• 202. (1) The formula in the definition “cumulative foreign resource expense” in subsection 66.21(1) of the Act is replaced by the following:

  (A + A.1 + B + C + D) – (E + F + G + H + I + J)

• (2) The definition “cumulative foreign resource expense” in subsection 66.21(1) of the Act is amended by adding the following after the description of A:

  A.1

  is the total of all foreign resource expenses, in respect of that country, that is the cost to the taxpayer of any of the taxpayer’s foreign resource property in respect of that country that is deemed to have been acquired by the taxpayer under paragraph 128.1(1)(c) at the last time (before the particular time) that the taxpayer became resident in Canada;

• (3) The description of B in the definition “cumulative foreign resource expense” in subsection 66.21(1) of the Act is replaced by the following:

  B

  is the total of all amounts included in computing the amount referred to in paragraph 59(3.2)(c.1) in respect of that country, for taxation years that ended before the particular time and at a resident time;

• (4) Subsections (1) and (2) are deemed to have come into force on January 1, 2005.

• (5) Subsection (3) applies to taxation years that end after November 5, 2010.

• 203. (1) Paragraph (a) of the definition “Canadian oil and gas property expense” in subsection 66.4(5) of the Act is replaced by the following:

  • (a) the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (a), (c) or (d) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — the property (other than a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership), or an amount paid to Her Majesty in right of the Province of Saskatchewan as a net royalty payment pursuant to a net royalty petroleum and natural gas lease that was in effect on March 31, 1977 to the extent that it can reasonably be regarded as a cost of acquiring the lease,

• (2) Subsection (1) applies to taxation years that begin after 2006, except that in its application to the taxation years that begin in 2007, paragraph (a) of the definition “Canadian oil and gas property expense” in subsection 66.4(5) of the Act, as enacted by subsection (1), is to be read as follows:

  • (a) notwithstanding paragraph 18(1)(m), the cost to the taxpayer of, including any payment for the preservation of a taxpayer’s rights in respect of, any property described in paragraph (a), (c) or (d) of the definition “Canadian resource property” in subsection 66(15) or any right to or interest in — or, for civil law, any right in or to — the property (other than a right or an interest that the taxpayer has by reason of being a beneficiary under a trust or a member of a partnership), or an amount paid or payable to Her Majesty in right of the Province of Saskatchewan as a net royalty payment pursuant to a net royalty petroleum and natural gas lease that was in effect on March 31, 1977 to the extent that it can reasonably be regarded as a cost of acquiring the lease, but not including any payment made to any of the persons referred to in subparagraph 18(1)(m)(i) for the preservation of a taxpayer’s right in respect of a Canadian resource property, nor a payment (other than a net royalty payment referred to in this paragraph) to which paragraph 18(1)(m) applied because of clause 18(1)(m)(ii)(B),

• 204. (1) Section 66.7 of the Act is amended by adding the following after subsection (10):

  • Marginal note:Amalgamation — partnership property

    (10.1) For the purposes of subsections (1) to (5) and the definition “original owner” in subsection 66(15), if at any particular time there has been an amalgamation within the meaning assigned by subsection 87(1), other than an amalgamation to which subsection 87(1.2) applies, of two or more corporations (each of which is referred to in this subsection as a “predecessor corporation”) to form one corporate entity (referred to in this subsection as the “new corporation”) and immediately before the particular time a predecessor corporation was a member of a partnership that owned a Canadian resource property or a foreign resource property,

    • (a) the predecessor corporation is deemed

      • (i) to have owned, immediately before the particular time, that portion of each Canadian resource property and of each foreign resource property owned by the partnership at the particular time that is equal to the predecessor corporation’s percentage share of the total of the amounts that would be paid to all members of the partnership if the partnership were wound up immediately before the particular time, and

      • (ii) to have disposed of those portions to the new corporation at the particular time;

    • (b) the new corporation is deemed to have, by way of the amalgamation, acquired those portions at the particular time; and

    • (c) the income of the new corporation for a taxation year that ends after the particular time that can reasonably be attributable to production from those properties is deemed to be the lesser of

      • (i) the new corporation’s share of the part of the income of the partnership for fiscal periods of the partnership that end in the year that can reasonably be regarded as being attributable to production from those properties, and

      • (ii) the amount that would be determined under subparagraph (i) for the year if the new corporation’s share of the income of the partnership for the fiscal periods of the partnership that end in the year were determined on the basis of the percentage share referred to in paragraph (a).

