Bill C-43

Child Fitness Tax Credit

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

“eligible fitness expense” in respect of a qualifying child of an individual for a taxation year means the amount of a fee paid to a qualifying entity (other than an amount paid to a person that is, at the time the amount is paid, the individual’s spouse or common-law partner or another individual who is under 18 years of age) to the extent that the fee is attributable to the cost of registration or membership of the qualifying child in a prescribed program of physical activity and, for the purposes of this section, that cost

(a) includes the cost to the qualifying entity of the program in respect of its administration, instruction, rental of required facilities, and uniforms and equipment that are not available to be acquired by a participant in the program for an amount less than their fair market value at the time, if any, they are so acquired; and

(b) does not include

(i) the cost of accommodation, travel, food or beverages, or

(ii) any amount deductible under section 63 in computing any person’s income for any taxation year.

“qualifying child” of an individual for a taxation year means a child of the individual who is, at the beginning of the year,

(a) under 16 years of age; or

(b) in the case where an amount is deductible under section 118.3 in computing any person’s tax payable under this Part for the year in respect of that child, under 18 years of age.

“qualifying entity” means a person or partnership that offers one or more prescribed programs of physical activity.

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

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

A × B

where

A      is the appropriate percentage for the year; and

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

C – D

where

C      is the total of all amounts each of which is an amount paid in the year by the individual, or by the individual’s spouse or common law partner, that is an eligible fitness expense in respect of the qualifying child of the individual, and

D      is the total of all amounts that any person is or was entitled to receive, each of which relates to an amount included in computing the value of C in respect of the qualifying child that is the amount of a reimbursement, allowance or any other form of assistance (other than an amount that is included in computing the income for any taxation year of that person and that is not deductible in computing the taxable income of that person).

(3) An individual who files a return of income for a taxation year and who makes a claim under this subsection is deemed to have paid, in respect of a qualifying child of the individual, at the end of the year, on account of tax payable under this Part for the year, an amount equal to $500 multiplied by the appropriate percentage for the year, if

(a) the amount referred to in the description of B in subsection (2) is $100 or more; and

(b) an amount is deductible in respect of the qualifying child under section 118.3 in computing any person’s tax payable under this Part for the year.

(4) If more than one individual is entitled to make a claim under this section for a taxation year in respect of a qualifying child, the total of all amounts deemed to have been paid shall not exceed the maximum amount that could be deemed to have been paid for the year by any one of those individuals in respect of that qualifying child if that individual were the only individual entitled to claim an amount for the year under this section in respect of that qualifying child. If the individuals cannot agree as to what portion of the maximum amount each can so claim, the Minister may fix the portions.

(5) For the purposes of this subdivision, if an individual becomes bankrupt in a particular calendar year, notwithstanding subsection 128(2), any reference to the taxation year of the individual (other than in this subsection) is deemed to be a reference to the particular calendar year.

(6) If an individual is resident in Canada throughout part of a taxation year and is non-resident throughout another part of the year, the total of the amounts that are deemed to be paid by the individual under subsection (2) and (3) for the year cannot exceed the lesser of

(a) the total of

(i) the amounts deemed to be paid under those subsections that can reasonably be considered as wholly applicable to the period or periods in the year throughout which the individual is not resident in Canada, computed as though that period or those periods were the whole taxation year, and

(ii) the amounts deemed to be paid under those subsections that can reasonably be considered as wholly applicable to the period or periods in the year throughout which the individual is resident in Canada, computed as though that period or those periods were the whole taxation year, and

(b) the total of the amounts that would have been deemed to have been paid under those subsections for the year had the individual been resident in Canada throughout the year.

(7) Subsections (2) and (3) do not apply in respect of a taxation year of an individual if the individual is, at no time in the year, resident in Canada, unless all or substantially all the individual’s income for the year is included in computing the individual’s taxable income earned in Canada for the year.

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

40. (1) The Act is amended by adding the following before section 125.3:

125.21 There may be deducted in computing the tax payable under this Part for a taxation year by a particular corporation that is throughout the year an eligible Canadian bank (as defined in subsection 95(2.43)) the total of all amounts, each of which is the amount, if any, by which

(a) an amount paid under paragraph 212(1)(b) in respect of interest paid or credited in the year by the particular corporation in respect of an upstream deposit (as defined in subsection 95(2.43)) owing to a non-resident corporation that is, throughout the year, an eligible bank affiliate (as defined in subsection 95(2.43)) of the particular corporation

exceeds

(b) the total of all amounts each of which is a portion of the amount described in paragraph (a) that is available to the non-resident corporation or any other person or partnership at any time as a credit or reduction of, or deduction from, any amount otherwise payable to the government of a country other than Canada, or a political subdivision of that country, having regard to all available provisions of the laws of that country, or political subdivision, as the case may be, any tax treaty with that country and any other agreements entered into by that country or political subdivision.

(2) Subsection (1) applies in respect of taxation years that begin after October 2012.

41. (1) The definition “investor” in subsection 125.4(1) of the Act is repealed.

(2) The definitions “assistance” and “salary or wages” in subsection 125.4(1) of the Act are replaced by the following:

“assistance” means an amount, other than a prescribed amount or an amount deemed under subsection (3) to have been paid, that would be included under paragraph 12(1)(x) in computing a taxpayer’s income for any taxation year if that paragraph were read without reference to

(a) subparagraphs 12(1)(x)(v) to (viii), if the amount were received

(i) from a person or partnership described in subparagraph 12(1)(x)(ii), or

(ii) in circumstances where clause 12(1)(x)(i)(C) applies; and

(b) subparagraphs 12(1)(x)(v) to (vii), in any other case.

“salary or wages” does not include an amount

(a) described in section 7;

(b) determined by reference to profits or revenues; or

(c) paid to a person in respect of services rendered by the person at a time when the person was non-resident, unless the person was at that time a Canadian citizen.

(3) The definition “Canadian film or video production certificate” in subsection 125.4(1) of the Act is replaced by the following:

“Canadian film or video production certificate” means a certificate issued in respect of a production by the Minister of Canadian Herit-age certifying that the production is a Canadian film or video production in respect of which that Minister is satisfied that, except where the production is a treaty co-production (as defined in subsection 1106(3) of the Income Tax Regulations), an acceptable share of revenues from the exploitation of the production in non-Canadian markets is, under the terms of any agreement, retained by

(a) a qualified corporation that owns or owned an interest in, or for civil law a right in, the production;

(b) a prescribed taxable Canadian corporation related to the qualified corporation; or

(c) any combination of corporations described in paragraph (a) or (b).

(4) The portion of the definition “labour expenditure” in subsection 125.4(1) of the Act before subparagraph (b)(i) is replaced by the following:

“labour expenditure”, of a corporation for a taxation year in respect of a Canadian film or video production, means, in the case of a corporation that is not a qualified corporation for the taxation year, nil, and in the case of a corporation that is a qualified corporation for the taxation year, subject to subsection (2), the total of the following amounts to the extent that they are reasonable in the circumstances and included in the cost to, or in the case of depreciable property the capital cost to, the corporation, or any other person or partnership, of the production:

(a) the salary or wages directly attributable to the production that are incurred after 1994 and in the taxation year, or the preceding taxation year, by the corporation for the stages of production of the property, from the production commencement time to the end of the post-production stage, and paid by it in the taxation year or within 60 days after the end of the taxation year (other than amounts incurred in that preceding taxation year that were paid within 60 days after the end of that preceding taxation year),

(b) that portion of the remuneration (other than salary or wages and other than remuneration that relates to services rendered in the preceding taxation year and that was paid within 60 days after the end of that preceding taxation year) that is directly attributable to the production of property, that relates to services rendered after 1994 and in the taxation year, or that preceding taxation year, to the corporation for the stages of production, from the production commencement time to the end of the post-production stage, and that is paid by it in the taxation year or within 60 days after the end of the taxation year to

(5) The portion of the definition “qualified labour expenditure” in subsection 125.4(1) of the Act before paragraph (a) is replaced by the following:

“qualified labour expenditure”, of a corporation for a taxation year in respect of a Canadian film or video production, means the lesser of

(6) The portion of the description of A in paragraph (b) of the definition “qualified labour expenditure” in subsection 125.4(1) of the Act before subparagraph (ii) is replaced by the following:

A      is 60% of the amount by which

(i) the total of all amounts each of which is an expenditure by the corporation in respect of the production that is included in the cost to, or in the case of depreciable property the capital cost to, the corporation or any other person or partnership of the production at the end of the taxation year,

exceeds

(7) Subsection 125.4(1) of the Act is amended by adding the following in alphabetical order:

“production commencement time”, in respect of a Canadian film or video production, means the earlier of

(a) the time at which principal photography of the production begins, and

(b) the latest of

(i) the time at which a qualified corporation that has an interest in, or for civil law a right in, the production, or the parent of the corporation, first makes an expenditure for salary or wages or other remuneration for activities, of scriptwriters, that are directly attributable to the development by the corporation of script material of the production,

(ii) the time at which the corporation or the parent of the corporation acquires a property, on which the production is based, that is a published literary work, screenplay, play, personal history or all or part of the script material of the production, and

(iii) two years before the date on which principal photography of the production begins.

“script material”, in respect of a production, means written material describing the story on which the production is based and, for greater certainty, includes a draft script, an original story, a screen story, a narration, a television production concept, an outline or a scene-by-scene schematic, synopsis or treatment.

(8) The portion of subsection 125.4(2) of the Act before paragraph (b) is replaced by the following:

(2) For the purposes of the definitions “labour expenditure” and “qualified labour expenditure” in subsection (1),

(a) remuneration does not include remuneration

(i) determined by reference to profits or revenues, or

(ii) in respect of services rendered by a person at a time when the person was non-resident, unless the person was at that time a Canadian citizen;

(9) Subsection 125.4(2) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

(d) an expenditure incurred in respect of a film or video production by a qualified corporation (in this paragraph referred to as the “co-producer”) in respect of goods supplied or services rendered by another qualified corporation to the co-producer in respect of the production is not a labour expenditure to the co-producer or, for the purpose of applying this section to the co-producer, a cost or capital cost of the production.

(10) Subsection 125.4(4) of the Act is replaced by the following:

(4) This section does not apply to a Canadian film or video production if the production — or an interest in a person or partnership that has, directly or indirectly, an interest in, or for civil law a right in, the production — is a tax shelter investment for the purpose of section 143.2.

(11) Subsection 125.4(6) of the Act is replaced by the following:

(6) If an omission or incorrect statement was made for the purpose of obtaining a Canadian film or video production certificate in respect of a production, or if the production is not a Canadian film or video production,

(a) the Minister of Canadian Heritage may

(i) revoke the certificate, or

(ii) if the certificate was issued in respect of productions included in an episodic television series, revoke the certificate in respect of one or more episodes in the series;

(b) for greater certainty, for the purposes of this section, the expenditures and cost of production in respect of productions included in an episodic television series that relate to an episode in the series in respect of which a certificate has been revoked are not attribut-able to a Canadian film or video production; and

(c) for the purpose of subparagraph (3)(a)(i), a certificate that has been revoked is deemed never to have been issued.

(12) Section 125.4 of the Act is amended by adding the following after subsection (6):

(7) The Minister of Canadian Heritage shall issue guidelines respecting the circumstances under which the conditions in the definition “Canadian film or video production certificate” in subsection (1) are satisfied. For greater certainty, those guidelines are not statutory instruments as defined in the Statutory Instruments Act.

(13) Subsections (1) and (10) apply

(a) to taxation years that end after November 14, 2003; and

(b) in respect of a film or video production in respect of which a corporation has, in a return of income filed before November 14, 2003, claimed an amount under subsection 125.4(3) of the Act in respect of a labour expenditure incurred after 1997.

