(a) property that

(b) property that was acquired, in the course of carrying on a business in Canada, by a purchaser from a vendor if

(c) property that was acquired by a purchaser from a vendor if

(a) the share is (or would, if held by a foreign affiliate of the corporation resident in Canada, be) excluded property of another foreign affiliate of the corporation resident in Canada that, immediately before the redemption, held the share; and

(b) the surplus entitlement percentage of the corporation resident in Canada, in respect of the issuing foreign affiliate, immediately before the redemption, is equal to the surplus entitlement percentage of the corporation resident in Canada, in respect of the issuing foreign affiliate, immediately after the redemption.

(a) a trust created or maintained for charitable purposes;

(b) a trust governed by an employee benefit plan;

(c) a trust described in paragraph (a.1) of the definition "trust" in subsection 108(1);

(d) a trust governed by a salary deferral arrangement;

(e) a trust operated for the purpose of administering or providing superannuation, pension, retirement or employee benefits; or

(f) a trust that at or before that time was a personal trust.

(a) the trust is an eligible trust;

(b) there are at least 150 beneficiaries each of whom holds a specified fixed interest in the trust with a fair market value of at least $500; and

(c) the total of all amounts each of which is the fair market value of an interest as a beneficiary under the trust held by a specified purchaser in respect of the taxpayer resident in Canada is not more than 10% of the total fair market value of all interests as a beneficiary under the trust.

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

(b) if the entity is a trust, an interest as a beneficiary under the trust;

(c) if the entity is a partnership, a partnership interest in the partnership; and

(d) a property that is, under a contract, in equity or otherwise, either immediately or in the future, and absolutely or contingently, convertible into, exchangeable for, or a right to acquire, directly or indirectly,

(a) the interest includes, at the particular time, a right of the interest holder as a beneficiary under the trust to receive, at or after the particular time and directly from the trust, income or capital of the trust;

(b) the interest was acquired, at or before the particular time, from the trust by any interest holder for consideration equal to its fair market value at the time of the acquisition; and

(c) no right of the interest holder as a beneficiary under the trust to any income or capital of the trust may cease to be a right of the interest holder otherwise than because of a disposition of the interest for consideration equal to the fair market value of the interest at the time of disposition or because of the disposition of the interest as a gift.

(a) the particular corporation;

(b) a taxpayer resident in Canada with which the particular corporation does not deal at arm's length;

(c) a foreign affiliate of a person described in paragraph (a) or (b);

(d) a non-resident person with which a person described in any of paragraphs (a) to (c) does not deal at arm's length;

(e) a trust (other than an exempt trust) in which a person or partnership described in any of paragraphs (a) to (d) and (f) is beneficially interested; or

(f) a partnership in which a person or partnership described in any of paragraphs (a) to (e) has, directly or indirectly in any manner whatever, a partnership interest.

(a) a foreign affiliate of the particular corporation;

(b) a foreign affiliate of a partnership of which the particular corporation is a member;

(c) a partnership a member of which is a person described in paragraph (a) or (b); or

(d) a partnership in which a person or partnership described in any of paragraphs (a) to (c) has, directly or indirectly in any manner whatever, a partnership interest.

(a) that was held by the disposed foreign affiliate at the original disposition time, and was held by a person or partnership that was not a specified purchaser in respect of the particular corporation resident in Canada immediately after a transaction or an event that is, or a series of transactions or events that includes,

(b) for which it is reasonable to conclude that one of the main reasons for holding the property at the original disposition time was

(a) a dissolution, winding-up, or cessation of the existence, of a corporation or partnership if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the dissolution, winding-up or cessation, a person or partnership that is a specified purchaser, in respect of the particular corporation resident in Canada,

(b) a merger or combination of corporations or partnerships if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the merger or combination, a specified purchaser in respect of the particular corporation resident in Canada

(c) a disposition of a participating interest in the current holder if, in the course of a transaction or an event that is, or a series of transactions or events that includes, the disposition of the participating interest, the specified share (or any portion of the specified share) or a right to, or an interest in, the specified share (or any portion of the interest in the specified share) becomes property of a person or partnership that is a specified purchaser in respect of the particular corporation resident in Canada.

(a) a disposition of the specified share in respect of the particular corporation resident in Canada that arises in the course of

(b) a disposition of the specified share in respect of the particular corporation resident in Canada that is part of a series of transactions or events that includes

(c) a particular disposition of the specified share in respect of the particular corporation resident in Canada if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the particular disposition

(a) a dissolution, winding-up, or cessation of the existence, of a corporation or partnership if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the dissolution, winding-up or cessation, a specified purchaser, in respect of the particular corporation, holds the specified property;

(b) a merger or combination of corporations or partnerships if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the merger or combination, a person or partnership that is a specified purchaser, in respect of the particular corporation, holds the specified property; or

(c) a disposition of a participating interest in the current holder if, in the course of a transaction or an event that is, or a series of transactions or events that includes, the disposition of the participating interest, the specified property (or any portion of the specified property) or a right to, or an interest in, the specified property (or any portion of the specified property) becomes property of a specified purchaser in respect of the particular corporation.

(a) a disposition of the specified property in respect of the particular corporation resident in Canada that occurs in the course of

(b) a disposition of the specified property in respect of the particular corporation resident in Canada that is part of a series of transactions or events that includes

(a) a dissolution, winding-up, or cessation of the existence, of a corporation or partnership if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the dissolution, winding-up or cessation, a specified purchaser in respect of the particular taxpayer holds the specified property;

(b) a merger or combination of corporations or partnerships if, immediately after a transaction or an event that is, or a series of transactions or events that includes, the merger or combination, a specified purchaser in respect of the particular taxpayer holds the specified property; or

(c) a disposition of a participating interest in the current holder if, in the course of a transaction or an event that is, or a series of transactions or events that includes, the disposition of the participating interest, the specified property (or any portion of the specified property) or a right to, or an interest in, the specified property (or any portion of the specified property) becomes property of a specified purchaser in respect of the particular taxpayer.

(a) the particular taxpayer;

(b) a taxpayer resident in Canada with which the particular taxpayer does not deal at arm's length;

(c) a foreign affiliate of a person described in paragraph (a) or (b);

(d) a non-resident taxpayer with which a person described in any of paragraphs (a) to (c) does not deal at arm's length;

(e) a trust (other than an exempt trust) in which a person or partnership described in any of paragraphs (a) to (d) and (f) is beneficially interested; or

(f) a partnership in which a person or partnership described in any of paragraphs (a) to (e) has, directly or indirectly in any manner whatever, a partnership interest.

(a) a foreign affiliate of the particular taxpayer;

(b) a foreign affiliate of a partnership of which the particular taxpayer is a member;

(c) a partnership a member of which is a person described in paragraph (a) or (b); or

(d) a partnership in which a person or partnership described in any of paragraphs (a) to (c) has, directly or indirectly in any manner whatever, a partnership interest.

(a) a disposition of the specified property in respect of the particular taxpayer resident in Canada that occurs in the course of

(b) a disposition of the specified property in respect of the particular taxpayer resident in Canada that is part of a series of transactions or events that includes

(a) the partnership or the trust, as the case may be, is deemed to be a non-resident corporation having capital stock of a single class divided into 100 issued shares;

(b) the holder is deemed to own at that time that proportion of the issued shares of that class that

(c) for the purpose of paragraph (b), the fair market value, at any time, of the holder's beneficial interest in a trust (other than a non-discretionary trust within the meaning assigned by subsection 17(15)) is deemed to be the fair market value, at that time, of all beneficial interests in the trust.

(a) the amount of any foreign income tax paid by that foreign affiliate in respect of the gain arising on the disposition;

(b) the amount of any distribution made, or dividend paid, on or after the disposition, to the particular corporation resident in Canada or a corporation resident in Canada with which the particular corporation resident in Canada does not deal at arm's length; and

(c) the amount of any election under section 93 made in respect of a disposition of a share of a foreign affiliate of the particular corporation resident in Canada or of a share of a foreign affiliate of a corporation resident in Canada with which the particular corporation resident in Canada does not deal at arm's length.

(a) for taxation years, of a foreign affiliate of a taxpayer, that begin after 2002 and on or before ANNOUNCEMENT DATE, the definition "controlled foreign affiliate", as enacted by subsection (1), is to be read as follows:

(a) is, at that time, a controlled foreign affiliate of the taxpayer because of paragraph 94.1(2)(h),

(b) is, at that time, controlled by the taxpayer, or

(c) would, at that time, be controlled by the taxpayer if the taxpayer owned each share of the capital stock of the foreign affiliate that is owned, at that time, by

(i) the taxpayer and not more than four other persons resident in Canada,

(ii) not more than four persons resident in Canada (other than the taxpayer or persons with whom the taxpayer does not deal at arm's length), or

(iii) the taxpayer and each person with whom the taxpayer does not deal at arm's length.", and

(a) is, at that time, controlled by the taxpayer, or

(b) would, at that time, be controlled by the taxpayer if the taxpayer owned each share of the capital stock of the foreign affiliate that is owned, at that time, by

(i) the amount paid or payable in consideration for those services or for the undertaking to provide those services

(ii) the services are, or are to be, performed by

(a) those paragraphs do not apply, in respect of the taxpayer, to dispositions that occur after December 20, 2002 and on or before ANNOUNCEMENT DATE; and

(b) with respect to the dispositions referred to in paragraph (a), the Act shall, in respect of the taxpayer, be read as though it contained subsections 93(1.4) to (1.6) that read as follows:

(a) the share is deemed not to be excluded property of the vendor unless any of subsection 88(3) or paragraphs 95(2)(c), (d) and (e) applied to the disposition of the share; and

(b) the cost amount of the share to the purchaser is deemed to be equal to the proceeds of disposition of the share to the vendor.