• (2) Subsection 66.7(16) of the Act is replaced by the following:

  • Marginal note:Non-successor acquisitions

    (16) If at any time a Canadian resource property or a foreign resource property is acquired by a person in circumstances in which none of subsections (1) to (5), nor subsection 29(25) of the Income Tax Application Rules, apply, every person who was an original owner or predecessor owner of the property before that time is, for the purpose of applying those subsections to or in respect of the person or any other person who after that time acquires the property, deemed after that time not to be an original owner or predecessor owner of the property before that time.

• (3) Subsection (1) applies to amalgamations that occur after 1996.

• (4) Subsection (2) applies to property acquired after November 5, 2010.

• 205. (1) Paragraph 66.8(3)(a) of the Act is replaced by the following:

  • (a) the expression “limited partner” of a partnership has the meaning that would be assigned by subsection 96(2.4), if in subsection 96(2.5) each reference to

    • (i) “February 25, 1986” were a reference to “June 17, 1987”,

    • (ii) “February 26, 1986” were a reference to “June 18, 1987”,

    • (iii) “January 1, 1987” were a reference to “January 1, 1988”,

    • (iv) “June 12, 1986” were a reference to “June 18, 1987”, and

    • (v) “prospectus, preliminary prospectus or registration statement” were a reference to “prospectus, preliminary prospectus, registration statement, offering memorandum or notice that is required to be filed before any distribution of securities may commence”;

  • (a.1) the expression “at-risk amount” of a taxpayer in respect of a partnership has the meaning that would be assigned by subsection 96(2.2) if paragraph 96(2.2)(c) read as follows:

  • (c) all amounts each of which is an amount owing at that time to the partnership, or to a person or partnership not dealing at arm’s length with the partnership, by the taxpayer or by a person or partnership not dealing at arm’s length with the taxpayer, other than any amount deducted under subparagraph 53(2)(c)(i.3) in computing the adjusted cost base, or under section 143.2 in computing the cost, to the taxpayer of the taxpayer’s partnership interest at that time, or any amount owing by the taxpayer to a person in respect of which the taxpayer is a subsidiary wholly-owned corporation or where the taxpayer is a trust, to a person that is the sole beneficiary of the taxpayer, and;

• (2) Subsection (1) applies to fiscal periods that end after 2003.

• 206. (1) The portion of subsection 67.1(1.1) of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Meal expenses for long-haul truck drivers

    (1.1) An amount paid or payable in respect of the consumption of food or beverages by a long-haul truck driver during an eligible travel period of the driver is deemed to be the amount determined by multiplying the specified percentage in respect of the amount so paid or payable by the lesser of

• (2) Subsection (1) applies to amounts that are paid, or become payable, after March 18, 2007.

• 207. (1) The portion of section 68 of the Act before paragraph (a) is replaced by the following:

  Marginal note:Allocation of amounts in consideration for property, services or restrictive covenants

  68. If an amount received or receivable from a person can reasonably be regarded as being in part the consideration for the disposition of a particular property of a taxpayer, for the provision of particular services by a taxpayer or for a restrictive covenant as defined by subsection 56.4(1) granted by a taxpayer,

• (2) Section 68 of the Act is amended by striking out “and” at the end of paragraph (a), by adding “and” at the end of paragraph (b) and by adding the following after paragraph (b):

  • (c) the part of the amount that can reasonably be regarded as being consideration for the restrictive covenant is deemed to be an amount received or receivable by the taxpayer in respect of the restrictive covenant irrespective of the form or legal effect of the contract or agreement, and that part is deemed to be an amount paid or payable to the taxpayer by the person to whom the restrictive covenant was granted.