(14) Subsections (2) and (4) to (9) apply

(a) to film or video productions for which the production commencement time of the corporation (or, if there is more than one qualified corporation in respect of the production, of all such corporations) is on or after November 14, 2003; and

(b) to a corporation in respect of a film or video production for which the production commencement time of any corporation is before November 14, 2003

(i) if the earliest labour expenditure of the corporation (or, if there is more than one qualified corporation in respect of the production, of all those corporations) in respect of the production is made after 2003, or

(ii) if the corporation elects (or, if there is more than one qualified corporation in respect of the production, all those corporations jointly elect), in writing, and the election is filed with the Minister of National Revenue on or before the earliest filing-due date of any qualified corporation in respect of the production for that corporation’s taxation year that includes the day on which this Act receives royal assent, and the earliest labour expenditure of all such qualified corporations in respect of the production is made

(A) after the last taxation year of any such corporation that ended before November 14, 2003, or

(B) if the first taxation year of all such corporations includes November 14, 2003, in that taxation year.

(15) The earliest labour expenditure referred to in subsection (14) is to be determined under the provisions of subsections 125.4(1) and (2) of the Act that would apply if subsections (2) and (4) to (9) had not been enacted.

(16) Subsection (3) applies in respect of film or video productions in respect of which certificates are issued by the Minister of Canadian Heritage after December 20, 2002, except that, in respect of those film or video productions in respect of which certificates are issued by the Minister of Canadian Heritage before 2004, the definition “Canadian film or video production certificate” in subsection 125.4(1) of the Act, as enacted by subsection (3), is to be read as follows:

“Canadian film or video production certificate” means a certificate issued in respect of a production by the Minister of Canadian Her-itage

(a) certifying that the production is a Canadian film or video production in respect of which that Minister is satisfied that, except where the production is a treaty co-production (as defined in subsection 1106(3) of the Income Tax Regulations), an acceptable share of revenues from the exploitation of the production in non-Canadian markets is, under the terms of any agreement, retained by

(i) a qualified corporation that owns or owned an interest in, or for civil law a right in, the production,

(ii) a prescribed taxable Canadian corporation related to the qualified corporation, or

(iii) any combination of corporations described in subparagraph (i) or (ii); and

(b) estimating amounts relevant for the purpose of determining the amount deemed under subsection (3) to have been paid in respect of the production.

(17) Subsection (11) is deemed to have come into force on November 15, 2003.

(18) Subsection (12) applies in respect of film or video productions in respect of which certificates are issued by the Minister of Canadian Heritage after December 20, 2002.

42. (1) Subsection 127(7) of the Act is replaced by the following:

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

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

43. (1) The description of C in section 127.51 of the Act is replaced by the following:

C      is

(a) $40,000, in the case of an individual (other than a trust) or a graduated rate estate; and

(b) nil, in any other case; and

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

44. (1) Subparagraph 127.52(1)(h)(i) of the Act is replaced by the following:

(i) the amounts deducted under any of subsections 110(2), 110.6(2), (2.1) and (12) and 110.7(1),

(2) Subparagraph 127.52(1)(h)(i) of the Act, as enacted by subsection (1), is replaced by the following:

(i) the amounts deducted under any of subsections 110(2), 110.6(2) and (2.1) and 110.7(1),

(3) Subsection (1) applies to amounts deducted in respect of the 2014 and subsequent taxation years.

(4) Subsection (2) applies to amounts deducted in respect of the 2016 and subsequent taxation years.

45. (1) Section 127.53 of the Act is repealed.

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

46. (1) Subparagraph 128.1(1)(b)(iv) of the Act is replaced by the following:

(iv) an excluded right or interest of the taxpayer, other than an interest described in paragraph (k) of the definition “excluded right or interest” in subsection (10),

(2) Paragraph (k) of the definition “excluded right or interest” in subsection 128.1(10) of the Act is replaced by the following:

(k) an interest of the individual in a non-resident testamentary trust that is an estate that arose on and as a consequence of a death if

(i) the interest was never acquired for consideration, and

(ii) the estate has been in existence for no more than 36 months; or

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

47. (1) The portion of paragraph 138.1(1)(a) of the Act before subparagraph (i) is replaced by the following:

(a) a trust (in this section referred to as the “related segregated fund trust”) is deemed to be created at the time that is the later of

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

48. (1) The portion of paragraph 143(1)(a) of the Act before subparagraph (i) is replaced by the following:

(a) a trust is deemed to be created on the day that is the later of

(2) The portion of subsection 143(2) of the Act before paragraph (a) is replaced by the following:

(2) If the trust referred to in subsection (1) in respect of a congregation so elects in respect of a taxation year in writing filed with the Minister on or before the trust’s filing-due date for the year and all the congregation’s participating members are specified in the election in accordance with subsection (5), the following rules apply:

(3) The portion of subsection 143(3.1) of the Act before paragraph (a) is replaced by the following:

(3.1) For the purposes of section 118.1, if the eligible amount of a gift made in a taxation year by a trust referred to in subsection (1) in respect of a congregation would, but for this subsection, be included in the total charitable gifts, total cultural gifts or total ecological gifts of the trust for the year and the trust so elects in its return of income under this Part for the year,

(4) The definition “total Crown gifts” in subsection 143(4) of the Act is repealed.

(5) The portion of subsection 143(5) of the Act before paragraph (a) is replaced by the following:

(5) For the purpose of applying subsection (2) to a particular election by the trust referred to in subsection (1) in respect of a congregation for a particular taxation year,

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

49. (1) The portion of paragraph 143.1(1.2)(a) of the Act before subparagraph (i) is replaced by the following:

(a) a trust (in this section referred to as the “amateur athlete trust”) is deemed

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

50. (1) The portion of paragraph (a) of the definition “earned income” in subsection 146(1) of the Act before subparagraph (i) is replaced by the following:

(a) the taxpayer’s income (other than an amount described in paragraph 12(1)(z)) for a period in the year throughout which the taxpayer was resident in Canada from

(2) The definition “earned income” in subsection 146(1) of the Act is amended by adding the following after paragraph (b.1):

(b.2) the taxpayer’s qualifying performance income (as defined in subsection 143.1(1)) that is deemed by paragraph 143.1(1.2)(c) to be income of an amateur athlete trust for the year,

(3) The portion of paragraph (c) of the definition “earned income” in subsection 146(1) of the Act before subparagraph (i) is replaced by the following:

(c) the taxpayer’s income (other than an amount described in paragraph 12(1)(z)) for a period in the year throughout which the taxpayer was not resident in Canada from

(4) Subsections (1) to (3) apply to an individual’s 2014 and subsequent taxation years, except that if an individual elects in writing under this subsection in respect of the individual’s 2011, 2012 or 2013 taxation year and the election is filed with the Minister of National Revenue before March 3, 2015, subsections (1) to (3) apply to the individual’s taxation year in respect of which the election is filed and subsequent taxation years.

51. (1) Subsection 146.1(11) of the Act is repealed.

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

52. (1) Subsection 148(2) of the Act is amended by striking out “and” at the end of paragraph (c), by adding “and” at the end of paragraph (d) and by adding the following after paragraph (d):

(e) if, in respect of a life insurance policy issued after 2016 that is an exempt policy, a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy is paid at any time, the payment results in the termination of the coverage but not the policy and the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) paid in respect of the coverage at that time exceeds the amount determined in respect of the coverage under subclause (A)(I) of the description of B in subparagraph 306(4)(a)(iii) of the Income Tax Regulations on the policy anniversary (as defined in section 310 of the Income Tax Regulations) that is on, or that first follows, the date of the death of an individual whose life is insured under the coverage, then a policyholder with an interest in the policy that gives rise to an entitlement (of the policyholder, beneficiary or assignee, as the case may be) to receive all or a portion of that excess, is deemed, at that time, to dispose of a part of the interest and to be entitled to receive proceeds of the disposition equal to that excess or portion, as the case may be.

(2) Subsection 148(4) of the Act is replaced by the following:

(4) If a taxpayer disposes (other than because of paragraph (2)(a) or as described in paragraph (b) of the definition “disposition” in subsection (9)) of a part of the taxpayer’s interest in a life insurance policy (other than an annuity contract) last acquired after December 1, 1982 or an annuity contract, the adjusted cost basis to the taxpayer, immediately before the disposition, of the part is the amount determined by the formula

A × B/C

where

A      is the adjusted cost basis to the taxpayer of the taxpayer’s interest immediately before the disposition,

B is the proceeds of the disposition, and

C is

(a) if the policy is a policy (other than an annuity contract) issued after 2016, the amount determined by the formula

D – E

where

D      is the interest’s cash surrender value immediately before the disposition, and

E      is the total of all amounts each of which is an amount payable, immediately before the disposition, by the taxpayer in respect of a policy loan in respect of the policy, and

(b) in any other case, the accumulating fund with respect to the taxpayer’s interest, as determined in prescribed manner, immediately before the disposition.

(4.01) For the purposes of the definition “adjusted cost basis” in subsection (9) and paragraph 60(s), a particular amount is deemed to be a repayment made at a particular time by a taxpayer in respect of a policy loan in respect of a life insurance policy if

(a) the policy is issued after 2016;

(b) the taxpayer disposes of a part of the taxpayer’s interest in the policy immediately after the particular time;

(c) paragraph (a) of the definition “proceeds of the disposition” in subsection (9) applies to determine the proceeds of the disposition of the interest;

(d) the particular amount is not

(i) otherwise a repayment by the taxpayer in respect of the policy loan, and

(ii) described in subparagraph (i) of the description of C in the definition “adjusted cost basis” in subsection (9); and

(e) the amount payable by the taxpayer in respect of the policy loan is reduced by the particular amount as a consequence of the disposition.

(3) The portion of the definition “adjusted cost basis” in subsection 148(9) of the Act before the description of A is replaced by the following:

“adjusted cost basis”, at any time to a policyholder of the policyholder’s interest in a life insurance policy, means the amount determined by the formula

(A + B + C + D + E + F + G + G.1) – (H + I + J + K + L + M + N + O)

where

(4) The description of E in the definition “adjusted cost basis” in subsection 148(9) of the Act is replaced by the following:

E      is the total of all amounts each of which is an amount that is in respect of the repayment, before that time and after March 31, 1978, of a policy loan and that does not exceed the amount determined by the formula,

E.1 – E.2

where

E.1      is the total of

(a) the proceeds of the disposition, if any, in respect of the loan,

(b) if the policy is issued after 2016 (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the repayment is at or after the particular time), the portion of the loan applied, immediately after the loan, to pay a premium under the policy as provided for under the terms and conditions of the policy (except to the extent that the portion is described in subparagraph (i) of the description of C in the definition “proceeds of the disposition” in this subsection), and

(c) the amount, if any, described in the description of J in this definition (but not including any payment of interest) in respect of the loan, and

E.2      is the total all amounts each of which is an amount in respect of a repayment, of the loan, referred to in clause (2)(a)(ii)(B) or deductible under paragraph 60(s) of this Act or paragraph 20(1)(hh) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952 (as it applied in taxation years before 1985),

(5) The description of G.1 in the definition “adjusted cost basis” in subsection 148(9) of the Act is replaced by the following:

G.1      is, in the case of an interest in a life insurance policy (other than an annuity contract) to which subsection (8.2) applied before that time, the total of all amounts each of which is a mortality gain, as defined by regulation and determined by the issuer of the policy in accordance with the regulations, in respect of the interest immediately before the end of the calendar year that ended in a taxation year that began before that time,

(6) The definition “adjusted cost basis” in subsection 148(9) of the Act is amended by striking out “and” at the end of the description of K and by adding the following after the description of L:

M      is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is a premium paid by or on behalf of the policyholder, or a cost of insurance charge incurred by the policyholder, before that time (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time), to the extent that the premium or charge is in respect of a benefit under the policy other than a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations),

N      is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is the policyholder’s interest in an amount paid — to the extent that the cash surrender value of the policy, if any, or the fund value of the policy (as defined in subsection 1401(3) of the Income Tax Regulations), if any, is reduced by the amount paid — before that time (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) that

(a) is a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations), or a disability benefit, under the policy, and

(b) does not result in the termination of a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy,

O      is, in the case of a policy that is issued after 2016 and is not an annuity contract, the total of all amounts each of which is — if a benefit on death (as defined in subsection 1401(3) of the Income Tax Regulations) under a coverage (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy is paid before that time (and, in the case where the particular time at which the policy is issued is determined under subsection (11), at or after the particular time) and the payment results in the termination of the coverage — the amount, if any, determined with respect to the coverage by the formula