(a) a foreign affiliate of the particular corporation; or

(b) a partnership of which a foreign affiliate of the particular corporation is a member.

(a) the particular corporation;

(b) a corporation resident in Canada with which the particular corporation does not deal at arm's length;

(c) a foreign affiliate of either of those corporations; or

(d) a partnership any member of which is described in any of paragraphs (a) to (c).".

"

(a) in applying paragraph 95(2)(k.1), as enacted by subsection (17), for taxation years, of a foreign affiliate of the taxpayer, that begin on or before ANNOUNCEMENT DATE, that paragraph is to be read without reference to its subparagraph (iv); and

(b) in applying paragraph 95(2)(k.2), as enacted by subsection (17), for taxation years, of a foreign affiliate of the taxpayer, that begin on or before ANNOUNCEMENT DATE, that paragraph is to be read without reference to its subclause (iv)(A)(II).

(c) subclauses 95(2)(a)(i)(A)(II) and (B)(II) and 95(2)(a)(ii)(A)(II) and (B)(II), clause 95(2)(a)(ii)(C), clause 95(2)(a)(ii)(E) and subparagraphs 95(2)(a)(v) and (vi), of the Act, as enacted by subsection (8);

(a) in applying paragraph (b) of the definition "taxable Canadian business" in subsection 95(1) of the Act, as enacted by subsection (7), for the 1997 and preceding taxation years of all foreign affiliates of the taxpayer, that paragraph is to be read in respect of those affiliates as follows:

(b) in applying clause 95(2)(k)(iv)(C) of the Act, as enacted by subsection (17), for taxation years, of all foreign affiliates of the taxpayer, that begin before December 21, 2002, that clause is to be read in respect of those affiliates as follows:

(c) in applying paragraph 95(2)(k.1) of the Act, as enacted by subsection (17), for taxation years, of a foreign affiliate of the taxpayer, that begin on or before ANNOUNCEMENT DATE, that paragraph is to be read without reference to its subparagraph (iv).

"

(e) a warrant or right issued by a person or partnership (in this paragraph referred to as the "issuer") that gives the holder of the warrant or right, the right to acquire property that is a qualified investment for the plan trust if

(e.01) an option listed on a stock exchange referred to in section 3200 or 3201 that gives the holder of the option, the right to purchase or sell property that is a qualified investment for the plan trust or, in lieu of delivery of that property, to receive a cash payment in settlement;

(i.3) a debt obligation issued by a Canadian corporation or a trust resident in Canada if

(j) a particular indebtedness that is secured by a mortgage in respect of real property situated in Canada,

(n.01) a debt issued by a limited partnership whose units are listed on a stock exchange referred to in section 3200;

(a) the whole of the limited unit if, at that time,

(b) the agreement governing the partnership specified a single fixed percentage, that has not changed since the formation of the partnership, as the share of the general partner, as general partner, in any income or loss of the partnership from any source, or from sources in any particular place, for any period, except that the agreement may have provided for one or more of the following exceptions:

(c) the interests of the limited partners were described by reference to units in the partnership, and the terms of those units, determined in accordance with the agreement governing the partnership, were identical with respect to the obligations of the limited partners to contribute capital to the partnership and the rights of the limited partners to receive distributions from the partnership,

(d) the share of limited partners, as limited partners, in any income or loss of the partnership from any source, or from sources in any particular place, for any period was determined, in accordance with the agreement governing the partnership, by reference to the partners' limited units in the partnership, and for no such income or loss did the share allocated in respect of any one limited unit in the partnership differ from the share allocated to any other limited unit in the partnership except that, in determining if the partnership has complied with the requirements of this paragraph, any amounts allocated to the limited units of a particular limited partner in respect of any income or loss of the partnership from specified properties are to be disregarded to the extent that the amounts are attributable to the investment of capital contributed by the particular limited partner, as limited partner, in excess of that which the particular limited partner was required to contribute based on requests made by the general partner to all limited partners to contribute a specified amount to the capital of the partnership,

(iv.1) limited units that the partnership acquired after 2002 in a qualified limited partnership (referred to in this subparagraph as an "investment partnership") and, if the investment partnership ceased, after that acquisition, to be a qualified limited partnership, those units are deemed to be limited units in a qualified limited partnership until the end of the third month following the month in which the cessation occurred,

(v) specified properties, or

(f.1) benefits payable as a direct consequence of an increase at any time in 2004 or 2005 in the value of a fixed rate under the provision where

A - B

(e) there is no reason to expect that the plan may become a revocable plan pursuant to subsection 147.1(8) or (9) of the Act or subsection 8503(15) or 8506(4).

(c) where the plan contains a money purchase provision, a condition set out in any of paragraphs 8506(2)(b) to (c.1) and (e) to (i).

(iv) is transferred to the plan in accordance with any of subsections 146(16), 146.3(14.1), 147(19) and 147.3(1) to (8) of the Act, or

(i) requires that the retirement benefits of a member under each benefit provision of the plan begin to be paid not later than the end of the calendar year in which the member attains 69 years of age except that,

(A) in the case of benefits provided under a defined benefit provision, the benefits may begin to be paid at any later time that is acceptable to the Minister, if the amount of benefits (expressed on an annualized basis) payable does not exceed the amount of benefits that would be payable if payment of the benefits began at the end of the calendar year in which the member attains 69 years of age, and

(B) in the case of benefits provided under a money purchase provision in accordance with paragraph 8506(1)(e.1), the benefits may begin to be paid not later than the end of the calendar year in which the member attains 70 years of age, and

(ii) the total amount of continued retirement benefits payable under the provision for each month does not exceed the amount of retirement benefits (other than benefits permissible under paragraph (e.1)) that would have been payable under the provision for the month to the member if the member were alive;

(iii) the total amount of survivor retirement benefits and other retirement benefits (other than benefits permissible under paragraph (e.1)) payable under the provision for each month to beneficiaries of the member does not exceed the amount of retirement benefits (other than benefits permissible under paragraph (e.1)) that would have been payable under the provision for the month to the member if the member were alive;

(e.1) retirement benefits (in this paragraph referred to as "variable benefits"), other than benefits permissible under any of paragraphs (a) to (e), provided to a member and, after the death of the member, to one or more beneficiaries of the member if

(g) the payment, with respect to one or more beneficiaries of a member, of one or more single amounts from the member's account under the provision;

(c.1) no contribution is made under the provision with respect to a member, and no amount is transferred for the benefit of a member to the provision from another benefit provision of the plan, at any time after the calendar year in which the member attains 69 years of age, other than an amount that is transferred for the benefit of the member to the provision

(e) the earnings of the plan, to the extent that they relate to the provision and are not reasonably attributable to forfeited amounts or a surplus under the provision, are allocated to plan members on a reasonable basis and at least monthly;

(g) retirement benefits (other than benefits permissible under paragraph (1)(e.1)) under the provision are provided by means of annuities that are purchased from a licensed annuities provider;

(h) each single amount that is payable after the death of a member (other than a single amount that is payable after the death of the specified beneficiary of the member in relation to the provision) is paid as soon as is practicable after the member's death; and

(i) each single amount that is payable after the death of the specified beneficiary of a member in relation to the provision is paid as soon as is practicable after the specified beneficiary's death.

A x B

(a) if there is a specified beneficiary of the member for the year in relation to the provision, the factor designated under subsection 7308(4) for the year in respect of the specified beneficiary,

(b) if paragraph (a) does not apply for the year, the factor designated under subsection 7308(4) for the year in respect of an individual where

(c) in any other case, the factor designated under subsection 7308(4) for the year in respect of the member.

(a) an individual, who is either the member or the specified beneficiary of the member for the year in relation to the provision, is alive at the beginning of the year, and

(b) that individual had not attained 69 years of age at the end of the preceding calendar year.

(a) the member died before the beginning of the year,

(b) the individual is a beneficiary of the member and was, immediately before the member's death, the member's spouse or common-law partner, and

(c) the member or the member's legal representative had, before the beginning of the year, provided the administrator of the plan with a written designation of the individual (and of no other individual) as the specified beneficiary of the member for the calendar year in relation to the provision.

(g) retirement benefits (other than benefits permissible under paragraph (e.1)) under the provision are provided by means of annuities that are purchased from a licensed annuities provider or under an arrangement acceptable to the Minister;

(a) in respect of property acquired after Announcement Date, after Announcement Date; and

(b) in respect of property acquired on or before Announcement Date, after 2004.

