where
	A is the amount that would, if this Act were read without reference to this subsection, be deductible in respect of the premium in computing the taxpayer's income,
	B is the total amount deductible in respect of the premium in computing the taxpayer's income for preceding taxation years, and
	C is the number of days in the year, and
	(e) where the individual died in the year, the amount determined under subparagraph (d)(i).
	(3) Subsections (1) and (2) apply to premiums paid after February 1994 for insurance.
	7. (1) Subsection 20(1) of the Act is amended by striking out the word ``and'' at the end of paragraph (qq) and by adding the following after paragraph (rr):
Mining reclamation trusts	(ss) a contribution made in the year by the taxpayer to a mining reclamation trust under which the taxpayer is a beneficiary; and
Acquisition of interests in mining reclamation trusts	(tt) the consideration paid by the taxpayer in the year for the acquisition from another person or partnership of all or part of the taxpayer's interest as a beneficiary under a mining reclamation trust, other than consideration that is the assumption of a mining reclamation obligation in respect of the trust.
	(2) Subparagraph 20(4.2)(a)(ii) of the Act is replaced by the following:
	(ii) the total of all amounts each of which is
	(A) the taxable capital gain of the taxpayer determined under subsection 14(1) for the year or a preceding taxation year and in respect of which a deduction can reasonably be considered to have been claimed under section 110.6, or
	(B) an amount determined in respect of the taxpayer for D in subparagraph 14(1)(a)(v) for the year or a preceding taxation year, and
	(3) Subsection 20(26) of the Act is replaced by the following:
Transition deduction re unpaid claims reserve	(26) An insurer may deduct, in computing its income for its taxation year that includes February 23, 1994, such amount as the insurer claims not exceeding the amount prescribed to be the insurer's unpaid claims reserve adjustment.
	(4) Subsection (1) applies to taxation years that end after February 22, 1994 and, for the purpose of paragraph 20(1)(ss) of the Act, as enacted by subsection (1), each contribution made by a taxpayer to a trust before February 23, 1994 shall be deemed to have been made on February 23, 1994.
	(5) Subsection (2) applies to taxation years that end after February 22, 1994.
	(6) Subsection (3) applies to taxation years that include February 23, 1994.
	8. (1) Subparagraph 24(2)(d)(ii) of the Act is replaced by the following:
	(ii) the amount to be included under subparagraph 14(1)(a)(v) or paragraph 14(1)(b) in computing the income of the spouse or corporation
	(2) Subsection (1) applies to fiscal periods that end after February 22, 1994.
	9. (1) The portion of subsection 37(1) of the Act before paragraph (a) is replaced by the following:
Scientific research and experimental development	37. (1) Where a taxpayer carried on a business in Canada in a taxation year and files with the Minister by the day on or before which the taxpayer's return of income under this Part for the taxpayer's following taxation year is required to be filed, or would be required to be filed if tax under this Part were payable by the taxpayer for that following year, a prescribed form containing prescribed information, there may be deducted in computing the taxpayer's income from the business for the year such amount as the taxpayer claims not exceeding the amount, if any, by which the total of
	(2) Section 37 of the Act is amended by adding the following after subsection (10):
Reclassified expenditures	(11) For the purpose of subsection (1), a taxpayer is not required to file the prescribed form referred to in that subsection in respect of an expenditure incurred in a taxation year by the taxpayer where the expenditure is reclassified by the Minister on an assessment of the taxpayer's tax payable under this Part for the year, or on a determination that no tax under this Part is payable by the taxpayer for the year, as an expenditure in respect of scientific research and experimental development.
	(3) Subsections (1) and (2) apply after February 21, 1994 to expenditures incurred at any time except that, for an expenditure incurred by a taxpayer in a taxation year that ended before February 22, 1994, the taxpayer may file the prescribed form referred to in subsection 37(1) of the Act, as amended by subsection (1), by the later of the day referred to in that subsection and the day that is 90 days after this Act is assented to.