[P × (Q + R + S)/T] – U

where

P      is the adjusted cost basis of the policyholder’s interest immediately before the termination,

Q      is the amount of the fund value benefit (as defined in subsection 1401(3) of the Income Tax Regulations) under the policy paid in respect of the coverage on the termination,

R      is the amount that would be the present value, determined for the purposes of section 307 of the Income Tax Regulations, on the last policy anniversary (as defined in section 310 of the Income Tax Regulations) on or before the termination, of the fund value of the coverage (as defined in subsection 1401(3) of the Income Tax Regulations) if the fund value of the coverage on that policy anniversary were equal to the fund value of the coverage on the termination,

S      is the amount that would be determined, on that policy anniversary, for paragraph (a) of the description of C in the definition “net premium reserve” in subsection 1401(3) of the Income Tax Regulations in respect of the coverage, if the benefit on death under the coverage, and the fund value of the coverage, on that policy anniversary were equal to the benefit on death under the coverage and the fund value of the coverage, as the case may be, on the termination,

T      is the amount that would be, on that policy anniversary, the net premium reserve (as defined in subsection 1401(3) of the Income Tax Regulations) in respect of the policy for the purposes of section 307 of the Income Tax Regulations, if the fund value benefit under the policy, the benefit on death under each coverage and the fund value of each coverage on that policy anniversary were equal to the fund value benefit, the benefit on death under each coverage and the fund value of each coverage, as the case may be, under the policy on the termination, and

U      is the amount, if any, determined under subsection (4) in respect of a disposition before that time of the interest because of paragraph (2)(e) in respect of the payment in respect of the fund value benefit under the policy paid in respect of the coverage on the termination;

(7) Paragraph (c) of the definition “premium” in subsection 148(9) of the Act is replaced by the following:

(c) the portion of any amount paid under the policy with respect to an accidental death benefit, a disability benefit, an additional risk as a result of insuring a substandard life, an additional risk in respect of the conversion of a term policy into another policy after the end of the year, an additional risk under a settlement option, or an additional risk under a guaranteed insurability benefit, if

(i) in the case of an annuity contract, a policy issued before 2017 or in respect of which the particular time at which the policy is issued is determined under subsection (11), where the interest in the policy was last acquired after December 1, 1982, the payment is made after May 31, 1985 and, if the particular time at which the policy is issued is determined under subsection (11), before the particular time, or

(ii) in the case where the taxpayer’s interest in the policy was last acquired before December 2, 1982,

(A) subsection 12.2(9) of the Income Tax Act, chapter 148 of the Revised Statutes of Canada, 1952, applies to the interest,

(B) the particular time at which the policy is issued is determined under subsection (11), and

(C) the payment is made in the period that starts at the later of May 31, 1985 and the first time at which that subsection 12.2(9) applies in respect of the interest and that ends at the particular time;

(8) Subparagraph (i) of the description of C in paragraph (a) of the definition “proceeds of the disposition” in subsection 148(9) of the Act is replaced by the following:

(i) an amount by which the amount payable in respect of a policy loan in respect of the policy is reduced as a consequence of the disposition, except that if the policy is issued after 2016 and the disposition is of a part of the interest (and, in the case where the particular time at which the policy is issued is determined under subsection (11), the disposition occurs at or after the particular time), only to the extent that the amount represents the portion of the loan applied, immediately after the loan, to pay a premium under the policy, as provided for under the terms and conditions of the policy,

(9) Section 148 of the Act is amended by adding the following after subsection (10):

(11) For the purposes of determining at and after a particular time whether a life insurance policy (other than an annuity contract) issued before 2017 is treated as issued after 2016 under this section (other than this subsection) and sections 306 (other than subsection (9)), 307, 308, 310, 1401 and 1403 of the Income Tax Regulations (except as they apply for the purposes of subsection 211.1(3)), the policy is deemed to be a policy issued at the particular time if the particular time is the first time after 2016 at which life insurance — in respect of a life, or two or more lives jointly insured, and in respect of which a particular schedule of premium or cost of insurance rates applies — is

(a) converted (other than only because of a change in premium or cost of insurance rates) into another type of life insurance; or

(b) if the insurance (other than insurance paid for with policy dividends or that is reinstated) is medically underwritten after 2016 (other than to obtain a reduction in the premium or cost of insurance rates under the policy), added to the policy.

53. (1) The portion of subsection 149(5) of the Act before paragraph (a) is replaced by the following:

(5) Notwithstanding subsections (1) and (2), where a club, society or association was for any period, a club, society or association described in paragraph (1)(l) the main purpose of which was to provide dining, recreational or sporting facilities for its members (in this subsection referred to as the “club”), a trust is deemed to have been created on the later of the commencement of the period and the end of 1971 and to have continued in existence throughout the period, and, throughout that period, the following rules apply:

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

54. (1) Subparagraph (a)(iii) of the definition “exempt shares” in subsection 149.1(1) of the Act is replaced by the following:

(iii) on or after March 19, 2007, under the terms of a trust created before March 19, 2007, and not amended on or after March 19, 2007,

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

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

(b) the amount of tax, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 122.8(2) or (3), 125.4(3), 125.5(3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year.

(2) The portion of subsection 152(4.2) of the Act before paragraph (a) is replaced by the following:

(4.2) Notwithstanding subsections (4), (4.1) and (5), for the purpose of determining — at any time after the end of the normal reassessment period, of a taxpayer who is an individual (other than a trust) or a graduated rate estate, in respect of a taxation year — the amount of any refund to which the taxpayer is entitled at that time for the year, or a reduction of an amount payable under this Part by the taxpayer for the year, the Minister may, if the taxpayer makes an application for that determination on or before the day that is 10 calendar years after the end of that taxation year,

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

(b) redetermine the amount, if any, deemed by subsection 120(2) or (2.2), 122.5(3), 122.51(2), 122.7(2) or (3), 122.8(2) or (3), 127.1(1), 127.41(3) or 210.2(3) or (4) to be paid on account of the taxpayer’s tax payable under this Part for the year or deemed by subsection 122.61(1) to be an overpayment on account of the taxpayer’s liability under this Part for the year.

(4) Subsections (1) and (3) apply to the 2015 and subsequent taxation years.

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

56. (1) Subsection 156.1(2) of the Act is amended by striking out “or” at the end of paragraph (a), by adding “or” at the end of paragraph (b) and by adding the following after paragraph (b):

(c) the individual is a graduated rate estate for the particular year.

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

57. (1) Section 160 of the Act is amended by adding the following after subsection (1.3):

(1.4) If subsection 104(13.4) deems an amount to have become payable in a taxation year of a trust to an individual, the individual and the trust are jointly and severally, or solidarily, liable for the tax payable by the individual under this Part for the individual’s taxation year that includes the day on which the individual dies to the extent that that tax payable is greater than it would have been if the amount were not included in computing the individual’s income under this Part for the taxation year.

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

58. (1) The portion of subsection 161(2.2) of the Act before paragraph (a) is replaced by the following:

(2.2) Notwithstanding subsections (1) and (2), the total amount of interest payable by a taxpayer (other than a graduated rate estate) under those subsections, for the period that begins on the first day of the taxation year for which a part or instalment of tax is payable and ends on the taxpayer’s balance-due day for the year, in respect of the taxpayer’s tax or instalments of tax payable for the year shall not exceed the amount, if any, by which

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

59. (1) Subsection 163(2) of the Act is amended by adding the following after paragraph (c.3):

(c.4) the amount, if any, by which

(i) the total of all amounts each of which is an amount that would be deemed by subsections 122.8(2) or (3) to have been paid on account of the person’s tax payable under this Part for the year if that amount were calculated by reference to the person’s claim for the year under those subsections

exceeds

(ii) the total of all amounts each of which is the amount that the person is entitled to claim for the year under subsections 122.8(2) or (3),

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

60. (1) Paragraph 164(1.5)(a) of the Act is replaced by the following:

(a) if the taxpayer is an individual (other than a trust) or a graduated rate estate for the year and the taxpayer’s return of income under this Part for the year was filed on or before the day that is 10 calendar years after the end of the year;

(2) The portion of subsection 164(6) of the Act before paragraph (a) is replaced by the following:

(6) If in the course of administering the graduated rate estate of a taxpayer, the taxpayer’s legal representative has, within the first taxation year of the estate,

(3) The portion of subsection 164(6.1) of the Act before paragraph (a) is replaced by the following:

(6.1) Notwithstanding any other provision of this Act, if a right to acquire securities (as defined in subsection 7(7)) under an agreement in respect of which a benefit was deemed by paragraph 7(1)(e) to have been received by a taxpayer (in this subsection referred to as “the right”) is exercised or disposed of by the taxpayer’s legal representative within the first taxation year of the graduated rate estate of the taxpayer and the representative so elects in prescribed manner and on or before a prescribed day,

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

61. (1) The portion of paragraph 165(1)(a) of the Act before subparagraph (i) is replaced by the following:

(a) if the assessment is in respect of the taxpayer for a taxation year and the taxpayer is an individual (other than a trust) or a graduated rate estate for the year, on or before the later of

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

62. (1) Paragraph 207.6(1)(a) of the Act is replaced by the following:

(a) a trust is deemed to be created on the day that the arrangement is established;

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

63. (1) Paragraph (b) of the definition “designated beneficiary” in subsection 210(1) of the Act is repealed.

(2) The portion of paragraph (d) of the definition “designated beneficiary” in subsection 210(1) of the Act before subparagraph (i) is replaced by the following:

(d) another trust (in this paragraph referred to as the “other trust”) that is not a graduated rate estate, a mutual fund trust or a trust that is exempt because of subsection 149(1) from tax under Part I on all or part of its taxable income, if any beneficiary under the other trust is at that time

(3) Subparagraph (d)(ii) of the definition “designated beneficiary” in subsection 210(1) of the Act is repealed.

(4) Clause (d)(iii)(A) of the definition “designated beneficiary” in subsection 210(1) of the Act is replaced by the following:

(A) a graduated rate estate,

(5) Subparagraph (e)(iii) of the definition “designated beneficiary” in subsection 210(1) of the Act is repealed.

(6) Paragraph 210(2)(a) of the Act is replaced by the following:

(a) a graduated rate estate;

(7) Subsections (2), (4) and (6) apply to the 2016 and subsequent taxation years.

64. (1) Section 212 of the Act is amended by adding the following after subsection (3):

(3.1) Subsections (3.2) and (3.3) apply at any time in respect of a taxpayer if

(a) the taxpayer pays or credits a particular amount at that time on account or in lieu of payment of, or in satisfaction of, interest (determined without reference to paragraph 18(6.1)(b) and subsection 214(16)) in respect of a particular debt or other obligation to pay an amount to a person or partnership (in this subsection referred to as the “intermediary”);

(b) the intermediary is not

(i) a person resident in Canada that does not deal at arm’s length with the taxpayer, or

(ii) a partnership each member of which is a person described in subparagraph (i);

(c) at any time in the period during which the interest accrued (in subsections (3.2) and (3.3) referred to as the “relevant period”), the intermediary, or a person or partnership that does not deal at arm’s length with the intermediary,

(i) has an amount outstanding as or on account of a debt or other obligation to pay an amount to a non-resident person that meets any of the following conditions (in this subsection and subsection (3.2) referred to as the “intermediary debt”):

(A) recourse in respect of the debt or other obligation is limited in whole or in part, either immediately or in the future and either absolutely or contingently, to the particular debt or other obligation, or

(B) it can reasonably be concluded that all or a portion of the particular debt or other obligation became owing, or was permitted to remain owing, because

(I) all or a portion of the debt or other obligation was entered into or was permitted to remain outstanding, or

(II) the intermediary anticipated that all or a portion of the debt or other obligation would become owing or remain outstanding, or

(ii) has a specified right (as defined in subsection 18(5)) in respect of a particular property that was granted directly or indirectly by a non-resident person and

(A) the existence of the specified right is required under the terms and conditions of the particular debt or other obligation, or

(B) it can reasonably be concluded that all or a portion of the particular debt or other obligation became owing, or was permitted to remain owing, because

(I) the specified right was granted, or

(II) the intermediary anticipated that the specified right would be granted;

(d) the tax that would be payable under this Part in respect of the particular amount, if the particular amount were paid or credited to the non-resident person rather than the intermediary, is greater than the tax payable under this Part (determined without reference to this subsection and subsection (3.2)) in respect of the particular amount; and

(e) the total of all amounts — each of which is, in respect of the particular debt or other obligation, an amount outstanding as or on account of an intermediary debt or the fair market value of a particular property described in subparagraph (c)(ii) — is equal to at least 25% of the total of

(i) the amount outstanding as or on account of the particular debt or other obligation, and

(ii) the total of all amounts each of which is an amount (other than the amount described in subparagraph (i)) that the taxpayer, or a person or partnership that does not deal at arm’s length with the taxpayer, has outstanding as or on account of a debt or other obligation to pay an amount to the intermediary under the agreement, or an agreement that is connected to the agreement, under which the particular debt or other obligation was entered into where

(A) the intermediary is granted a secu-rity interest (as defined in subsection 18(5)) in respect of a property that is the intermediary debt or the particular property, as the case may be, and the security interest secures the payment of two or more debts or other obligations that include the debt or other obligation and the particular debt or other obligation, and

(B) each security interest that secures the payment of a debt or other obligation referred to in clause (A) secures the payment of every debt or other obligation referred to in that clause.