B is the total value for the year of Canadian investment property (other than Canadian equity property and any property described in paragraph (i) of the definition "Canadian investment property" in subsection 2400(1)) owned by the insurer at any time in the year;

E is the total value for the year of Canadian investment property that is Canadian equity property (other than any property described in paragraph (i) of the definition "Canadian investment property" in subsection 2400(1)) owned by the insurer at any time in the year;

H is the total value for the year of foreign investment property (other than any property described in paragraph (e) of the definition "investment property" in subsection 2400(1)) owned by the insurer at any time in the year; and

(a) the amount of the particular foreign affiliate's exempt surplus, in respect of the corporation resident in Canada, (in this subsection referred to as the "consolidated exempt surplus" in respect of the corporation resident in Canada) at the time (in this section and in section 5905 referred to as the "calculation time") that is immediately before the dividend time, is deemed to be the amount that would be its exempt surplus, in respect of the corporation resident in Canada, at the calculation time if

(iii) for the purpose of subparagraph (ii), the proportionate share, at any time, of a foreign affiliate (referred to in this subparagraph as the "calculating foreign affiliate") of the corporation resident in Canada, of the exempt surplus, in respect of the corporation resident in Canada, of another foreign affiliate (referred to in this subparagraph as the "providing foreign affiliate") of the corporation resident in Canada in which the calculating foreign affiliate has a direct equity percentage were equal to the proportion determined by the following formula:

A/B

where

A is the amount of dividends that would be received, at that time, by the calculating foreign affiliate from the providing foreign affiliate if, at that time, the providing foreign affiliate had paid dividends on all of its shares and the total of those dividends were equal to its consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such a consolidated net surplus, in respect of the corporation resident in Canada, its consolidated exempt surplus (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

B is the amount of the providing foreign affiliate's consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its consolidated exempt surplus (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

(iv) in determining, under this paragraph, the particular foreign affiliate's consolidated exempt surplus, in respect of the corporation resident in Canada,

(b) the amount of the particular foreign affiliate's exempt deficit, in respect of the corporation resident in Canada, (in this subsection referred to as the "consolidated exempt deficit" in respect of the corporation resident in Canada) at the calculation time, is deemed to be the amount that would be its exempt deficit, in respect of the corporation resident in Canada, at that time if

(iii) for the purpose of subparagraph (ii), the proportionate share, at any time, of a foreign affiliate (referred to in this subparagraph as the "calculating foreign affiliate") of the corporation resident in Canada, of the exempt deficit, in respect of the corporation resident in Canada, of another foreign affiliate (referred to in this subparagraph as the "providing foreign affiliate") of the corporation resident in Canada in which the calculating foreign affiliate has a direct equity percentage were equal to the proportion determined by the following formula:

A/B

where

A is the amount of dividends that would be received by the calculating foreign affiliate from the providing foreign affiliate if, at that time, the providing foreign affiliate had paid dividends on all of its shares and the total of those dividends were equal to its consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its exempt deficit (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

B is the amount of the providing foreign affiliate's consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its consolidated exempt deficit (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

(iv) in determining, under this paragraph, the particular foreign affiliate's consolidated exempt deficit, in respect of the corporation resident in Canada,

(c) the amount of the particular foreign affiliate's taxable surplus and underlying foreign tax, in respect of the corporation resident in Canada, (referred to, respectively, in this subsection as the "consolidated taxable surplus", and "consolidated underlying foreign tax", in respect of the corporation resident in Canada) at the calculation time, is deemed to be the amount that would be its taxable surplus, and underlying foreign tax, in respect of the corporation resident in Canada, at that time, if

(iii) for the purpose of subparagraph (ii), the proportionate share, at any time, of a foreign affiliate (referred to in this subparagraph as the "calculating foreign affiliate") of the corporation resident in Canada, of the taxable surplus, or underlying foreign tax, as the case may be, in respect of the corporation resident in Canada, of another foreign affiliate (referred to in this subparagraph as the "providing foreign affiliate") of the corporation resident in Canada in which the particular foreign affiliate has a direct equity percentage were equal to the proportion determined by the following formula:

A/B

where

A is the amount of dividends that would be received, at that time, by the calculating foreign affiliate from the providing foreign affiliate if, at that time, the providing foreign affiliate had paid dividends on all of its shares and the total of those dividends were equal to its consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its consolidated taxable surplus (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

B is the amount of the providing foreign affiliate's consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its consolidated taxable surplus (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

(iv) in determining, under this paragraph, the particular foreign affiliate's consolidated taxable surplus, and consolidated underlying foreign tax, in respect of the corporation resident in Canada,

(d) the amount of the particular foreign affiliate's taxable deficit, in respect of the corporation resident in Canada, (in this subsection referred to as the "consolidated taxable deficit" in respect of the corporation resident in Canada) at the calculation time is deemed to be the amount that would be its taxable deficit, in respect of the corporation resident in Canada, at that time if

(iii) for the purpose of subparagraph (ii), the proportionate share, at any time, of a foreign affiliate (referred to in this subparagraph as the "calculating foreign affiliate") of the corporation resident in Canada, of the taxable deficit, in respect of the corporation resident in Canada, of another foreign affiliate (referred to in this subparagraph as the "providing foreign affiliate") of the corporation resident in Canada in which the calculating foreign affiliate has a direct equity percentage were equal to the proportion determined by the following formula:

A/B

where

A is the amount of dividends that would be received, at that time, by the calculating foreign affiliate from the providing foreign affiliate if, at that time, the providing foreign affiliate had paid dividends on all of its shares and the total of those dividends were equal to its consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its consolidated taxable deficit (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

B is the amount of the providing foreign affiliate's consolidated net surplus (determined using the provisions of this subsection on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, or, where it does not have such consolidated net surplus, its consolidated taxable deficit (determined in accordance with this paragraph on the assumption that the providing foreign affiliate were the particular foreign affiliate), in respect of the corporation resident in Canada, at that time, and

(iv) in determining, under this paragraph, the particular foreign affiliate's consolidated taxable deficit, in respect of the corporation resident in Canada,

(e) for the purpose of applying subsection 5901(1) to subsection 5900(1), and for the purpose of paragraph (f),

(f) the attributed net surplus in respect of a disposed share of the specified class in respect of the particular foreign affiliate's consolidated net surplus, in respect of the corporation resident in Canada, immediately before the dividend time, is deemed to be equal to the amount that would be received by the holder of the disposed share, in respect of the disposed share, at the dividend time, if the particular foreign affiliate paid a dividend, at that time, on all of its shares, the total of which was equal to the amount of its consolidated net surplus, in respect of the corporation resident in Canada, immediately before the dividend time;

(g) for the purpose of applying subsection 5901(1) to subsection 5900(1), the amount of the whole dividend paid by the particular foreign affiliate, at the dividend time, on the shares of the specified class is deemed to be equal to the amount obtained when the total of all amounts each of which is an amount deemed by subsection 93(1) or (1.2) of the Act to have been received as a dividend on a disposed share of the specified class is multiplied by the greater of

A/B

(h) the amount prescribed, for the purpose of subsection 93(1) or (1.2) of the Act, as the case may be, in respect of a disposition of a disposed share of the specified class is not to exceed the amount determined, under paragraph (f), to be the amount of the attributed net surplus in respect of the disposed share in respect of the particular foreign affiliate's consolidated net surplus, in respect of the corporation resident in Canada, immediately before the dividend time; and

(i) for the purposes of paragraphs (a) to (d), the consolidated net surplus, at any time, in respect of a corporation resident in Canada, of a particular foreign affiliate of the corporation resident in Canada, is the amount that would be determined in subparagraph (e) in respect of the particular foreign affiliate if the reference in that paragraph to the expression "immediately before the dividend time" were read as a reference to the expression "at any time".

(a) exempt surplus in respect of the corporation;

(b) exempt deficit in respect of the corporation;

(c) taxable surplus in respect of the corporation;

(d) taxable deficit in respect of the corporation; or

(e) underlying foreign tax in respect of the corporation.

(a) the capital gain, if any, otherwise determined in respect of the disposition of the share, and

(b) the amount of attributed net surplus (as determined under paragraph (1)(f)) in respect of the share.

(a) the taxable capital gain, if any, otherwise determined in respect of the disposition of the share, and

(b) the amount that is one-half of the amount referred to in paragraph (6)(b).

(a) for the purposes of this Part, the amount of the exempt surplus or exempt deficit, the taxable surplus or taxable deficit, and the underlying foreign tax, in respect of the corporation, of the particular relevant foreign affiliate is (unless subsection (8) applies to the particular relevant foreign affiliate because of the acquisition of the shares) to be, at that time, adjusted to become the proportion of that amount, determined without making this adjustment, that

(b) for the purposes of applying the definitions "exempt deficit", "exempt surplus", "taxable deficit", "taxable surplus" and "underlying foreign tax" in subsection 5907(1), the adjusted amounts determined under paragraph (a) are deemed to be the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of the particular relevant foreign affiliate, in respect of the corporation.