	10. (1) Paragraph 39(1)(a) of the Act is amended by striking out the word ``or'' at the end of subparagraph (iii), by adding the word ``or'' at the end of subparagraph (iv) and by adding the following after subparagraph (iv):
	(v) an interest of a beneficiary under a mining reclamation trust;
	(2) Subparagraph 39(1)(b)(ii) of the Act is replaced by the following:
	(ii) property described in subparagraph (a)(i), (ii), (ii.1), (iii) or (v); and
	(3) Subsection 39(11) of the Act is replaced by the following:
Recovery of bad debt	(11) Where an amount is received in a taxation year on account of a debt (in this subsection referred to as the ``recovered amount'') in respect of which a deduction for bad debts had been made under subsection 20(4.2) in computing the taxpayer's income for a preceding taxation year, the amount, if any, by which 3/4 of the recovered amount exceeds the amount determined under paragraph 12(1)(i.1) in respect of the recovered amount shall be deemed to be a taxable capital gain of the taxpayer from a disposition of capital property by the taxpayer in the year.
	(4) Subsections (1) and (2) apply to taxation years that end after February 22, 1994.
	(5) Subsection (3) applies to the 1994 and subsequent taxation years except that, in its application to the 1994 taxation year, subsection 39(11) of the Act, as enacted by subsection (3), shall be read as follows:
	(11) Where an amount is received in a taxation year on account of a debt (in this subsection referred to as the ``recovered amount'') in respect of which a deduction for bad debts had been made under subsection 20(4.2) in computing the taxpayer's income for a preceding taxation year, the amount, if any, by which 3/4 of the recovered amount exceeds the amount determined under paragraph 12(1)(i.1) in respect of the recovered amount shall be deemed to be a taxable capital gain of the taxpayer from a disposition of capital property by the taxpayer in the year and, for the purposes of section 110.6, that property shall be deemed to have been disposed of by the taxpayer on the day on which the taxpayer received the recovered amount.
	11. (1) The Act is amended by adding the following after section 39:
Definitions	39.1 (1) In this section,
``exempt capital gains balance'' « solde des gains en capital exonérés »	``exempt capital gains balance'' of an individual for a taxation year that ends before 2005 in respect of a flow-through entity means the amount determined by the formula
	A - B - C
	where
	A is
	(a) if the entity is a trust referred to in any of paragraphs (f) to (j) of the definition ``flow-through entity'' in this subsection, the amount determined under paragraph 110.6(19)(c) in respect of the individual's interest or interests therein, and
	(b) in any other case, the lesser of
	(i) 4/3 of the total of the taxable capital gains that resulted from elections made under subsection 110.6(19) in respect of the individual's interests in or shares of the capital stock of the entity, and
	(ii) the amount that would be determined under subparagraph (i) if
	(A) the amount designated in the election in respect of each interest or share were equal to the amount determined by the formula
	D - E
	where
	D is the fair market value of the interest or share at the end of February 22, 1994, and
	E is the amount, if any, by which the amount designated in the election that was made in respect of the interest or share exceeds 11/10 of its fair market value at the end of February 22, 1994, and
	(B) this Act were read without reference to subsection 110.6(20),
	B is the total of all amounts each of which is the amount by which the individual's capital gain for a preceding taxation year, determined without reference to subsection (2), from the disposition of an interest in or a share of the capital stock of the entity was reduced under that subsection, and
	C is
	(a) if the entity is a trust described in any of paragraphs (d) and (h) to (j) of the definition ``flow-through entity'' in this subsection, 4/3 of the total of all amounts each of which is the amount by which the individual's taxable capital gain otherwise determined for a preceding taxation year that resulted from a designation made under subsection 104(21) by the trust was reduced under subsection (3),
	(b) if the entity is a partnership, 4/3 of the total of all amounts each of which is
	(i) the amount by which the individual's share otherwise determined of the partnership's taxable capital gains for its fiscal period that ended in a preceding taxation year was reduced under subsection (4), or
	(ii) the amount by which the individual's share otherwise determined of the partnership's income from a business for its fiscal period that ended in a preceding taxation year was reduced under subsection (5), and