(3.2) If this subsection applies at any time in respect of a taxpayer, then for the purposes of paragraph (1)(b), the taxpayer is deemed, at that time, to pay interest to a non-resident person referred to in subparagraph (3.1)(c)(i) or (ii), the amount of which is determined by the formula

[(A × B/C) – D] × (E – F)/E

where

A      is the particular amount referred to in paragraph (3.1)(a);

B      is the average of all amounts each of which is the lesser of

(i) the amount of the particular debt or other obligation referred to in paragraph (3.1)(a) outstanding at a particular time in the relevant period; and

(ii) the total of all amounts each of which is at that particular time

(A) an amount outstanding as or on account of an intermediary debt, in respect of the particular debt or other obligation, that is owed to the non-resident person,

(B) the fair market value of a particular property referred to in subparagraph (3.1)(c)(ii) in respect of the particular debt or other obligation, or

(C) if neither clause (A) nor (B) applies at that particular time, nil;

C      is the average of all amounts each of which is the amount of the particular debt or other obligation outstanding at a time in the relevant period;

D      is the portion, if any, of the particular amount deemed by subsection 214(16) to have been paid by the taxpayer as a dividend;

E      is the rate of tax (determined without reference to subsection 214(16)) that would be imposed under this Part on the particular amount if the particular amount were paid by the taxpayer to the non-resident person at that time; and

F      is the rate of tax (determined without reference to subsection 214(16)) imposed under this Part on the intermediary in respect of all or the portion of the particular amount paid or credited to the intermediary.

(3.3) If subsection (3.2) applies at any time to deem a taxpayer to pay interest at that time to more than one non-resident person referred to in subparagraph (3.1)(c)(i) or (ii) in respect of a particular debt or other obligation and the total of all amounts determined (without reference to this subsection) for B in subsection (3.2) in respect of the particular debt or other obligation exceeds the average of all amounts each of which is the amount of the particular debt or other obligation outstanding at a time in the relevant period, then the taxpayer may reduce the amount determined for B in respect of one or more of the non-resident persons by one or more amounts designated by the taxpayer, as is reasonable in the circumstances, the total of which designated amounts shall not be greater than that excess.

(2) Subsection (1) applies to amounts paid or credited after 2014.

65. (1) Paragraph 212.3(1)(b) of the Act is replaced by the following:

(b) the CRIC is immediately after the investment time, or becomes after the investment time and as part of a transaction or event or series of transactions or events that includes the making of the investment, controlled by a non-resident corporation (in this section referred to as the “parent”), and any of the following conditions is satisfied:

(i) if, at the investment time, the parent owned all shares of the capital stock of the CRIC that are owned — determined without reference to paragraph 212.3(25)(b) in the case of partnerships referred to in this subparagraph and as if all rights referred to in paragraph 251(5)(b), of the parent, each person that does not deal at arm’s length with the parent and all of those partnerships, were immediate and absolute and the parent and each of the other persons and partnerships had exercised those rights at the investment time — by the parent, persons that are not dealing at arm’s length with the parent and partnerships of which the parent or a non-resident person that is not dealing at arm’s length with the parent is a member (other than a limited partner within the meaning assigned by subsection 96(2.4)), the parent would own shares of the capital stock of the CRIC that

(A) give the holders of those shares 25% or more of all of the votes that could be cast at any annual meeting of the shareholders in respect of all shares of the capital stock of the CRIC, or

(B) have a fair market value of 25% or more of the fair market value of all of the issued and outstanding shares of the capital stock of the CRIC,

(ii) the investment is an acquisition of shares of the capital stock of a subject corporation by a CRIC to which this subparagraph applies because of subsection (19), or

(iii) under an arrangement entered into in connection with the investment, a person or partnership, other than the CRIC or a person related to the CRIC, has in any material respect the risk of loss or opportunity for gain or profit in respect of a property that can reasonably be considered to relate to the investment; and

(2) Paragraph 212.3(2)(a) of the Act is replaced by the following:

(a) for the purposes of this Part and subject to subsections (3) and (7), the CRIC is deemed to have paid to the parent, and the parent is deemed to have received from the CRIC, at the dividend time, a dividend equal to the total of all amounts each of which is the portion of the fair market value at the investment time of any property (not including shares of the capital stock of the CRIC) transferred, any obligation assumed or incurred, or any benefit otherwise conferred, by the CRIC, or of any property transferred to the CRIC which transfer results in the reduction of an amount owing to the CRIC, that can reasonably be considered to relate to the investment; and

(3) Subsections 212.3(3) and (4) of the Act are replaced by the following:

(3) If a CRIC (or a CRIC and a corporation that is a qualifying substitute corporation in respect of the CRIC at the dividend time) and the parent (or the parent and another non-resident corporation that at the dividend time does not deal at arm’s length with the parent) jointly elect in writing under this subsection in respect of an investment, and the election is filed with the Minister on or before the filing-due date of the CRIC for its taxation year that includes the dividend time, then the dividend that would, in the absence of this subsection, be deemed under paragraph (2)(a) to have been paid by the CRIC to the parent and received by the parent from the CRIC is deemed to have instead been

(a) paid by the CRIC or the qualifying substitute corporation, as agreed on in the election; and

(b) paid to, and received by, the parent or the other non-resident corporation, as agreed on in the election.

(4) The following definitions apply in this section.

“cross-border class”, in respect of an investment, means a class of shares of the capital stock of a CRIC or qualifying substitute corporation if, immediately after the dividend time in respect of the investment,

(a) the parent, or a non-resident corporation that does not deal at arm’s length with the parent, owns at least one share of the class; and

(b) no more than 30% of the issued and outstanding shares of the class are owned by one or more persons resident in Canada that do not deal at arm’s length with the parent.

“dividend time”, in respect of an investment, means

(a) if the CRIC is controlled by the parent at the investment time, the investment time; or

(b) in any other case, the earlier of

(i) the first time, after the investment time, at which the CRIC is controlled by the parent, and

(ii) the day that is one year after the day that includes the investment time.

“qualifying substitute corporation”, at any time in respect of a CRIC, means a corporation resident in Canada

(a) that is, at that time, controlled by the parent or by a non-resident corporation that does not deal at arm’s length with the parent;

(b) that has, at that time, an equity percent-age (as defined in subsection 95(4)) in the CRIC; and

(c) shares of the capital stock of which are, at that time, owned by the parent or another non-resident corporation with which the parent does not, at that time, deal at arm’s length.

(4) Section 212.3 of the Act is amended by adding the following after subsection (5):

(5.1) In the case of an investment (in this subsection referred to as the “second investment”) in a subject corporation by a CRIC described in paragraph (10)(f), the total referred to in paragraph (2)(a) in respect of the second investment is to be reduced by the total referred to in paragraph (2)(a) in respect of a prior investment (in this subsection referred to as the “first investment”) in the subject corporation by another corporation resident in Canada if

(a) the first investment is an investment that is described in paragraph (10)(a) or (b) and to which paragraph (2)(a) applies;

(b) immediately after the investment time in respect of the first investment, the other corporation is not controlled by the parent; and

(c) the other corporation becomes, after the time that is immediately after the investment time in respect of the first investment and as part of a transaction or event or series of transactions or events that includes the making of the first investment, controlled by the parent because of the second investment.

(5) Subsection 212.3(6) of the Act is repealed.

(6) Section 212.3 of the Act is amended by adding the following before subsection (7):

(6) A particular class of shares of the capital stock of a CRIC or a qualifying substitute corporation that, in the absence of this subsection, would be a cross-border class in respect of an investment is deemed not to be a cross-border class in respect of the investment if

(a) a particular corporation resident in Canada that does not deal at arm’s length with the parent

(i) acquires shares of the particular class (or shares that are substituted for those shares) as part of a transaction or event or series of transactions or events that includes the investment, or

(ii) owns shares of the particular class (or shares that are substituted for those shares) and, as part of a transaction or event or series of transactions or events that includes the investment,

(A) the paid-up capital in respect of the particular class is increased otherwise than as a result of an acquisition described in subparagraph (i), and

(B) the increase in paid-up capital in respect of the particular class can reasonably be considered to be connected to funding provided to the particular corporation or another corporation resident in Canada (other than the corporation that issued the particular class) by the parent or a non-resident person that does not deal at arm’s length with the parent, unless

(I) the funding results in an increase, equal to the amount funded, in the paid-up capital of shares of a class of the capital stock of the particular corporation, or the other corporation, that is a cross-border class in respect of the investment, and

(II) the increase referred to in subclause (I) occurred at or before the time of the increase to the paid-up capital in respect of the particular class; and

(b) it can reasonably be considered that one of the main reasons for the acquisition or for the funding, as the case may be, was to increase the amount of a deduction required under paragraph (7)(b) or (c) in computing the paid-up capital in respect of shares of the particular class held by the particular corporation.

(7) Subsection 212.3(7) of the Act is replaced by the following:

(7) If paragraph (2)(a) applies to an investment in a subject corporation made by a CRIC,

(a) where the CRIC demonstrates — in respect of one or more classes of shares of the capital stock of the CRIC, or of a qualifying substitute corporation, all the issued and outstanding shares of which are owned, immediately after the dividend time in respect of the investment, by persons that deal at arm’s length with the CRIC — that an amount of paid-up capital in respect of each of the classes arose as a consequence of one or more transfers of property, directly or indirectly, to the CRIC and that all of the property transferred was used by the CRIC to make, in whole or in part, the investment (or, in the case of an investment described in paragraph (10)(f), the direct acquisition referred to in that paragraph), then

(i) the amount, determined without reference to this subsection, of the dividend deemed under paragraph (2)(a) to have been paid and received, is reduced by the lesser of

(A) that amount, and

(B) the total of all amounts of paid-up capital so demonstrated by the CRIC, and

(ii) in computing the paid-up capital in respect of each class described in this paragraph, at any time after the dividend time, there is to be deducted an amount equal to the portion of the amount determined under subparagraph (i) that can reasonably be considered to relate to that class;

(b) where the amount, determined without reference to this paragraph, of the dividend deemed under paragraph (2)(a) to have been paid and received is equal to or greater than the total of all amounts each of which is an amount of paid-up capital immediately after the dividend time, determined without reference to this paragraph, of a cross-border class in respect of the investment, then

(i) the amount of the dividend is reduced by the total referred to in this paragraph, and

(ii) in computing, at any time after the dividend time, the paid-up capital in respect of each cross-border class in respect of the investment, there is to be deducted an amount equal to the paid-up capital in respect of that class immediately after the dividend time, determined without reference to this paragraph;

(c) where paragraph (b) does not apply and there is at least one cross-border class in respect of the investment,

(i) the amount, determined without reference to this paragraph, of the dividend is reduced to nil,