(a) if, because of an election made by the corporation under subsection 93(1) or (1.2) of the Act in respect of the disposition of the disposed shares, a dividend (referred to in this subsection and subsections (18) and (21) as the "disposition dividend") is deemed to have been received on the disposed shares, by the corporation or by another foreign affiliate of the corporation, for the purpose of the adjustment required by paragraph (b),

A/B x C x D

where

A is the portion of the particular relevant foreign affiliate's underlying foreign tax, in respect of the corporation resident in Canada, at the balance adjustment time, that may reasonably be considered to have been included in computing the particular foreign affiliate's consolidated underlying foreign tax (as determined under subparagraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition,

B is the particular foreign affiliate's consolidated underlying foreign tax (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition,

C is the portion, of the particular foreign affiliate's consolidated underlying foreign tax (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition), that is prescribed, by paragraph 5900(1)(d), to be applicable to the portion of the whole dividend (as determined, under paragraph 5902(1)(g), in respect of the disposition dividend in respect of the disposed shares) paid on shares of the specified class that is prescribed, by paragraph 5900(1)(c), to have been paid out of the particular foreign affiliate's consolidated taxable surplus, in respect of the corporation resident in Canada, and

D is the specified adjustment factor in respect of the particular relevant foreign affiliate, and

(b) the amount, at the balance adjustment time, of exempt surplus, exempt deficit, taxable surplus, taxable deficit and underlying foreign tax, in respect of the corporation resident in Canada, of the particular relevant foreign affiliate is to be adjusted to become the proportion of that amount, determined without making this adjustment, that

(c) for the purposes of applying the definitions "exempt deficit", "exempt surplus", "taxable deficit", "taxable surplus" and "underlying foreign tax", in subsection 5907(1), the amounts determined under paragraph (b), in respect of the particular relevant foreign affiliate, in respect of the corporation resident in Canada, are deemed to be the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus and opening underlying foreign tax, as the case may be, of the particular relevant foreign affiliate, in respect of the corporation resident in Canada.

(a) if, at any time, a foreign affiliate of a corporation resident in Canada disposes of one or more shares (referred to in this subsection and subsections (16) to (23) as the "disposed shares") of a class of the capital stock of a predecessor corporation and the foreign affiliate is, because of an election made under subsection 93(1) or (1.2) of the Act, deemed to have received a dividend (referred to in this subsection and subsections (18) and (21) as the "disposition dividend") on the disposed shares, for the purposes of the adjustments required by paragraphs (b) and (3)(b),

A/B x C x D

(b) the amount, at the balance adjustment time, of exempt surplus, exempt deficit, taxable surplus, taxable deficit and underlying foreign tax, in respect of the corporation resident in Canada, of the particular relevant foreign affiliate is to be adjusted to become the proportion of that amount, determined without making that adjustment, that

is of

(ii) the surplus entitlement percentage, immediately after the time of the disposition, of the corporation resident in Canada, in respect of the particular relevant foreign affiliate, determined on the assumption that the taxation year, of the particular relevant foreign affiliate, that otherwise would have included the balance adjustment time, had ended at the time of the disposition.

(a) subject to paragraph (c), the amount of the exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax, as the case may be, of the particular foreign affiliate, in respect of the subsidiary corporation and the parent corporation is deemed to be nil, immediately before the amalgamation;

(b) subject to paragraph (c), the amount of the exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax, as the case may be, in respect of the subsidiary corporation, of each other foreign affiliate (referred to in this subsection as a "lower-tier foreign affiliate") of the subsidiary corporation (other than the particular foreign affiliate) in which the particular foreign affiliate has, immediately before the amalgamation, an equity percentage, is deemed to be nil, immediately before the amalgamation; and

(c) the amount of the exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax, as the case may be, of the particular foreign affiliate and of each lower-tier foreign affiliate, in respect of the parent corporation, is deemed to be the amount that would be determined if

(a) subject to paragraph (c), the amount of the exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax, as the case may be, of the particular foreign affiliate, in respect of the subsidiary corporation and the parent corporation is deemed to be nil, immediately before the winding-up;

(b) subject to paragraph (c), the amount of the exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax, as the case may be, in respect of the subsidiary corporation, of each other foreign affiliate (referred to in this subsection as a "lower-tier foreign affiliate") of the subsidiary corporation (other than the particular foreign affiliate) in which the particular foreign affiliate has, immediately before the winding-up, an equity percentage, is deemed to be nil, immediately before the winding-up; and

(c) the amount of the exempt surplus or exempt deficit, taxable surplus or taxable deficit and underlying foreign tax, as the case may be, of the particular foreign affiliate and each lower-tier foreign affiliate, in respect of the parent corporation, is deemed to be the amount that would be determined if

(a) if paragraph (5)(a) applies and the predecessor corporation is, because of an election made under subsection 93(1) or (1.2) of the Act, deemed to have received a dividend (referred to in this subsection and subsections (18) and (21) as the "disposition dividend") on one or more of the shares (each of which is referred to in this subsection and subsections (16) to (23) as a "disposed share") of the particular foreign affiliate (referred to in this subsection as the "issuing foreign affiliate") disposed of, at that time, for the purpose of the adjustment required by paragraph (b),

A/B x C/D

where

A is the portion of the amount of the particular relevant foreign affiliate's exempt surplus, in respect of the predecessor corporation, at the balance adjustment time, that may reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under subparagraph 5902(1)(a)), in respect of the predecessor corporation, in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under subparagraph 5902(1)(a)), in respect of the predecessor corporation, in respect of the disposition of the disposed shares,

C is the portion, of the disposition dividend that is, because of an election made under subsection 93(1) or (1.2) of the Act in respect of the disposition of the disposed shares, deemed to be received on the disposed shares by the person that disposed of the disposed shares, that is prescribed by paragraph 5900(1)(a) to have been paid out of the issuing foreign affiliate's exempt surplus, in respect of the predecessor corporation, and

D is the surplus entitlement percentage of the predecessor corporation in respect of the particular relevant foreign affiliate at the balance adjustment time, determined on the assumption that the disposed shares were the only shares owned by the predecessor corporation at that time,

(ii) in computing the taxable surplus, in respect of a predecessor corporation, of the particular relevant foreign affiliate, at the balance adjustment time, the following rules apply:

where

A is the portion of the amount of the particular relevant foreign affiliate's taxable surplus, in respect of the predecessor corporation, at the balance adjustment time, that may reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under subparagraph 5902(1)(c)), in respect of the predecessor corporation, in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under subparagraph 5902(1)(c)), in respect of the predecessor corporation, in respect of the disposition of the disposed shares,

C is the portion, of the disposition dividend that is, because of an election made under subsection 93(1) or (1.2) of the Act in respect of the disposition of the disposed shares, deemed to be received on the disposed shares by the person that disposed of the disposed shares, that is prescribed by paragraph 5900(1)(b) to have been paid out of the issuing foreign affiliate's taxable surplus, in respect of the predecessor corporation, and

D is the surplus entitlement percentage of the predecessor corporation in respect of the particular relevant foreign affiliate at the balance adjustment time, determined on the assumption that the disposed shares were the only shares owned by the predecessor corporation at that time,

(iii) in computing the underlying foreign tax, in respect of the predecessor corporation, of the particular relevant foreign affiliate, at the balance adjustment time, there is to be included under subparagraph (iii) of the description of B in the definition "underlying foreign tax" in subsection 5907(1), the total of

where

A is the portion of the amount of the particular relevant foreign affiliate's underlying foreign tax, in respect of the predecessor corporation, at the balance adjustment time, that may reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated underlying foreign tax (as determined under paragraph 5902(1)(c)), in respect of the predecessor corporation, in respect of the disposition,

B is the amount of the issuing foreign affiliate's consolidated underlying foreign tax (as determined under paragraph 5902(1)(c)), in respect of the predecessor corporation, in respect of the disposition,

C is the total of all amounts each of which is the amount, determined by paragraph 5900(1)(d), to be the amount of foreign tax applicable to the portion of the disposition dividend prescribed to have been paid out of the taxable surplus of the issuing foreign affiliate, that relates to a disposed share, in respect of the disposition, and

D is the surplus entitlement percentage of the predecessor corporation in respect of the particular relevant foreign affiliate at the balance adjustment time, determined on the assumption that the disposed shares were the only shares owned by the predecessor corporation at that time, and

(B) an amount determined by the formula

where

A is the underlying foreign tax, in respect of the particular predecessor corporation, at the balance adjustment time, of the particular relevant foreign affiliate in respect of the disposition of the disposed shares.