	(c) in any other case, the total of all amounts each of which is the amount by which the total of the individual's capital gains otherwise determined under subsection 130.1(4) or 131(1), subsections 138.1(3) and (4) or subsection 144(4), as the case may be, for a preceding taxation year in respect of the entity was reduced under subsection (6);
``flow-throug h entity'' « entité intermédiaire »	``flow-through entity'' means
	(a) an investment corporation,
	(b) a mortgage investment corporation,
	(c) a mutual fund corporation,
	(d) a mutual fund trust,
	(e) a partnership,
	(f) a related segregated fund trust for the purpose of section 138.1,
	(g) a trust governed by an employees profit sharing plan,
	(h) a trust maintained primarily for the benefit of employees of a corporation or 2 or more corporations that do not deal at arm's length with each other, where one of the main purposes of the trust is to hold interests in shares of the capital stock of the corporation or corporations, as the case may be, or any corporation not dealing at arm's length therewith,
	(i) a trust established exclusively for the benefit of one or more persons each of whom was, at the time the trust was created, either a person from whom the trust received property or a creditor of that person, where one of the main purposes of the trust is to secure the payments required to be made by or on behalf of that person to such creditor, and
	(j) a trust all or substantially all of the properties of which consist of shares of the capital stock of a corporation, where the trust was established pursuant to an agreement between 2 or more shareholders of the corporation and one of the main purposes of the trust is to provide for the exercise of voting rights in respect of those shares pursuant to that agreement.
Reduction of capital gain	(2) Where at any time after February 22, 1994 an individual disposes of an interest in or a share of the capital stock of a flow-through entity, the individual's capital gain, if any, otherwise determined for a taxation year from the disposition shall be reduced by such amount as the individual claims, not exceeding the amount determined by the formula
	A - B - C
	where
	A is the exempt capital gains balance of the individual for the year in respect of the entity,
	B is
	(a) if the entity made a designation under subsection 104(21) in respect of the individual for the year, 4/3 of the amount, if any, claimed under subsection (3) by the individual for the year in respect of the entity,
	(b) if the entity is a partnership, 4/3 of the total of
	(i) the amount, if any, claimed under subsection (4) by the individual for the year in respect of the entity, and
	(ii) the amount, if any, claimed under subsection (5) by the individual for the year in respect of the entity, and
	(c) in any other case, the amount, if any, claimed under subsection (6) by the individual for the year in respect of the entity, and
	C is the total of all reductions under this subsection in the individual's capital gains otherwise determined for the year from the disposition of other interests in or shares of the capital stock of the entity.
Reduction of taxable capital gain	(3) The taxable capital gain otherwise determined under subsection 104(21) of an individual for a taxation year as a result of a designation made under that subsection by a flow-through entity shall be reduced by such amount as the individual claims, not exceeding 3/4 of the individual's exempt capital gains balance for the year in respect of the entity.
Reduction in share of partnership's taxable capital gains	(4) An individual's share otherwise determined for a taxation year of a taxable capital gain of a partnership from the disposition of a property (other than property acquired by the partnership after February 22, 1994 in a transfer to which subsection 97(2) applied) for its fiscal period that ends after February 22, 1994 and in the year shall be reduced by such amount as the individual claims, not exceeding the amount determined by the formula
	A - B
	where
	A is 3/4 of the individual's exempt capital gains balance for the year in respect of the partnership, and
	B is the total of amounts claimed by the individual under this subsection in respect of other taxable capital gains of the partnership for that fiscal period.
Reduction in share of partnership's income from a business	(5) An individual's share otherwise determined for a taxation year of the income of a partnership from a business for the partnership's fiscal period that ends in the year and the individual's share of the partnership's taxable capital gain, if any, arising under subparagraph 14(1)(a)(v) shall be reduced by such amount as the individual claims, not exceeding the lesser of
	(a) the amount, if any, by which 3/4 of the individual's exempt capital gains balance for the year in respect of the partnership exceeds the total of
	(i) the amount, if any, claimed under subsection (4) by the individual for the year in respect of the partnership, and