(ii) in computing, at any time after the dividend time, the paid-up capital in respect of a particular cross-border class in respect of the investment, there is to be deducted the amount, if any, that when added to the total of all amounts that are deducted under this paragraph in computing the paid-up capital of other cross-border classes, results in the greatest total reduction because of this paragraph, immediately after the dividend time, of the paid-up capital in respect of shares of cross-border classes that are owned by the parent or another non-resident corporation with which the parent does not, at the dividend time, deal at arm’s length,

(iii) if the proportion of the shares of a particular class owned, in aggregate, by the parent and non-resident corporations that do not deal at arm’s length with the parent is equal to the proportion so owned of one or more other cross-border classes (in this subparagraph all those classes, together with the particular class, referred to as the “relevant classes”), then the proportion that the reduction under subparagraph (ii) to the paid-up capital in respect of the particular class is of the paid-up capital, determined immediately after the dividend time and without reference to this paragraph, in respect of that class is to be equal to the proportion that the total reduction under subparagraph (ii) to the paid-up capital in respect of all the relevant classes is of the total paid-up capital, determined immediately after the dividend time and without reference to this paragraph, of all the relevant classes, and

(iv) the total of all amounts each of which is an amount to be deducted under subparagraph (ii) in computing the paid-up capital of a cross-border class is to be equal to the amount by which the dividend is reduced under subparagraph (i); and

(d) if the amount of the dividend is reduced because of any of subparagraphs (a)(i), (b)(i) and (c)(i),

(i) the CRIC shall file with the Minister in prescribed manner a form containing prescribed information and the amounts of the paid-up capital, determined immediately after the dividend time and without reference to this subsection, of each class of shares that is described in paragraph (a) or that is a cross-border class in respect of the investment, the paid-up capital of the shares of each of those classes that are owned by the parent or another non-resident corporation that does not, at the dividend time, deal at arm’s length with the parent, and the reduction under any of subparagraphs (a)(ii), (b)(ii) and (c)(ii) in respect of each of those classes, and

(ii) if the form is not filed on or before the CRIC’s filing-due date for its taxation year that includes the dividend time, the CRIC is deemed to have paid to the parent, and the parent is deemed to have received from the CRIC, on the filing-due date, a dividend equal to the total of all amounts each of which is the amount of a reduction because of any of subparagraphs (a)(i), (b)(i) and (c)(i).

(8) Subparagraph 212.3(8)(a)(ii) of the Act is replaced by the following:

(ii) the total that would be determined under subparagraph (i) if this Act were read without reference to paragraph (2)(b) and subsections (7) and (9), and

(9) Subparagraph 212.3(8)(b)(i) of the Act is replaced by the following:

(i) the total of all amounts required by paragraph (2)(b) or subsection (7) to be deducted in computing the paid-up capital in respect of the class before that time

(10) Subsection 212.3(9) of the Act is replaced by the following:

(9) If, in respect of an investment in a subject corporation made by a CRIC that is described in any of paragraphs (10)(a) to (f), an amount is deducted under paragraph (2)(b) or subsection (7) in computing the paid-up capital in respect of a class of shares of the capital stock of a particular corporation and, at a time subsequent to the investment time, there is a reduction of paid-up capital referred to in subparagraph (b)(i) or a receipt of property referred to in the description of A in subparagraph (b)(ii), then the paid-up capital in respect of the class is to be increased, immediately before the subsequent time, by the lesser of

(a) the amount, if any, by which

(i) the total of all amounts deducted, before the subsequent time, under paragraph (2)(b) or subsection (7), in respect of the investment, in computing the paid-up capital in respect of the class

exceeds

(ii) the total of all amounts added under this subsection, in respect of the investment, to the paid-up capital in respect of the class before the time that is immediately before the subsequent time, and

(b) an amount that

(i) if the investment is described in paragraph (10)(a), (b) or (f), the paid-up capital in respect of the class is reduced at the subsequent time as part of or because of a distribution of property by the particular corporation and the property (in this paragraph referred to as the “distributed shares”) is shares of the capital stock of the subject corporation or shares of the capital stock of a foreign affiliate of the particular corporation that were substituted for shares of the capital stock of the subject corporation, is equal to the amount determined by the formula

A/B

where

A      is

(A) if the investment is described in paragraph (10)(b), the portion of the fair market value, immediately before the subsequent time, of the distributed shares that can reasonably be considered to relate to the contribution of capital that is the investment, and

(B) if the investment is described in paragraph (10)(a) or (f), the lesser of

(I) the portion of the fair market value, immediately before the subsequent time, of the distributed shares that can reasonably be considered to relate to the shares (in this paragraph referred to as the “acquired shares”) of the capital stock of the subject corporation that were acquired on the investment (other than any portion described in clause (A)), and

(II) the proportion of the amount determined under subparagraph (a)(i) that the amount determined under subclause (I) is of the fair market value, immediately before the subsequent time, of the acquired shares, or the portion of the fair market value of shares that were substituted for the acquired shares that can reasonably be considered to relate to the acquired shares, and

B      is

(A) if the particular corporation is, immediately after the dividend time, a qualifying substitute corporation in respect of the CRIC, the particular corporation’s equity percentage (as defined in subsection 95(4)) in the CRIC immediately after the dividend time, and

(B) in any other case, 100%, and

(ii) in any other case, is equal to the amount determined by the formula

A × B/C

where

A      is the amount that is equal to the fair market value of property that the particular corporation demonstrates has been received at the subsequent time by it or by a corporation resident in Canada that was not dealing at arm’s length with the particular corporation at that time (in this subparagraph referred to as the “recipient corporation”)

(A) as proceeds from the disposition of the acquired shares, or other shares to the extent that the proceeds from the disposition of those other shares can reasonably be considered to relate to the acquired shares or to shares of the capital stock of the subject corporation in respect of which an investment described in paragraph (10)(b) was made, other than

(I) the fair market value of shares of the capital stock of another foreign affiliate of the taxpayer acquired by the recipient corporation as consideration for the disposition and as an investment to which subsection (16) or (18) applies, and

(II) proceeds from a disposition of shares to a corporation resi-dent in Canada for which the acquisition of the shares is an investment to which subsection (16) or (18) applies,

(B) as a reduction of paid-up capital or dividend in respect of a class of shares of the capital stock of the subject corporation or the portion, of a reduction of paid-up capital or dividend in respect of a class of shares of the capital stock of a foreign affiliate of the particular corporation that were substituted for shares of the capital stock of the subject corporation, that can reasonably be considered to relate to the subject shares, or

(C) if the investment is described in paragraph (10)(c) or (d) or subparagraph (10)(e)(i),

(I) as a repayment of or as proceeds from the disposition of the debt obligation or amount owing, other than

1. if the debt obligation or amount owing was acquired by another foreign affiliate of the taxpayer, the portion of the fair market value of property received by the particular corporation as a result of an investment by the particular corporation that is described in paragraphs (10)(a) to (f) to which subsection (16) or (18) applies, or

2. as proceeds from a disposition to a corporation resident in Canada and that is affiliated with the particular corporation, and where subsection (16) or (18) applies to the other corporation in respect of its acquisition, or

(II) as interest on the debt obligation or amount owing,

B      is the amount determined under paragraph (a) in respect of the class, and

C      is the total of all amounts each of which is an amount determined under paragraph (a) in respect of all classes of shares of the capital stock of the particular corporation or of any corporation that does not deal at arm’s length with the particular corporation.

(9.1) For the purposes of subsection (9), if at any time a debt obligation that relates to a particular investment described in paragraph (10)(c) or (d) or subparagraph (10)(e)(i) is exchanged for shares of a subject corporation and as part of the exchange there is an acquisition of shares described in subparagraph (18)(b)(i) or paragraph 18(d), then all amounts, in respect of the particular investment, deducted under paragraph (2)(b) or subsection (7) from, or added under subsection (9) to, the paid-up capital in respect of a class of shares before that time are deemed to have been deducted or added, as the case may be, in respect of the acquisition of the shares and not the particular investment.

(9.2) If at any particular time shares (in this subsection referred to as the “new shares”) of a class of the capital stock of a corporation resident in Canada are acquired, in a transaction to which any of sections 51, 85, 85.1, 86 and 87 apply, in exchange for a share (in this subsection referred to as the “old share”) of a class of the capital stock of a particular corporation that is either the corporation or another corporation resident in Canada, then for the purposes of subsections (8) and (9),

(a) if the corporation that issues the new shares is not the particular corporation, it is deemed to be the same corporation as, and a continuation of, the particular corporation;

(b) the new shares are deemed to be the same share, and of the same class of the capital stock of the particular corporation, as the old share; and

(c) if the old share remains outstanding after the exchange, it is deemed to be a share of a different class of the capital stock of the particular corporation.

(11) Paragraph 212.3(10)(c) of the Act is amended by striking out “or” at the end of subparagraph (i), by adding “or” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(iii) because a dividend has been declared, but not yet paid, by the subject corporation;

(12) Subsection 212.3(15) of the Act is replaced by the following:

(15) For the purposes of this section and paragraph 128.1(1)(c.3),

(a) a CRIC or a taxpayer to which paragraph 128.1(1)(c.3) applies (in this paragraph referred to as the “specific corporation”), that would, in the absence of this subsection, be controlled at any time

(i) by more than one non-resident corporation is deemed not to be controlled at that time by any such non-resident that controls at that time another non-resident corporation that controls at that time the specific corporation, unless the application of this paragraph would otherwise result in no non-resident corporation controlling the specific corporation, and

(ii) by a particular non-resident corporation is deemed not to be controlled at that time by the particular corporation if the particular corporation is controlled at that time by another corporation that is at that time

(A) resident in Canada, and

(B) not controlled by any non-resident person; and

(b) if at any time a corporation would not, in the absence of this subsection, be controlled by any non-resident corporation, and a related group (determined without reference to paragraph 251(5)(b)), each member of which is a non-resident corporation, is in a position to control the corporation, the corporation is deemed to be controlled at that time by

(i) the member of the group that has the greatest direct equity percentage (within the meaning assigned by subsection 95(4)) in the corporation at that time, or

(ii) where no member of the group has a direct equity percentage in the corporation that is greater than that of every other member, the member determined by the corporation or, if the corporation does not make a determination, by the Minister.

(13) The portion of paragraph 212.3(16)(b) of the Act before subparagraph (i) is replaced by the following:

(b) officers of the CRIC, or of a corporation resident in Canada that did not, at the investment time, deal at arm’s length with the CRIC, had and exercised the principal decision-making authority in respect of the making of the investment and a majority of those officers were, at the investment time, persons each of whom was resident, and working principally,

(14) Paragraph 212.3(16)(c) of the Act is replaced by the following:

(c) at the investment time, it is reasonably expected that

(i) officers of the CRIC, or of a corporation resident in Canada that does not deal at arm’s length with the CRIC, will have and exercise the ongoing principal decision-making authority in respect of the investment,

(ii) a majority of those officers will be persons each of whom will be resident, and working principally, in Canada or in a country in which a connected affiliate is resident, and

(iii) the performance evaluation and compensation of the officers of the CRIC, or of the corporation resident in Canada that does not deal at arm’s length with the CRIC, who are resident, and work principally, in Canada, or in a country in which a connected affiliate is resident, will be based on the results of operations of the subject corporation to a greater extent than will be the performance evaluation and compensation of any officer of a non-resident corporation (other than the subject corporation, a corporation controlled by the subject corporation or a connected affiliate) that does not deal at arm’s length with the CRIC.

(15) Subsection 212.3(17) of the Act is replaced by the following:

(17) For the purposes of paragraphs (16)(b) and (c), any person who is an officer of the CRIC, or of a corporation resident in Canada that does not deal at arm’s length with the CRIC, and of a non-resident corporation that does not, at the investment time, deal at arm’s length with the CRIC (other than the subject corporation, a subject subsidiary corporation or a connected affiliate) is deemed to not be resident, and to not work principally, in a country in which a connected affiliate is resident.