B is the amount determined under clause (ii)(C) in respect of the particular relevant foreign affiliate, in respect of the predecessor corporation, in respect of the disposition of the disposed shares,

C is the exempt deficit allocation, in respect of the predecessor corporation, of the particular relevant foreign affiliate, in respect of the disposition of the disposed shares, and

D is the taxable surplus in respect of the predecessor corporation, at the balance adjustment time, of the particular relevant foreign affiliate,

(iv) in computing the exempt deficit, in respect of the predecessor corporation, of the particular relevant foreign affiliate, at the balance adjustment time, there is to be included under subparagraph (viii) of the description of A in the definition "exempt surplus" in subsection 5907(1), an amount equal to the exempt deficit, in respect of the predecessor corporation, of the particular relevant foreign affiliate, immediately before that time, and

(v) in computing the taxable deficit, in respect of the predecessor corporation, of the particular relevant foreign affiliate, at the balance adjustment time, there is to be included under subparagraph (vi) of the description of A in the definition "taxable surplus" in subsection 5907(1), an amount equal to the taxable deficit, in respect of the predecessor corporation, of the particular relevant foreign affiliate, immediately before that time; and

(b) the exempt surplus or the exempt deficit, the taxable surplus or the taxable deficit and the underlying foreign tax in respect of a predecessor corporation (within the meaning assigned by subsection (5)) and in respect of the acquiring corporation (within the meaning assigned by subsection (5)) of a particular relevant foreign affiliate is, at the balance adjustment time, to be adjusted to become the proportion of the amount of the surplus, deficit or underlying foreign tax determined without reference to this paragraph that

(i) the surplus entitlement percentage, immediately before the time of the latest of the transactions referred to in paragraphs (5)(a), (b) and (c), of the predecessor corporation or the acquiring corporation, as the case may be, in respect of the particular relevant foreign affiliate, determined on the assumptions

(ii) the surplus entitlement percentage, immediately after the time of the latest of the transactions referred to in paragraphs (5)(a), (b) and (c), of the predecessor corporation or the acquiring corporation, as the case may be, in respect of the particular relevant foreign affiliate, determined on the assumption that the taxation year of the particular relevant foreign affiliate that otherwise would have included that time had ended immediately after that time.

(a) where paragraph 95(2)(e.1) of the Act so applies, for the purpose of computing the exempt surplus, exempt deficit, taxable surplus, taxable deficit and underlying foreign tax, in respect of the corporation, of each other foreign affiliate of the corporation that has a direct equity percentage in the disposing foreign affiliate immediately before the specified time, it is deemed

(b) where paragraph 95(2)(e) or (e.1) of the Act so applies, the amount, in respect of the corporation, of the exempt deficit of each other foreign affiliate of the corporation that had a direct equity percentage in the disposing foreign affiliate immediately before the specified time is to be, immediately before that time, increased by the total of

(c) the amount, in respect of the corporation, of the taxable deficit of each other foreign affiliate of the corporation that had a direct equity percentage in the disposing foreign affiliate immediately before the specified time is to be, immediately before that time, increased by the total of

(d) the amount, in respect of the corporation, of the exempt surplus of each other foreign affiliate of the corporation that had a direct equity percentage in the disposing foreign affiliate immediately before the specified time is to be, immediately before that time, decreased by the lesser of

(e) the amount, in respect of the corporation, of the taxable surplus of each other foreign affiliate of the corporation that had a direct equity percentage in the disposing foreign affiliate immediately before the specified time is to be, immediately before that time, decreased by the lesser of

(a) the time of dissolution of the disposing foreign affiliate, and

(b) the time of the earliest distribution of property as part of the liquidation and the dissolution of the disposing foreign affiliate.

(a) for the purpose of the adjustment required by paragraph (b),

(ii) in computing the taxable surplus, in respect of the corporation resident in Canada, of the particular relevant foreign affiliate, at the balance adjustment time, there is to be included under subparagraph (v) of the description of B in the definition "taxable surplus" in subsection 5907(1), the total of

(iii) in computing the underlying foreign tax, in respect of the corporation resident in Canada, of the particular relevant foreign affiliate, at the balance adjustment time, there is to be included under subparagraph (iii) of the description of B in the definition "underlying foreign tax" in subsection 5907(1), the total of

where

A is the portion of the amount of the particular relevant foreign affiliate's underlying foreign tax, in respect of the corporation resident in Canada, at the balance adjustment time, that may reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated underlying foreign tax (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition,

B is the amount of the issuing foreign affiliate's consolidated underlying foreign tax (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition,

C is the total of all amounts each of which is the amount, determined by paragraph 5900(1)(d), to be the amount of foreign tax applicable to the portion of the disposition dividend prescribed to have been paid out of the taxable surplus of the issuing foreign affiliate, that relates to a disposed share, in respect of the disposition, and

D is the specified adjustment factor, in respect of the corporation resident in Canada, in respect of the particular relevant foreign affiliate of the corporation resident in Canada, of the foreign affiliate of the corporation resident in Canada that disposed of the disposed shares, in respect of the disposition of the disposed shares, and

(B) the amount of the underlying foreign tax reduction in respect of the corporation resident in Canada, of the particular relevant foreign affiliate, in respect of the disposition of the disposed shares,

(i) the surplus entitlement percentage, at the balance adjustment time, of the corporation resident in Canada, in respect of the particular relevant foreign affiliate, determined on the assumption that the taxation year, of the particular relevant foreign affiliate that otherwise would have included that time, had ended immediately before that time,

is of

(ii) the surplus entitlement percentage, immediately after the time of the disposition, of the corporation resident in Canada, in respect of the particular relevant foreign affiliate, determined on the assumption that the taxation year, of the particular relevant foreign affiliate, that otherwise would have included the balance adjustment time, had ended at the time of the disposition; and

(c) for the purposes of applying the definitions "exempt deficit", "exempt surplus", "taxable deficit", "taxable surplus" and "underlying foreign tax", in subsection 5907(1), the amounts determined under paragraph (b) are deemed to be the opening exempt deficit, opening exempt surplus, opening taxable deficit, opening taxable surplus, and opening underlying foreign tax, as the case may be, of the particular relevant foreign affiliate, in respect of the corporation resident in Canada.

(a) the amount determined by the formula

where

A is the amount of the issuing foreign affiliate's consolidated exempt deficit (as determined under paragraph 5902(1)(b)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the portion of the amount of the particular relevant foreign affiliate's taxable surplus, in respect of the corporation resident in Canada, immediately before the disposition of the disposed shares, that can reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

D is the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares, and

E is

(i) subject to subparagraph (ii), the surplus entitlement percentage, of the issuing foreign affiliate, in respect of the particular relevant foreign affiliate, that would be determined under subsections 5905(10) to (13) at the balance adjustment time if the issuing foreign affiliate were the "corporation resident in Canada" referred to in those subsections and the particular relevant foreign affiliate were the "particular foreign affiliate" referred to in those subsections, and

(ii) if the particular relevant foreign affiliate is the issuing foreign affiliate, 1; and

(b) if the amount determined, in respect of the particular relevant foreign affiliate, for the description of D or E in the formula in paragraph (a) is nil, nil.

(a) if the particular relevant foreign affiliate has, at the balance adjustment time, an amount of exempt surplus, in respect of the corporation resident in Canada, and the particular foreign affiliate, of the corporation resident in Canada, that issued the disposed shares (in this subsection referred to as the "issuing foreign affiliate") has, at the balance adjustment time, consolidated exempt surplus (as determined under subparagraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares, that exceeds the amount of its consolidated exempt deficit (as determined under paragraph 5902(1)(b)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

where

A is the portion of the amount of the particular relevant foreign affiliate's exempt surplus, in respect of the corporation resident in Canada, at the balance adjustment time, that can reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the amount of the issuing foreign affiliate's consolidated exempt deficit (as determined under paragraph 5902(1)(b)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares, and

D is

(ii) if the value determined, in respect of the particular relevant foreign affiliate, for the description of any of A, B or D in the formula in subparagraph (i) is nil, nil; and

(b) the amount of the particular relevant foreign affiliate's exempt surplus, in respect of the corporation resident in Canada, at the balance adjustment time, if

(i) the particular relevant foreign affiliate has, at the balance adjustment time, an amount of exempt surplus, in respect of the corporation resident in Canada, and

(ii) the issuing foreign affiliate has, at that time, an amount of consolidated exempt deficit (as determined under paragraph 5902(1)(b)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares that is equal to or greater than the amount of its consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares.

(a) the amount determined by the formula

where

A is the portion of the amount of the particular relevant foreign affiliate's exempt surplus, in respect of the corporation resident in Canada, at the balance adjustment time, that can reasonably be considered to have been included in computing the amount of the consolidated exempt surplus, in respect of the corporation resident in Canada, (as determined under paragraph 5902(1)(a)) of the particular foreign affiliate, of the corporation resident in Canada, that issued the disposed shares (referred to in this subsection as the "issuing foreign affiliate"), in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the portion of the disposition dividend that is, because of an election made under subsection 93(1) or (1.2) of the Act in respect of the disposition of the disposed shares, received on the disposed shares by the person that disposed of those shares and that is prescribed by paragraph 5900(1)(a) to have been paid out of the issuing foreign affiliate's exempt surplus, in respect of the corporation resident in Canada, and

D is the specified adjustment factor, in respect of the corporation resident in Canada, in respect of the particular relevant foreign affiliate, of the person that disposed of the disposed shares;

(a) the amount determined by the formula

where

A is the amount of the issuing foreign affiliate's consolidated taxable deficit (as determined under subparagraph 5902(1)(d)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under subparagraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the portion of the amount of the particular relevant foreign affiliate's exempt surplus, in respect of the corporation resident in Canada, immediately before the disposition of the disposed shares, that may reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

Dis the amount of the issuing foreign affiliate's consolidated exempt surplus (as determined under paragraph 5902(1)(a)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares, and

Eis

(b) where the amount determined, in respect of the particular relevant foreign affiliate, for the description of D or E in the formula in paragraph (a) is nil, nil.

