winding-up is deemed not to be acquired by a person if the person acquired the property before the acquisition of control referred to in clause ( c )(vi)(

A) and the property is not owned by the person at any time after that acquisition of control;

(4) Subparagraph 88(1)( c.3 )(

i) of the Act is replaced by the following:

(

i) property (other than a specified property) owned by the person at any time after the acquisition of control referred to in clause ( c )(vi)(

A) more than 10% of the fair market value of which is, at that time, attributable to the particular property or properties, and

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

(ii)

an indebtedness that was issued

(

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

(

B) for consideration that consists solely of money,

(6) Subparagraphs 88(1)( c.4 )(

v) and (vi) of the Act are replaced by the following:

(

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

(

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

(

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

(II)

exchanged for shares of the capital stock of the parent, or

(

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

(vi)

a share of the capital stock of a corporation issued to a person described in clause ( c )(vi)(

B) if all the shares of the capital stock of the subsidiary were acquired by the parent for consideration that consists solely of money;

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

v) and by repealing subparagraph (vi).

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

( c.9 )

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

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

(ii)

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

A – (B +

C) where A

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

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

is the prescribed amount, and

(10) Subparagraph 88(1)( e.9 )(

i) of the Act is amended by striking out “and” at the end of clause (A), by adding “and” at the end of clause (

B) and by adding the following after clause (B):

(

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

(

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

(II)

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

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