(16) The portion of subsection 212.3(18) of the Act before paragraph (b) is replaced by the following:

(18) Subject to subsections (18.1) to (20), subsection (2) does not apply to an investment in a subject corporation made by a CRIC if

(a) the investment is described in paragraph (10)(a) or (d) and is an acquisition of shares of the capital stock, or a debt obligation, of the subject corporation

(i) from a corporation resident in Canada (in this paragraph referred to as the “disposing corporation”) to which the CRIC is, immediately before the investment time, related (determined without reference to paragraph 251(5)(b)), and

(A) each shareholder of the disposing corporation immediately before the investment time is

(I) either the CRIC or a corporation resident in Canada that is, immediately before the investment time, related to the parent, and

(II) at no time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent, or

(B) the disposing corporation is, at no time that is in the period and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent, or

(ii) on an amalgamation described in subsection 87(1) of two or more corporations (each of which is in this subparagraph referred to as a “predecessor corporation”) to form the CRIC if

(A) all of the predecessor corporations are, immediately before the amalgam-ation, related to each other (determined without reference to paragraph 251(5)(b)), and

(B) either

(I) none of the predecessor corporations are, at any time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent, or

(II) if the condition in subclause (I) is not satisfied in respect of a predecessor corporation, each shareholder of that predecessor immediately before the investment time is

1. either the CRIC or a corporation resident in Canada that is, immediately before the investment time, related to the parent, and

2. at no time that is in the period and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent;

(17) Paragraph 212.3(18)(b) is amended by striking out “or” at the end of subparagraph (vi), by adding “or” at the end of subparagraph (vii) and by adding the following after subparagraph (vii):

(viii) as a result of a disposition of the shares by the CRIC to a partnership and to which subsection 97(2) applies;

(18) Paragraph 212.3(18)(c) of the Act is replaced by the following:

(c) the investment is an indirect acquisition referred to in paragraph (10)(f) that results from a direct acquisition of shares of the capital stock of another corporation resident in Canada

(i) from a corporation (in this paragraph referred to as the “disposing corporation”) to which the CRIC is, immediately before the investment time, related (determined without reference to paragraph 251(5)(b)), and

(A) each shareholder of the disposing corporation immediately before the investment time is

(I) either the CRIC or a corporation resident in Canada that, immediately before the investment time, is related to the parent, and

(II) at no time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent, or

(B) the disposing corporation is, at no time that is in the period and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent,

(ii) on an amalgamation described in subsection 87(1) of two or more corporations (each of which is in this subparagraph referred to as a “predecessor corporation”) to form the CRIC, or a corporation of which the CRIC is a shareholder, if

(A) all of the predecessor corporations are, immediately before the amalgam-ation, related to each other (determined without reference to paragraph 251(5)(b)), and

(B) either

(I) none of the predecessor corporations are, at any time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent, or

(II) if the condition in subclause (I) is not satisfied in respect of a predecessor corporation, each shareholder of that predecessor immediately before the investment time is

1. either the CRIC or a corporation resident in Canada that, immediately before the investment time, is related to the parent, and

2. at no time that is in the period and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the parent or a non-resident corporation that participates in the series and is, at any time that is in the period and that is before the investment time, related to the parent,

(iii) in an exchange to which subsection 51(1) applies,

(iv) in the course of a reorganization of the capital of the other corporation to which subsection 86(1) applies,

(v) to the extent that an investment (other than one described in paragraph (10)(f)) is made in the subject corporation by the other corporation, or by a particular corporation resident in Canada to which the CRIC and the other corporation are related at the investment time, using property transferred, directly or indirectly, by the CRIC to the other corporation or the particular corporation, as the case may be, if the two investments

(A) occur within 90 days of each other, and

(B) are part of the same series of transactions or events, or

(vi) as a result of a disposition of the shares by the CRIC to a partnership and to which subsection 97(2) applies; or

(19) Paragraph 212.3(18)(d) of the Act is replaced by the following:

(d) the investment is an acquisition of shares of the capital stock of the subject corporation that is described in paragraph (10)(a), or an indirect acquisition referred to in paragraph (10)(f) that results from a direct acquisition of shares of the capital stock of another corporation resident in Canada, if

(i) the shares are acquired by the CRIC in exchange for a bond, debenture or note, and

(ii) subsection 51(1) would apply to the exchange if the terms of the bond, debenture or note conferred on the holder the right to make the exchange.

(20) Section 212.3 of the Act is amended by adding the following after subsection (18):

(18.1) Subsection (18) does not apply to an investment that is an acquisition of property if the property can reasonably be considered to have been received by the CRIC as repayment in whole or in part, or in settlement, of a pertinent loan or indebtedness.

(21) The portion of subsection 212.3(19) of the Act before paragraph (a) is replaced by the following:

(19) Subparagraph (1)(b)(ii) applies, and subsection (16) and paragraphs (18)(b) and (d) do not apply, to an acquisition of shares of the capital stock of a subject corporation by a CRIC if, having regard to all the terms and conditions of the shares and any agreement in respect of the shares, the shares cannot reasonably be considered to fully participate in the profits of the subject corporation and any appreciation in the value of the subject corporation, unless the subject corporation would be a subsidiary wholly-owned corporation of the CRIC throughout the period during which the series of transactions or events that includes the acquisition occurs if the CRIC owned all of the shares of the capital stock of the subject corporation that are owned by any of

(22) Paragraph 212.3(22)(a) of the Act is amended by striking out “and” at the end of subparagraph (i) and by adding the following after subparagraph (ii):

(iii) each shareholder of the new corporation is deemed not to acquire indirectly any shares as a result of the amalgamation; and

(23) Subsection 212.3(23) of the Act is replaced by the following:

(23) Subsection (2) applies to an investment in a subject corporation made by a CRIC to which, in the absence of this subsection, subsection (2) would not apply because of subsection (16) or (24), to the extent that one or more properties received by the subject corporation from the CRIC as a result of the investment, or property substituted for any such property, may reasonably be considered to have been used by the subject corporation, directly or indirectly as part of a series of transactions or events that includes the making of the investment, in a transaction or event to which subsection (2) would have applied if the CRIC had entered into the transaction, or participated in the event, as the case may be, instead of the subject corporation.

(24) Paragraphs 212.3(24)(a) to (c) of the Act are replaced by the following:

(a) all the properties received by the subject corporation from the CRIC as a result of the investment were used, at a particular time that is within 30 days after the investment time and at all times after the particular time, by the subject corporation

(i) to derive income from activities that can reasonably be considered to be directly related to active business activities carried on by a particular corporation and all of the income is income from an active business because of subparagraph 95(2)(a)(i), or

(ii) to make a loan or acquire a property, all or substantially all of the income from which is, or would be, if there were income from the loan or property, derived from amounts paid or payable, directly or indirectly, to the subject corporation by a particular corporation and is, or would be, income from an active business because of subparagraph 95(2)(a)(ii);

(b) the particular corporation was, at the particular time, a controlled foreign affiliate of the CRIC for the purposes of section 17; and

(c) the particular corporation is, throughout the period that begins at the investment time and during which the series of transactions or events that includes the activities of, or the making of the loan or acquisition of property by, the subject corporation occurs, a corporation in which an investment made by the CRIC would not be subject to subsection (2) because of subsection (16).

(25) Subject to subsections (26) and (27), subsections (1) to (5), (7) to (18) and (21) to (24) apply in respect of transactions and events that occur after March 28, 2012, except that

(a) an election referred to in subsection 212.3(3) of the Act, as enacted by subsection (3), is deemed to have been filed on a timely basis if the election is filed on or before the filing-due date of the electing CRIC for its taxation year that includes the day on which this Act receives royal assent;

(b) in respect of transactions and events that occur before August 29, 2014, subsection 212.3(4) of the Act, as enacted by subsection (3), is to be read without reference to paragraph (b) of the definition “cross-border class”;

(c) a form referred to in paragraph 212.3(7)(d) of the Act, as enacted by subsection (7), is deemed to have been filed by the CRIC referred to in that paragraph on a timely basis if the form is filed on or before the day that is the later of the CRIC’s filing-due date for its taxation year that includes the day on which this Act receives royal assent and one year after the day on which this Act receives royal assent;

(d) in respect of transactions and events that occur before August 29, 2014, the reference to “on the filing-due date” in subparagraph 212.3(7)(d)(ii), as enacted by subsection (7), is to be read as a reference to the time that is the later of the filing-due date for the CRIC’s taxation year that includes the day on which this Act receives royal assent and one year after the day on which this Act receives royal assent;

(e) in respect of transactions and events that occur before August 16, 2013

(i) subparagraph 212.3(9)(b)(ii) of the Act, as enacted by subsection (10), is to be read without reference to subclause (A)(I) in the description of A,

(ii) subsection 212.3(15) of the Act, as enacted by subsection (12), is to be read without reference to paragraph (b), and

(iii) the portion of subsection 212.3(18) of the Act before paragraph (a), as enacted by subsection (16), is to be read as follows:

(18) Subject to subsections (19) and (20), subsection (2) does not apply to an investment in a subject corporation made by a CRIC if

(f) in respect of transactions and events that occur before August 29, 2014

(i) clause 212.3(18)(a)(i)(B) of the Act, as enacted by subsection (16), is to be read as follows:

(B) the disposing corporation is, at no time that is in the period and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the CRIC, or

(ii) subclause 212.3(18)(a)(ii)(B)(I) of the Act, as enacted by subsection (16), is to be read as follows:

(I) none of the predecessor corporations deal at arm’s length (determined without reference to paragraph 251(5)(b)) with another predecessor corporation at any time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, or

(iii) clause 212.3(18)(c)(i)(B) of the Act, as enacted by subsection (18), is to be read as follows:

(B) the disposing corporation is, at no time that is in the period and that is before the investment time, dealing at arm’s length (determined without reference to paragraph 251(5)(b)) with the CRIC,

(iv) subclause 212.3(18)(c)(ii)(B)(I) of the Act, as enacted by subsection (18), is to be read as follows:

(I) none of the predecessor corporations deal at arm’s length (determined without reference to paragraph 251(5)(b)) with another predecessor corporation at any time that is in the period during which the series of transactions or events that includes the making of the investment occurs and that is before the investment time, or

(26) If an election is made under subsection 49(3) of the Jobs and Growth Act, 2012, section 212.3 of the Income Tax Act applies in the manner set out in that subsection in respect of transactions and events that occur after March 28, 2012 and before August 14, 2012.

(27) If a taxpayer elects in writing under this subsection and files the election with the Minister of National Revenue on or before the day that is the later of the taxpayer’s filing-due date for its taxation year that includes the day on which this Act receives royal assent and the day that is one year after the day on which this Act receives royal assent, then, in respect of transactions and events that occur before August 16, 2013, subsection 212.3(9) of the Act, as enacted by subsection (10), is to be read as follows:

(9) If, in respect of an investment in a subject corporation made by a CRIC that is described in any of paragraphs (10)(a) to (f), an amount is required by paragraph (2)(b) or subsection (7) to be deducted in computing the paid-up capital in respect of a class of shares of the capital stock of a particular corporation, and the paid-up capital in respect of the class is reduced at a time subsequent to the investment time, then the paid-up capital in respect of the class is to be increased, immediately before the subsequent time, by the least of

(a) the amount by which the paid-up capital of the class is reduced at the subsequent time,

(b) the amount, if any, by which

(i) the total of all amounts each of which is required, before the subsequent time, by paragraph (2)(b) or subsection (7) to be deducted, in respect of the investment, in computing the paid-up capital in respect of the class

exceeds

(ii) the total of all amounts required under this subsection to be added, in respect of the investment, to the paid-up capital of the class before the subsequent time, and

(c) an amount that

(i) if the paid-up capital of the class is reduced at the subsequent time as part of or because of a distribution of property by the particular corporation and the property is shares of the capital stock of the subject corporation (in this paragraph referred to as the “subject shares”) or shares of the capital stock of a foreign affiliate of the particular corporation that were substituted for the subject shares, is equal to the fair market value of the subject shares, or the portion of the fair market value of the substituted shares that may reasonably be considered to relate to the subject shares, as the case may be, at the subsequent time,

(ii) is equal to the fair market value of property that the particular corporation demonstrates it has received directly or indirectly after the investment time and no more than 180 days before the subsequent time

(A) as proceeds from the disposition of the subject shares, or as the portion of the proceeds from the disposition of the substituted shares that may reasonably be considered to relate to the subject shares,

(B) as a dividend or qualifying return of capital, within the meaning assigned by subsection 90(3), in respect of a class of subject shares, or the portion of a dividend or reduction of paid-up capital in respect of a class of substituted shares that may reasonably be considered to relate to the subject shares, or

(C) if the investment is described in paragraph (10)(c) or (d) or subparagraph (10)(e)(i),

(I) as a repayment of or as proceeds from the disposition of the debt obligation, or amount owing, in connection with the investment, or

(II) as interest on the debt obligation or amount owing, or

(iii) if neither subparagraph (i) nor (ii) applies, is equal to nil.