(a) if the particular relevant foreign affiliate has, at the balance adjustment time, an amount of taxable surplus, in respect of the corporation resident in Canada, and the particular foreign affiliate, of the corporation resident in Canada, that issued the disposed shares (in this subsection referred to as the "issuing foreign affiliate") has, at the balance adjustment time, consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares, that exceeds the amount of the issuing foreign affiliate's consolidated taxable deficit (as determined under paragraph 5902(1)(d)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

(i) the amount determined by the formula

A/B x C/D

where

A is the portion of the amount of the particular relevant foreign affiliate's taxable surplus, in respect of the corporation, at the balance adjustment time, that can reasonably be considered to have been included in computing the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

B is the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the amount of the issuing foreign affiliate's consolidated taxable deficit (as determined under paragraph 5902(1)(d)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

D is

(A) subject to clause (B), the surplus entitlement percentage, of the issuing foreign affiliate, in respect of the particular relevant foreign affiliate, that would be determined under subsections 5905(10) to (13) at the balance adjustment time where the issuing foreign affiliate were the "corporation resident in Canada" referred to in those subsections and the particular relevant foreign affiliate were the "particular foreign affiliate" referred to in those subsections, and

(B) where the particular relevant foreign affiliate is the issuing foreign affiliate, 1, and

(b) the amount of the particular relevant foreign affiliate's taxable surplus, in respect of the corporation resident in Canada, at the balance adjustment time, if

(a) the amount determined by the formula

where

A is the portion of the amount of the particular relevant foreign affiliate's taxable surplus, in respect of the corporation resident in Canada, at the balance adjustment time, that can reasonably be considered to have been included in computing the amount of the consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares, of the particular foreign affiliate, of the corporation resident in Canada, that issued the disposed shares (in this subsection referred to as the "issuing foreign affiliate"),

B is the amount of the issuing foreign affiliate's consolidated taxable surplus (as determined under paragraph 5902(1)(c)), in respect of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the portion, of the disposition dividend that is, because of an election made under subsection 93(1) or (1.2) of the Act, in respect of the disposition of the disposed shares, received on the disposed shares by the person that disposed of those shares and that is prescribed by paragraph 5900(1)(b) to have been paid out of the issuing foreign affiliate's taxable surplus, in respect of the corporation resident in Canada, and

D is the specified adjustment factor, in respect of the corporation resident in Canada, in respect of the particular relevant foreign affiliate, of the person that disposed of the disposed shares;

where

A is the underlying foreign tax in respect of the corporation resident in Canada, at the balance adjustment time, of the particular relevant foreign affiliate,

B is the taxable deficit reduction, in respect of the corporation resident in Canada, of the particular relevant foreign affiliate of the corporation resident in Canada, in respect of the disposition of the disposed shares,

C is the exempt deficit allocation, in respect of the corporation resident in Canada, of the particular relevant foreign affiliate of the corporation resident in Canada, in respect of the disposition of the disposed shares, and

D is the taxable surplus in respect of the corporation resident in Canada of the particular relevant foreign affiliate, at the balance adjustment time.

where

A is

(a) where the corporation resident in Canada disposed of the disposed shares, 100 per cent, and

(b) where another foreign affiliate of the corporation resident in Canada disposed of the disposed shares, the surplus entitlement percentage of the corporation resident in Canada in respect of that other foreign affiliate, immediately before the disposition of the disposed shares, and

Bis the surplus entitlement percentage of the corporation resident in Canada in respect of the particular relevant foreign affiliate, immediately before the disposition of the disposed shares.

(a) subparagraph (iii) of the description of A in the definition "exempt surplus";

(b) subparagraph (iii) of the description of A in the definition "taxable surplus"; and

(c) subparagraph (iv) of the description of A in the definition "underlying foreign tax".

(b) in any other case, the total of all the amounts required by paragraph 95(2)(a) of the Act to be included in computing the affiliate's income for the year from an active business;

pour l'application du présent alinéa, lorsque la société affiliée a disposé d'immobilisations qui étaient des actions du capital-actions d'une autre société étrangère affiliée de la société donnée en faveur d'une autre société qui était, immédiatement après la disposition, une société étrangère affiliée de la société donnée, est exclue des gains en capital de la société affiliée pour l'année la fraction de ces gains qui correspond au total des montants représentant chacun l'excédent de la juste valeur marchande, à la fin de l'année d'imposition 1975 de la société affiliée, de l'une des actions dont il a été disposé sur son prix de base rajusté;

(b) the total of all amounts each of which is an amount determined at that time under any of subparagraphs (i) to (viii) of the description of A in that definition;

(a.1) the total of all amounts each of which is an amount determined by the formula

where

A is the amount that would be included by paragraph (c), (c.1) or (c.2) of the definition "capital dividend account" in subsection 89(1) of the Act in determining the capital dividend account of the affiliate at the end of the taxation year if

B is the amount determined for A at the end of the affiliate's taxation year that immediately precedes the taxation year,

(ii) the earnings of the particular affiliate for the year from an active business to the extent that they derive from

(c) where the year is the 1976 or any subsequent taxation year of the affiliate (referred to in this paragraph as the "particular affiliate") and the particular affiliate is resident in a designated treaty country, each amount that is

minus the portion of any income or profits tax refunded by the government of a country for the year to the affiliate that can reasonably be regarded as tax refunded in respect of amounts of losses referred to in subparagraph (c)(ii);

(viii) an amount that is determined under subparagraph 5905(2)(a)(iv), (4)(a)(iv), (6)(a)(iv) or (8)(a)(iv) in the period and before the particular time, and

(v) each amount that is determined under subparagraph 5905(2)(a)(i), (4)(a)(i), (6)(a)(i) or (8)(a)(i) in the period and before the particular time, or

(a) in the case of an active business carried on by it in a country, the amount of its loss for the year from the active business carried on in the country computed by applying the provisions of paragraph (a) of the definition "earnings" in this subsection respecting the computation of earnings from that active business carried on in that country, with any modifications that the circumstances require, and

(b) in any other case, the total of the amounts required by paragraph 95(2)(a) of the Act to be included in computing the affiliate's loss from an active business for the year; (perte)

(d) from dispositions of

is the amount, if any, by which

exceeds

(d) from dispositions of

is the amount, if any, by which

exceeds

(b) the total of all amounts each of which is an amount determined at that time under any of subparagraphs (i) to (vi) of the description of A in that definition;

(v) the affiliate's net earnings for the year from dispositions of shares of the capital stock of another foreign affiliate of the corporation that were excluded property of the affiliate (other than dispositions to which any of subsection 88(3) or paragraphs 95(2)(c), (c.2), (d), (d.1), (e), (e.1), (e.3) to (e.5) and (f.4) of the Act applied) or dispositions of partnership interests that were excluded property of the affiliate,

(i.1) the affiliate's net loss for the year in respect of losses included in computing income from an active business because of subparagraphs 95(2)(a)(v) and (vi) of the Act,

(iv) the affiliate's net loss for the year from the disposition of shares of the capital stock of another foreign affiliate of the corporation that were excluded property of the affiliate or from the disposition of partnership interests that were excluded property of the affiliate, or

(v) to the extent that they have not otherwise been included under subparagraph (i) or deducted in computing an amount under subparagraph (b)(i) of the definition "taxable earnings", the loss for the year as determined under paragraph (b) of the definition "loss" minus the portion of any income or profits tax refunded by the government of a country for the year that can reasonably be regarded as tax refunded in respect of that loss,

(vi) each amount that is determined under subparagraph 5905(2)(a)(v), (4)(a)(v), (6)(a)(v) or (8)(a)(v) in the period and before that particular time, and

(v) each amount that is determined under subparagraph 5905(2)(a)(ii), (4)(a)(ii), (6)(a)(ii) or (8)(a)(ii) in the period and before the particular time, or

(iii) each amount that is required by subparagraph 5905(2)(a)(iii), (4)(a)(iii), (6)(a)(iii) or (8)(a)(iii) to be deducted in the period and before the particular time in computing the subject affiliate's underlying foreign tax, or

(b) where a whole dividend is deemed by paragraph 5902(1)(g) to have been paid at the same time on shares of more than one class of the capital stock of an affiliate, for the purpose only of that paragraph, the whole dividend deemed to have been paid at that time on the shares of a class of the capital stock of the affiliate is deemed to be the total of all amounts each of which is a whole dividend deemed to have been paid at that time on the shares of a class of the capital stock of the affiliate, and

(ii) an amount is paid by the primary affiliate to a secondary affiliate in respect of a reduction or refund because of a loss or a tax credit of the secondary affiliate for a taxation year of the income or profits tax that would otherwise have been payable by the primary affiliate for the year on behalf of the consolidated group,

(f) any revenue, income or profit (other than an amount referred to in paragraph (f.1), (h), or (i)) of the affiliate derived in the year from such business carried on in that country to the extent that such revenue, income or profit is not otherwise required to be included in computing the earnings amount of the affiliate for any taxation year by the income tax law that is relevant in computing the earnings amount, and

(a) that are derived from a disposition to which any of subsection 88(3) and paragraphs 95(2)(c.2), (d), (d.1), (e), (e.1), (e.3) to (e.5) and (f.4) of the Act applies, those earnings are to be determined using the rules in those paragraphs; and

(b) from a disposition of property acquired in a transaction to which any of subsection 88(3) and paragraphs 95(2)(c.2), (d), (d.1), (e), (e.1), (e.3) to (e.5) and (f.4) of the Act applies, the cost to the foreign affiliate of the property is to be determined using the rules in those paragraphs.

(a) an amount in respect of the particular amount of interest is included, because of clause 95(2)(a)(ii)(D) of the Act, in computing the income or loss for a particular taxation year from an active business of a particular foreign affiliate of the corporation resident in Canada or a particular foreign affiliate of a person related to that corporation; and

(b) the particular amount of interest is an amount of interest paid or payable to the particular foreign affiliate, by another foreign affiliate (in this subsection and in subsections (2.81) to (2.83) referred to as the "second affiliate") of the corporation resident in Canada to which the particular foreign affiliate and the corporation resident in Canada are related, under a legal obligation to pay interest on borrowed money used for the purpose of earning income from property, or on an amount payable for property acquired for the purpose of gaining or producing income from property, and

(a) where the specified foreign affiliate is the second affiliate, the particular amount is to be deducted in computing the second affiliate's exempt surplus in respect of the corporation resident in Canada at the end of the applicable taxation year of the second affiliate, to the extent of the second affiliate's available exempt surplus amount in respect of the applicable taxation year of the second affiliate;

(b) where the specified foreign affiliate is the third affiliate, there is to be deducted in computing the third affiliate's exempt surplus in respect of the corporation resident in Canada at the end of the applicable taxation year of the third affiliate, the lesser of the third affiliate's available exempt surplus amount in respect of its applicable taxation year and the amount determined by the formula

where

A is the particular amount of interest,

B is the amount deducted because of paragraph (a) in computing the second affiliate's exempt surplus in respect of the corporation resident in Canada at the end of the applicable taxation year of the second affiliate, and

C is the specified adjustment factor, in respect of the corporation resident in Canada, in respect of the third affiliate, in respect of the applicable taxation year of the second affiliate;

where

A is the particular amount of interest,

B is the amount deducted because of paragraph (a) in computing the second affiliate's exempt surplus in respect of the corporation resident in Canada at the end of the applicable taxation year of the second affiliate,

C is the amount determined when the amount deducted because of paragraph (b) in computing the third affiliate's exempt surplus in respect of the corporation resident in Canada at the end of the applicable taxation year of the third affiliate is divided by the amount determined for C in the formula in paragraph (b) in respect of the third affiliate, and

D is the specified adjustment factor, in respect of the corporation resident in Canada, in respect of the specified foreign affiliate of the corporation resident in Canada, in respect of the applicable taxation year of the second affiliate;

(d) amounts in respect of the particular amount of interest must be deducted under paragraphs (a) to (c) in computing the exempt surplus in respect of the corporation resident in Canada of the specified foreign affiliates of the corporation resident in Canada at the end of each of their applicable taxation years to the extent of the total of all amounts each of which is the available exempt surplus amount of a specified foreign affiliate of the corporation resident in Canada in respect of that specified foreign affiliate's applicable taxation year;

(e) paragraph (a) is to be applied to the second affiliate before paragraph (b) is applied to the third affiliate and paragraph (b) is to be applied to the third affiliate before paragraph (c) is applied to a group foreign affiliate of the corporation resident in Canada; and

(f) there is to be added in computing the exempt deficit in respect of the corporation resident in Canada of the second affiliate the amount determined by the formula:

where

K is the particular amount of interest,

L is the amount determined under paragraph (a) in respect of the particular amount of interest in respect of the second affiliate,

M is the amount determined when the amount determined under paragraph (b) in respect of the particular amount of interest in respect of the third affiliate is divided by the amount determined for C in the formula in that paragraph, and

N is the amount determined when the amount determined under paragraph (c) in respect of the particular amount of interest in respect of the group foreign affiliate is divided by the amount determined for D in the formula in that paragraph.

"applicable taxation year", of a specified foreign affiliate of the corporation resident in Canada, means the last taxation year of the specified foreign affiliate that ends in the particular taxation year of the particular foreign affiliate referred to in paragraph (2.8)(a). (l'année d'imposition applicable)

"available exempt surplus amount", of a specified foreign affiliate of the corporation resident in Canada in respect of the applicable taxation year of the specified foreign affiliate, means the amount determined by the formula

where

A is the total of all amounts each of which is the portion of the specified foreign affiliate's income, for its applicable taxation year, from an active business that is included in computing the exempt earnings of the specified foreign affiliate in respect of the corporation resident in Canada,

B is the specified foreign affiliate's exempt surplus in respect of the corporation resident in Canada at the end of the specified foreign affiliate's taxation year that immediately precedes its applicable taxation year,

C is the total of all amounts each of which is the portion of any dividend received in the applicable taxation year, by the specified foreign affiliate from another foreign affiliate of the corporation resident in Canada, that is prescribed by paragraph 5900(1)(a) to have been paid out of that other affiliate's exempt surplus in respect of the corporation resident in Canada,

D is the total of all amounts each of which is the portion of the specified foreign affiliate's loss, for its applicable taxation year, from an active business that is included in computing the exempt loss of the specified foreign affiliate in respect of the corporation resident in Canada,

E is the specified foreign affiliate's exempt deficit in respect of the corporation resident in Canada at the end of the specified foreign affiliate's taxation year that immediately precedes its applicable taxation year,

F is the specified foreign affiliate's taxable deficit in respect of the corporation resident in Canada at the end of the specified foreign affiliate's taxation year that immediately precedes its applicable taxation year, and

G is the total of all amounts each of which is the portion of any dividend paid in the applicable taxation year by the specified foreign affiliate that is prescribed by paragraph 5900(1)(a) to have been paid out of its exempt surplus in respect of the corporation resident in Canada. (montant disponible de surplus exonéré)

where

A is the surplus entitlement percentage of the corporation resident in Canada in respect of the second affiliate, immediately before the end of the applicable taxation year of the second affiliate, and

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the specified foreign affiliate, immediately before the end of the applicable taxation year of the second affiliate. (facteur de rajustement)

(a) the second affiliate;

(b) the third affiliate; or

(c) another corporation that is

(a) there shall be added to the amount determined under paragraph (a) of the definition "earnings" in subsection (1), after adjustment in accordance with subsections (2) to (2.2),

(ii) where the operator is the partnership, the proportion of the total determined under subparagraph (i) that the affiliate's share of the partnership's income or loss for the preceding taxation year is of the partnership's income or loss for that year but, for the purpose of this subparagraph, if both the income and loss of the partnership for the preceding taxation year are nil, that proportion is to be determined as if the partnership had income for that year in the amount of $1,000,000; and

(b) there shall be added to the amount determined under paragraph (a) of the definition "loss" in subsection (1)

(i) where the operator is the affiliate, the total of

(ii) where the operator is the partnership, the proportion of the total determined under subparagraph (i) that the affiliate's share of the income or loss of the partnership for the preceding taxation year is of the income or loss of the partnership for that year but, for the purpose of this subparagraph, if both the income and loss of the partnership for the preceding taxation year are nil, that proportion is determined as if the partnership had income for that year in the amount of $1,000,000.

(a) where at a particular time in the course of the liquidation and dissolution, the fair market value of the property that has been disposed of by the affiliate in the course of the liquidation and dissolution equals or is more than 90% of the fair market value of the property that was owned by the affiliate, immediately before the commencement of the liquidation and the dissolution, the taxation year of the affiliate that would have included the particular time is deemed to have ended immediately before that time; and

(b) each property of the affiliate that was distributed or disposed of by the affiliate in the course of the liquidation and the dissolution is deemed

(a) the property of the affiliate that was so transferred is deemed

(b) the amount, in respect of the property, of the dividend or distribution made by the affiliate to the person to whom the property was transferred is deemed to be equal to the affiliate's proceeds of disposition of the property.

(a) the taxable surplus of the affiliate in respect of the taxpayer at the end of the year (other than the affiliate's net earnings for the year in respect of the affiliate's foreign accrual property income), minus the amount, if any, that would have been added to the underlying foreign tax of the affiliate in respect of the taxpayer, if each disposition deemed by paragraph 128.1(1)(b) of the Act had been an actual disposition, and that is not otherwise included in the underlying foreign tax of the affiliate,

(a) the amount, if any, by which the fair market value of the relevant share, at the election time, exceeds the adjusted cost base, at the time of the disposition, of the relevant share to the holder, and

(b) the amount determined by the following formula

where

A is the amount that would, if the relevant share was the disposed share and the relevant affiliate was the disposed affiliate in respect of the specified section 93 election, be determined under paragraph 5902(1)(f) to be the attributed net surplus in respect of the relevant share in respect of the specified section 93 election,

B is the amount that would be determined under subparagraph 5907(1)(e)(vi) to be the consolidated net surplus in respect of the relevant affiliate, if

C is the amount that would be determined under subparagraph 5902(1)(e)(vi) to be the consolidated net surplus in respect of the relevant affiliate in respect of the specified section 93 election, if the relevant foreign affiliate was the disposed foreign affiliate referred to in subsection 5902(1) and the relevant share was the disposed share referred to in subsection 5902(1).