(28) Subsection (6) applies in respect of transactions and events that occur after August 28, 2014.

(29) Subsections (19) and (20) apply in respect of transactions and events that occur after August 15, 2013.

66. (1) Paragraph 219.1(3)(b) of the Act is replaced by the following:

(b) an amount is required by paragraph 212.3(2)(b) or subsection 212.3(7) to be deducted in computing the paid-up capital in respect of a class of shares of the capital stock of the corporation because of an investment in a subject corporation made by a CRIC that is described in any of paragraphs 212.3(10)(a) to (f);

(2) Paragraph 219.1(4)(a) of the Act is replaced by the following:

(a) the total of all amounts each of which is an amount by which the paid-up capital of a class of shares of the capital stock of the corporation was required by paragraph 212.3(2)(b) or subsection 212.3(7) to be reduced in respect of an investment in a subject corporation made by the CRIC that is described in any of paragraphs 212.3(10)(a) to (f), and

(3) Paragraph 219.1(4)(b) of the Act is amended by striking out “or” at the end of subparagraph (i), by adding “or” at the end of subparagraph (ii) and by adding the following after subparagraph (ii):

(iii) the fair market value of a debt obligation, other than a pertinent loan or indebtedness (as defined in subsection 212.3(11)), of a subject corporation that is owned by the corporation immediately before the emigration time.

(4) Subsections (1) to (3) apply to corporations that cease to be resident in Canada after March 28, 2012.

67. (1) Paragraph 220(4.51)(a) of the Act is replaced by the following:

(a) the total amount of those taxes that would be payable for the year by a trust resident in Canada (other than a graduated rate estate or a qualified disability trust as defined in subsection 122(3)) the taxable income of which for the year is $50,000, and

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

68. (1) Section 227 of the Act is amended by adding the following after subsection (6.1):

(6.2) If, in respect of an investment described in subsection 212.3(10), a corporation is deemed by subparagraph 212.3(7)(d)(ii) to pay a dividend and the corporation subsequently complies with the requirements of subparagraph 212.3(7)(d)(i) in respect of the investment,

(a) subject to paragraph (b), the Minister shall, on written application made on a particular day that is, or is no more than two years after, the day on which the form described in subparagraph 212.3(7)(d)(i) is filed, pay to the corporation an amount equal to the lesser of

(i) the total of all amounts, if any, paid to the Receiver General, on or prior to the particular day, on behalf of a person and in respect of the liability of the person to pay an amount under Part XIII in respect of the dividend, and

(ii) the amount that the person was liable to pay in respect of the dividend under Part XIII;

(b) where the corporation or the person is or is about to become liable to make a payment to Her Majesty in right of Canada, the Minister may apply the amount otherwise payable under paragraph (a) to that liability and notify the corporation, and, if applicable, the person, of that action; and

(c) for the purposes of this Part (other than subparagraph (a)(i)), if the amount described in subparagraph (a)(ii) exceeds the amount described in subparagraph (a)(i), the corporation is deemed to pay that excess to the Receiver General on the day on which the form described in subparagraph 212.3(7)(d)(i) is filed.

(2) Paragraph 227(8.5)(b) of the Act is replaced by the following:

(b) an amount deemed by subparagraph 212.3(7)(d)(ii) or subsection 247(12) to have been paid as a dividend by the corporation.

(3) Subsections (1) and (2) apply in respect of transactions and events that occur after March 28, 2012.

69. (1) Subparagraph 233.4(1)(c)(i) of the Act is replaced by the following:

(i) where the total of all amounts, each of which is a share of the partnership’s income or loss for the period of a member that is not resident in Canada or that is a taxpayer all of whose taxable income for the year in which the period ends is exempt from tax under Part I, is less than 90% of the income or loss of the partnership for the period, and, where the income and loss of the partnership are nil for the period, the income of the partnership for the period is deemed to be $1,000,000 for the purpose of determining a member’s share of the partnership’s income for the purpose of this subparagraph, and

(2) Subsection 233.4(2) of the Act is amended by striking out “and” at the end of paragraph (b), by adding “and” at the end of paragraph (c) and by adding the following after paragraph (c):

(d) if the taxpayer is a member of one or more partnerships described in subparagraph (1)(c)(i) of which a non-resident corporation or trust is a foreign affiliate, and the taxpayer does not have any direct or indirect interest (determined without reference to subsection 93.1(1)) in the non-resident corporation or trust other than through its interest in the partnerships, then the non-resident corporation or trust is deemed not to be a foreign affiliate of the taxpayer.

(3) Subsections (1) and (2) apply in respect of taxation years that end after July 11, 2013.

70. (1) Section 241 of the Act is amended by adding the following after subsection (3.2):

(3.3) The Minister of Canadian Heritage may communicate or otherwise make available to the public, in any manner that that Minister considers appropriate, the following taxpayer information in respect of a Canadian film or video production certificate (as defined under subsection 125.4(1)) that has been issued or revoked:

(a) the title of the production for which the Canadian film or video production certificate was issued;

(b) the name of the taxpayer to whom the Canadian film or video production certificate was issued;

(c) the names of the producers of the production;

(d) the names of the individuals in respect of whom and places in respect of which that Minister has allotted points in respect of the production in accordance with regulations made for the purpose of section 125.4;

(e) the total number of points so allotted; and

(f) any revocation of the Canadian film or video production certificate.

(2) Paragraph 241(4)(d) of the Act is amended by striking out “or” at the end of subparagraph (xiv) and by adding the following after subparagraph (xv):

(xvi) to a person employed or engaged in the service of an office or agency, of the Government of Canada or of a province, whose mandate includes the provision of assistance (as defined in subsection 125.4(1) or 125.5(1)) in respect of film or video productions or film or video production services, solely for the purpose of the administration or enforcement of the program under which the assistance is offered, or

(xvii) to an official of the Canadian Radio-television and Telecommunications Commission, solely for the purpose of the administration or enforcement of a regulatory function of that Commission;

71. (1) Subparagraph (f)(vi) of the definition “disposition” in subsection 248(1) of the Act is replaced by the following:

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

(2) The portion of the definition “international traffic” in subsection 248(1) of the Act before paragraph (a) is replaced by the following:

“international traffic” means, in respect of a person or partnership carrying on the business of transporting passengers or goods, a voyage made in the course of that business if the principal purpose of the voyage is to transport passengers or goods

(3) Paragraph (a) of the definition “per-sonal trust” in subsection 248(1) of the Act is replaced by the following:

(a) a graduated rate estate, or

(4) The portion of paragraph (b) of the definition “personal trust” in subsection 248(1) of the Act before subparagraph (i) is replaced by the following:

(b) a trust in which no beneficial interest was acquired for consideration payable directly or indirectly to

(5) Subparagraph (e)(i) of the definition “taxable Canadian property” in subsection 248(1) of the Act is amended by striking out “and” at the end of clause (A) and by adding the following after clause (B):

(C) partnerships in which the taxpayer or a person referred to in clause (B) holds a membership interest directly or indirectly through one or more partnerships, and

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

“graduated rate estate”, of an individual at any time, means the estate that arose on and as a consequence of the individual’s death if

(a) that time is no more than 36 months after the death,

(b) the estate is at that time a testamentary trust,

(c) the individual’s Social Insurance Number (or if the individual had not, before the death, been assigned a Social Insurance Number, such other information as is acceptable to the Minister) is provided in the estate’s return of income under Part I for the taxation year that includes that time and for each of its earlier taxation years that ended after 2015,

(d) the estate designates itself as the graduated rate estate of the individual in its return of income under Part I for its first taxation year that ends after 2015, and

(e) no other estate designates itself as the graduated rate estate of the individual in a return of income under Part I for a taxation year that ends after 2015;

“international shipping” means the operation of a ship owned or leased by a person or partnership (in this definition referred to as the “operator”) that is used, either directly or as part of a pooling arrangement, primarily in transporting passengers or goods in international traffic — determined as if, except where paragraph (c) of the definition “international traffic” in this subsection applies, any port or other place on the Great Lakes or St. Lawrence River is in Canada — including the chartering of the ship, provided that one or more persons related to the operator (if the operator and each such person is a corporation), or persons or partnerships affiliated with the operator (in any other case), has complete possession, control and command of the ship, and any activity incident to or pertaining to the operation of the ship, but does not include

(a) the offshore storing or processing of goods,

(b) fishing,

(c) laying cable,

(d) salvaging,

(e) towing,

(f) tug-boating,

(g) offshore oil and gas activities (other than the transportation of oil and gas), including exploration and drilling activities,

(h) dredging, or

(i) leasing a ship by a lessor to a lessee that has complete possession, control and command of the ship, unless the lessor or a corporation, trust or partnership affiliated with the lessor has an eligible interest (as defined in subsection 250(6.04)) in the lessee;

(7) The portion of subsection 248(25.1) of the Act before paragraph (a) is replaced by the following:

(25.1) If, at any time, a particular trust transfers property to another trust (other than a trust governed by a registered retirement savings plan or by a registered retirement income fund) in circumstances to which paragraph (f) of the definition “disposition” in subsection (1) applies, without affecting the personal liabilities under this Act of the trustees of either trust or the application of subsection 104(5.8),

(8) Section 248 of the Act is amended by adding the following after subsection (28):

(29) For the purposes of subsection 40(1.1) and sections 70, 73 and 110.6, if at any time a person or partnership carries on a farming business and a fishing business, a property used at that time principally in a combination of the activities of the farming business and the fishing business is deemed to be used at that time principally in the course of carrying on a farming or fishing business.

(9) Subsections (1), (3), (4) and (7) apply to the 2016 and subsequent taxation years.

(10) Subsection (2) and the definition “international shipping” in subsection 248(1) of the Act, as enacted by subsection (6), apply to taxation years that begin after July 12, 2013.

(11) Subsection (5) applies in determining after July 11, 2013 whether a property is taxable Canadian property of a taxpayer.

(12) The definition “graduated rate estate” in subsection 248(1) of the Act, as enacted by subsection (6), comes into force on December 31, 2015.

(13) Subsection (8) applies in respect of property disposed of, or transferred, in the 2014 and subsequent taxation years.

72. (1) Paragraphs 249(1)(b) and (c) of the Act are replaced by the following:

(b) in the case of a graduated rate estate, the period for which the accounts of the estate are made up for purposes of assessment under this Act; and

(c) in any other case, a calendar year.

(2) Section 249 of the Act is amended by adding the following after subsection (4):

(4.1) For a particular trust that is a testamentary trust,

(a) its taxation year that otherwise includes a particular time is deemed to end immediately before the particular time if

(i) the particular trust is an estate and the particular time is the first time after 2015 at which the estate is not a graduated rate estate, or

(ii) the particular trust is not an estate and the particular time is immediately after 2015; and

(b) if the particular trust exists at the particular time,

(i) a new taxation year of the particular trust is deemed to begin at the particular time, and

(ii) for the purpose of determining the particular trust’s fiscal period after the particular time, the particular trust is deemed not to have established a fiscal period before that time.

(3) Subsection 249(5) of the Act is replaced by the following:

(5) The period for which the accounts of a graduated rate estate are made up for the purposes of an assessment under this Act may not exceed 12 months, and no change in the time when that period ends may be made for the purposes of this Act without the concurrence of the Minister.

(4) Subsection 249(6) of the Act is repealed.

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

(6) Subsection (2) comes into force or is deemed to have come into force on December 31, 2015.

(7) Subsection (4) applies to transactions and events that occur after 2015.