(a) the amount, if any, by which the adjusted cost base, at the time of the disposition, of the relevant share to the holder exceeds the fair market value of the relevant share, at the election time, and

(b) the amount determined by the following formula

where

A is the amount that would be determined to be the attributed net surplus in respect of the relevant share under paragraph 5902(1)(f) in respect of the specified section 93 election, if

B is the amount, if any, by which the total that would be determined under clause 5902(1)(e)(vi)(B) exceeds the total that would be determined under clause 5902(1)(e)(vi)(A), in respect of the relevant foreign affiliate, if

C is the amount, if any, by which the total that would be determined under clause 5902(1)(e)(vi)(B) exceeds the total that would be determined under clause 5902(1)(e)(vi)(A), in respect of the relevant affiliate in respect of the specified section 93 election, if the relevant foreign affiliate was the disposed foreign affiliate referred to in subsection 5902(1) and the relevant share was the disposed share referred to in subsection 5902(1).

(a) the amount, if any, by which the fair market value of the relevant share, at the election time, exceeds the adjusted cost base, at the time of the disposition, of the relevant share to the holder, and

(b) the amount that would, if the relevant share was the disposed share and the relevant affiliate was the disposed affiliate in respect of the specified section 93 election, be determined under paragraph 5902(1)(f) to be the attributed net surplus in respect of the relevant share if the consolidated net surplus of the relevant foreign affiliate were the amount determined for B in the formula in paragraph (1)(b).

where

A is the amount of the unadjusted suspended gain in respect of a specified share of the relevant foreign affiliate at the original disposition time,

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the original disposition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time, and

C is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the recognition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time.

where

A is any income or profits tax paid to the government of a country by the relevant foreign affiliate that can reasonably be regarded as tax in respect of the unadjusted suspended gain in respect of the specified share,

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the original disposition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time, and

C is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the recognition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time.

A is the amount of the unadjusted suspended income or gain in respect of a specified property of the relevant foreign affiliate at the original disposition time,

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the original disposition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time, and

C is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the recognition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time.

where 

A is any income or profits tax paid to the government of a country by the relevant foreign affiliate that can reasonably be regarded as tax in respect of the unadjusted suspended income or gain in respect of the specified property,

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the original disposition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time, and

C is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the recognition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time.

where

A is the amount of the unadjusted suspended loss or capital loss in respect of a specified property of the relevant foreign affiliate at the original disposition time,

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the original disposition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time, and

C is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the recognition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time.

where

A is any income or profits tax refunded by the government of a country to the relevant foreign affiliate that can reasonably be regarded as tax refunded in respect of the unadjusted suspended loss or capital loss in respect of the specified property,

B is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the original disposition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time, and

C is the surplus entitlement percentage of the corporation resident in Canada in respect of the relevant foreign affiliate immediately before the recognition time determined on the assumption that the taxation year of the relevant foreign affiliate that would otherwise have included that time had ended immediately before that time.

(a) if a foreign affiliate of the particular corporation resident in Canada was the vendor that disposed of the specified share, the particular corporation's filing-due date for its taxation year that includes the last day of the foreign affiliate's taxation year in which the disposition was made; and

(b) if a foreign affiliate of the particular corporation resident in Canada is a member of a partnership that was the vendor that disposed of the specified share, the particular corporation's filing-due date for its taxation year that includes the last day of the taxation year of the foreign affiliate that includes the last day of the partnership's fiscal period in which the disposition was made.

(a) if a foreign affiliate of the corporation resident in Canada made the disposition, the filing-due date of the corporation resident in Canada for its taxation year that includes the last day of the foreign affiliate's taxation year in which the disposition was made; and

(b) if a foreign affiliate of the corporation resident in Canada is a member of a partnership that made the disposition, the filing-due date of the corporation resident in Canada for its taxation year that includes the last day of the taxation year of the foreign affiliate that includes the last day of the partnership's fiscal period in which the disposition was made.

(a) if a foreign affiliate of the particular corporation resident in Canada was the vendor that disposed of the specified property, the particular corporation's filing-due date for its taxation year that includes the last day of the foreign affiliate's taxation year in which the disposition was made; and

(b) if a foreign affiliate of the particular corporation resident in Canada is a member of a partnership that was the vendor that disposed of the specified property, the particular corporation's filing-due date for its taxation year that includes the last day of the foreign affiliate's taxation year that includes the last day of the partnership's fiscal period in which the disposition was made.

(a) if a foreign affiliate of the taxpayer was the operator, the taxpayer's filing-due date for its taxation year that includes the last day of the foreign affiliate's taxation year that is the specified taxation year; and

(b) if a partnership — of which a foreign affiliate of the taxpayer was, or was deemed by paragraph 95(2)(k.7) of the Act to be, a member — was the operator, the taxpayer's filing-due date for its taxation year that includes the last day of the foreign affiliate's taxation year that includes the last day of the partnership's fiscal period that is the specified taxation year.

(a) if an election has been made by a taxpayer under subsection 93(1) or (1.2) of the Income Tax Act in respect of a disposition that occurs after December 20, 2002 and on or before ANNOUNCEMENT DATE (other than a disposition required to be made under an agreement in writing made by a vendor on or before December 20, 2002) and the taxpayer has made a valid election under subsection 133(40) of the Legislative Proposals and Draft Regulations relating to Income Tax released on ANNOUNCEMENT DATE,

(i) the taxpayer has not made a valid election under subsection 133(40) of the Legislative Proposals and Draft Regulations relating to Income Tax released on ANNOUNCEMENT DATE, and

(ii) none of paragraphs 88(3)(a), as enacted by subsection 130(2) of those Legislative Proposals, and 95(2)(c.2) and 95(2)(d) to (e.5), as enacted by subsection 133(11) of those Legislative Proposals, of the Income Tax Act applies to the disposition; and

(c) section 1 does not apply in respect of a taxpayer in respect of an election made by the taxpayer under subsection 93(1) or (1.2) of the Income Tax Act in respect of a disposition that occurs after ANNOUNCEMENT DATE, if

(a) clause (d)(ii)(D) of the definition "exempt earnings" in subsection 5907(1) of the Regulations, as enacted by subsection 3(7), is, for the taxation years, of all foreign affiliates of the taxpayer, that end before 2000, to be read as follows:

(c) where the taxpayer has not made a valid election under subsection 133(37) of the Legislative Proposals and Draft Regulations relating to Income Tax released on ANNOUNCEMENT DATE,

(ii) subclause (c)(ii)(H)(I) of the definition "exempt loss" in subsection 5907(1) of the Regulations, as enacted by subsection 3(9), is to be read as follows:

(d) clause (c)(ii)(D) of the definition "exempt loss" in subsection 5907(1) of the Regulations, as enacted by subsection 3(9), is, for the taxation years, of all foreign affiliates of the taxpayer, that end before 2000, to be read as follows:

(e) clauses (c)(ii)(F) and (G) of the definition "exempt loss" in subsection 5907(1) of the Regulations, as enacted by subsection 3(9), is, for the taxation years, of all foreign affiliates of the taxpayer, that end before 2000, to be read as follows:

(G) if the particular affiliate is a member of a particular partnership (other than where the particular affiliate would be a specified member of the particular partnership at any time in a fiscal period of the particular partnership that ends in the year if the definition "specified member" of a partnership in subsection 248(1) of the Act were read without reference to paragraph (a) of that definition), amounts required to be included in computing the loss of the particular affiliate from an active business for the year because of clause 95(2)(a)(ii)(C) of the Act that are derived from amounts paid or payable, directly or indirectly, to it or to another partnership of which it is a member by the particular partnership, to the extent that, if the particular partnership were a foreign affiliate of a corporation and were resident in the country in which the particular affiliate is resident and subject to income taxation, the amounts paid or payable by the particular partnership would be deductible in computing its exempt earnings or exempt loss for the year or for a subsequent taxation year,".

(a) a fixed place of business of the person, including an office, a branch, a mine, an oil well, a farm, a timberland, a factory, a workshop or a warehouse; or

(b) if the person does not have any fixed place of business, the principal place at which the person's business is conducted.

(a) if a person carries on business through an employee or agent, established in a particular place, who has general authority to contract for the person or who has a stock of merchandise owned by the person from which the employee or agent regularly fills orders, the person is deemed to have a fixed place of business at that place,

(b) if a person is an insurance corporation, the person is deemed to have a fixed place of business in each country in which the person is registered or licensed to do business,

(c) if a person uses substantial machinery or equipment at a particular place at any time in a taxation year, the person is deemed to have a fixed place of business at that place,

(d) the fact that a person has business dealings through a commission agent, broker or other independent agent or maintains an office solely for the purchase of merchandise at a particular place does not of itself mean that the person has a fixed place of business at that place, and

(e) the fact that a corporation has a subsidiary controlled corporation at a place or a subsidiary controlled corporation engaged in trade or business at a place does not of itself mean that the corporation is operating a fixed place of business at that place.