73. (1) The portion of paragraph 249.1(1)(b) of the Act before clause (ii)(B) is replaced by the following:

(b) in the case of

(i) an individual (other than an individual to whom section 149 or 149.1 applies or a trust),

(i.1) a trust (other than a mutual fund trust if the fiscal period is one to which paragraph 132.11(1)(c) applies or a graduated rate estate),

(ii) a partnership of which

(A) an individual (other than an individ-ual to whom section 149 or 149.1 applies or a graduated rate estate),

(2) Subparagraph 249.1(4)(c)(ii) of the Act is replaced by the following:

(ii) who is a member of a partnership no member of which is a graduated rate estate,

(3) Paragraph 249.1(4)(d) of the Act is replaced by the following:

(d) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, an election in prescribed form to have paragraph (1)(b) not apply is filed with the Minister by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after 1994.

(4) Clause 249.1(6)(b)(i)(B) of the Act is replaced by the following:

(B) who is a member of a partnership no member of which is a graduated rate estate,

(5) Subparagraph 249.1(6)(b)(ii) of the Act is replaced by the following:

(ii) in the case of an individual who is a member of a partnership a member of which is a graduated rate estate, by the individual on or before the earliest of the filing-due dates of the members of the partnership for a taxation year that includes the first day of the first fiscal period of the business that begins after the beginning of the particular year.

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

74. (1) The portion of subsection 250(6) of the Act before paragraph (c) is replaced by the following:

(6) For the purposes of this Act, a corporation that was incorporated or otherwise formed under the laws of a country other than Canada or of a state, province or other political subdivision of such a country is deemed to be resident in that country throughout a taxation year and not to be resident in Canada at any time in the year, if

(a) the corporation

(i) has international shipping as its principal business in the year, or

(ii) holds eligible interests in one or more eligible entities throughout the year and at no time in the year is the total of the cost amounts to it of all those eligible interests and of all debts owing to it by an eligible entity in which an eligible interest is held by it, by a person related to it or by a partnership affiliated with it less than 50% of the total of the cost amounts to it of all its property;

(b) all or substantially all the corporation’s gross revenue for the year consists of any one or more of

(i) gross revenue from international shipping,

(ii) gross revenue from an eligible interest held by it in an eligible entity, and

(iii) interest on a debt owing by an eligible entity in which an eligible interest is held by it, by a person related to it or by a partnership affiliated with it; and

(2) Section 250 of the Act is amended by adding the following after subsection (6):

(6.01) For the purposes of paragraph (6)(b), an amount of profit allocated from a partnership to a member of the partnership for a taxation year is deemed to be gross revenue of the member from member’s interest in the partnership for the year.

(6.02) Subsection (6.03) applies to a corporation, trust or partnership (in this subsection and subsection (6.03) referred to as the “relevant entity”) for a taxation year if

(a) the relevant entity does not satisfy the condition in subparagraph (6)(a)(i), determined without reference to subsection (6.03);

(b) all or substantially all the gross revenue of the relevant entity for the year consists of any one or more of;

(i) gross revenue from the provision of services to one or more eligible entities, other than services described in any of paragraphs (a) to (h) of the definition “international shipping” in subsection 248(1),

(ii) gross revenue from international shipping,

(iii) gross revenue from an eligible interest held by it in an eligible entity, and

(iv) interest on a debt owing by an eligible entity in which an eligible interest is held by it or a person related to it;

(c) either the relevant entity is a subsidiary wholly-owned corporation (as defined in subsection 87(1.4)) of the eligible entity referred to in paragraph (b) or an eligible interest in each eligible entity referred to in paragraph (b) is held throughout the year by

(i) the relevant entity,

(ii) one or more persons related to the relevant entity (if the relevant entity and each such person is a corporation), or persons or partnerships affiliated with the relevant entity (in any other case), or

(iii) any combination of the relevant entity and persons or partnerships described in subparagraph (ii); and

(d) all or substantially all the shares of the capital stock of, or interests in, the relevant entity are held, directly or indirectly through one or more subsidiary wholly-owned corporations (as defined in subsection 87(1.4)), throughout the year by one or more corporations, trusts or partnerships that would be eligible entities if they did not own shares of, or interests in, the relevant entity.

(6.03) If this subsection applies for a taxation year, then for the purposes of subsection (6) and paragraph 81(1)(c),

(a) the relevant entity is deemed to have international shipping as its principal business in the year; and

(b) the gross revenue described in subparagraph (6.02)(b)(i) is deemed to be gross revenue from international shipping.

(6.04) The following definitions apply in this subsection and subsections (6) to (6.03).

“eligible entity”, for a taxation year, means

(a) a corporation that is deemed by subsection (6) to be resident in a country other than Canada for the year; or

(b) a partnership or trust, if

(i) it satisfies the conditions in subparagraph (6)(a)(i) or (ii), and

(ii) all or substantially all its gross revenue for the year consists of any combination of amounts described in any of subparagraphs (6)(b)(i) to (iii).

“eligible interest” means

(a) in respect of a corporation, shares of the capital stock of the corporation that

(i) give the holders of those shares not less than 25% of the votes that could be cast at an annual meeting of the shareholders of the corporation, and

(ii) have a fair market value that is not less than 25% of the fair market value of all the issued and outstanding shares of the capital stock of the corporation;

(b) in respect of a trust, an interest as a beneficiary (as defined in subsection 108(1)) under the trust with a fair market value that is not less than 25% of the fair market value of all the interests of all beneficiaries under the trust; and

(c) in respect of a partnership, an interest as a member of the partnership with a fair market value that is not less than 25% of the fair market value of all the membership interests in the partnership.

(6.05) For the purpose of determining whether a person or partnership (in this subsection referred to as the “holder”) holds an eligible interest in an eligible entity in subsections (6) to (6.04), the holder is deemed to hold all of the shares or interests, as the case may be, in the eligible entity held by

(a) the holder;

(b) if the holder is a corporation,

(i) each corporation related to the holder, and

(ii) each person, other than a corporation, or partnership that is affiliated with the holder; and

(c) if the holder is not a corporation, each person or partnership affiliated with the holder.

(3) Subsections (1) and (2) apply to taxation years that begin after July 12, 2013.

75. (1) Subsection 251.2(1) of the Act is amended by adding the following in alphabetical order:

“fixed interest”, at any time of a person in a trust, means an interest of the person as a beneficiary (in this definition, determined without reference to subsection 248(25)) under the trust provided that no amount of the income or capital of the trust to be distributed at any time in respect of any interest in the trust depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, other than a power in respect of which it is reasonable to conclude that

(a) the power is consistent with normal commercial practice;

(b) the power is consistent with terms that would be acceptable to the beneficiaries under the trust if the beneficiaries were dealing with each other at arm’s length; and

(c) the exercise of, or failure to exercise, the power will not materially affect the value of an interest as a beneficiary under the trust relative to the value of other such interests under the trust.

“investment fund”, at any time, means a trust that

(a) is at that time a portfolio investment fund; and

(b) is, at all times throughout the period that begins at the later of March 21, 2013 and the time of its creation and that ends at that time,

(i) a mutual fund trust, or

(ii) a trust

(A) that would be a mutual fund trust if section 4801 of the Income Tax Regulations were read without reference to its paragraph (b), and

(B) if the only beneficiaries who may for any reason receive directly from the trust any of the income or capital of the trust are beneficiaries whose interests as beneficiaries under the trust are fixed interests.

“portfolio investment fund”, at any time, means an entity that at that time would be a portfolio investment entity as defined in subsection 122.1(1) if

(a) the references to “subject entity” in paragraph (a) of the definition “non-portfolio property” in subsection 122.1(1) were read as references to “entity”;

(b) the definition “Canadian real, immovable or resource property” in subsection 248(1) were read as though

(i) its paragraph (a) were read without reference to “situated in Canada”,

(ii) its paragraph (b) were read as “a Canadian resource property or a foreign resource property”, and

(iii) “timber resource property” in paragraph (c) were defined as extending to rights in respect of property outside Canada; and

(c) paragraph (c) of the definition “non-portfolio property” in subsection 122.1(1) were read without reference to “in Canada”.

(2) Subsection 251.2(3) of the Act is amended by striking out “or” at the end of paragraph (d), by adding “or” at the end of paragraph (e) and by adding the following after paragraph (e):

(f) the acquisition of equity of the particular trust by a person or group of persons if

(i) immediately before the acquisition, the particular trust is an investment fund, and

(ii) the acquisition is not part of a series of transactions or events that includes the particular trust becoming a portfolio investment fund, or ceasing to be an investment fund.

(3) Section 251.2 of the Act is amended by adding the following after subsection (6):

(7) If a trust is subject to a loss restriction event in a taxation year, subsection 249(4) does not apply to end the year for the purpose of this subsection or to determine the end of that year in applying subsection 132(6.1), paragraph 150(1)(c), paragraph (a) of the definition “balance-due day” in subsection 248(1) and subsection 204(2) of the Income Tax Regulations to the trust in respect of the year.

(4) Subsections (1) to (3) are deemed to have come into force on March 21, 2013, except that if a trust elects in writing and files the election with the Minister of National Revenue on or before the trust’s filing-due date for its last taxation year that ends before January 1, 2015, then those subsections are deemed to have come into force in respect of that trust on January 1, 2014.

76. (1) Subparagraphs 256(1.2)(f)(i) to (iii) of the Act are replaced by the following:

(ii) where a beneficiary’s share of the accumulating income or capital therefrom depends on the exercise by any person of, or the failure by any person to exercise, any discretionary power, those shares are deemed to be owned at that time by the beneficiary,

(iii) in any case where subparagraph (ii) does not apply, a beneficiary is deemed at that time to own the proportion of those shares that the fair market value of the beneficial interest in the trust of the beneficiary is of the fair market value of all beneficial interests in the trust, and

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

77. (1) Paragraph 261(3)(b) of the Act is replaced by the following:

(b) the taxpayer has elected that subsection (5) apply to the taxpayer and has filed that election with the Minister in prescribed form and manner on or before the day that is 60 days after the first day of the particular taxation year;

(2) Subparagraph 261(6)(a)(iii) of the Act is replaced by the following:

(iii) begins on or after the first day of the particular taxpayer’s first functional currency year;

(3) Clause 261(6.1)(a)(i)(C) of the Act is replaced by the following:

(C) begins on or after the first day of the particular taxpayer’s first functional currency year,

(4) Clause 261(11)(b)(i)(A) of the Act is replaced by the following:

(A) the total of the taxes payable by the taxpayer under Parts I, VI, VI.1 and XIII.1 for the particular taxation year, as determined in the taxpayer’s elected functional currency

(5) The portion of paragraph 261(11)(c) of the Act before subparagraph (i) is replaced by the following:

(c) for the purposes of determining any amount (other than tax) that is payable by the taxpayer under Part I, VI, VI.1 or XIII.1 for the particular taxation year, the taxpayer’s tax payable under the Part for the particular taxation year is deemed to be equal to the total of

(6) Paragraph 261(11)(d) of the Act is replaced by the following:

(d) amounts of tax that are payable under this Act (except under Parts I, VI, VI.1 and XIII.1) by the taxpayer for the particular taxation year are to be determined by converting those amounts, as determined in the taxpayer’s elected functional currency, to Canadian currency using the relevant spot rate for the day on which those amounts are due;

(7) Section 261 of the Act is amended by adding the following after subsection (17):

(17.1) Notwithstanding subsection (3), if each predecessor corporation in respect of an amalgamation (within the meaning assigned by subsection 87(1)) has the same elected functional currency for its last taxation year, then, unless a predecessor corporation has filed a notice of revocation under subsection (4) on or before the day that is six months before the end of its last taxation year,

(a) the new corporation formed as a result of the amalgamation is deemed to have made an election under paragraph (3)(b) and to have filed that election on the first day of its first taxation year; and

(b) that elected functional currency is deemed to be the new corporation’s functional currency for its first taxation year.

(8) Subsections (1) to (3) apply to taxation years that begin after July 12, 2013.

(9) Subsections (4) to (6) apply to taxation years that begin after December 13, 2007.

(10) Subsection (7) applies in respect of amalgamations that occur after July 12, 2013.