• (3) Subsections (1) and (2) are deemed to have come into force on February 27, 2004, except that those subsections do not apply to a taxpayer’s grant of a restrictive covenant made in writing by the taxpayer before February 27, 2004 between the taxpayer and a person with whom the taxpayer deals at arm’s length.

• 208. (1) Paragraph 69(1)(b) of the English version of the Act is amended by striking out “and” at the end of subparagraph (iii).

• (2) Subsection (1) applies to dispositions that occur after December 23, 1998.

• 209. (1) The portion of subsection 70(3) of the French version of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Droits ou biens transférés aux bénéficiaires

    (3) Si, avant l’expiration du délai accordé pour le choix prévu au paragraphe (2), un droit ou un bien auquel ce paragraphe s’appliquerait par ailleurs a été transféré ou distribué aux bénéficiaires ou à d’autres personnes ayant un droit de bénéficiaire sur la succession ou la fiducie, les règles ci-après s’appliquent :

• (2) Subsection 70(5.2) of the Act is replaced by the following:

  • Marginal note:Resource property and land inventory

    (5.2) If in a taxation year a taxpayer dies,

    • (a) the taxpayer is deemed

      • (i) to have disposed, at the time that is immediately before the taxpayer’s death, of each

        • (A) Canadian resource property of the taxpayer,

        • (B) foreign resource property of the taxpayer, and

        • (C) property that was land included in the inventory of a business of the taxpayer, and

      • (ii) subject to paragraph (c), to have received at that time proceeds of disposition for each such property equal to its fair market value at that time;

    • (b) any person who, as a consequence of the taxpayer’s death, acquires a property that is deemed by paragraph (a) to have been disposed of by the taxpayer is, subject to paragraph (c), deemed to have acquired the property at the time of the death at a cost equal to its fair market value at the time that is immediately before the death; and

    • (c) where the taxpayer was resident in Canada at the time that is immediately before the taxpayer’s death, a particular property described in clause (a)(i)(A), (B) or (C) is, on or after the death and as a consequence of the death, transferred or distributed to a spouse or common-law partner of the taxpayer described in paragraph (6)(a) or a trust described in paragraph (6)(b), and it can be shown within the period that ends 36 months after the death (or, where written application has been made to the Minister by the taxpayer’s legal representative within that period, within any longer period that the Minister considers reasonable in the circumstances) that the particular property has, within that period, vested indefeasibly in the spouse, common-law partner or trust, as the case may be,

      • (i) the taxpayer is deemed to have received, at the time that is immediately before the taxpayer’s death, proceeds of disposition of the particular property equal to

        • (A) if the particular property is Canadian resource property of the taxpayer or foreign resource property of the taxpayer, the amount specified by the taxpayer’s legal representative in the taxpayer’s return of income filed under paragraph 150(1)(b), not exceeding its fair market value at that time, and

        • (B) if the particular property was land included in the inventory of a business of the taxpayer, its cost amount to the taxpayer at that time, and

      • (ii) the spouse, common-law partner or trust, as the case may be, is deemed to have acquired at the time of the death the particular property at a cost equal to the amount determined under subparagraph (i) in respect of the disposition of it under paragraph (a).

• (3) The portion of subsection 70(6) of the French version of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Transfert ou distribution de biens à l’époux ou au conjoint de fait ou à une fiducie à leur profit

    (6) Lorsqu’un bien d’un contribuable qui résidait au Canada immédiatement avant son décès est un bien auquel le paragraphe (5) s’appliquerait par ailleurs et qu’il est, par suite du décès du contribuable, transféré ou distribué :

• (4) The portion of subsection 70(6.1) of the French version of the Act before paragraph (a) is replaced by the following:

  • Marginal note:Transfert ou distribution du compte de stabilisation du revenu net à l’époux ou au conjoint de fait ou à une fiducie

    (6.1) Lorsqu’un bien qui est un compte de stabilisation du revenu net d’un contribuable est transféré ou distribué à l’une des personnes ci-après au moment du décès du contribuable ou postérieurement et par suite de ce décès, les paragraphes (5.4) et 73(5) ne s’appliquent pas au second fonds du compte de stabilisation du revenu net du contribuable :

• (5) The portion of paragraph 70(7)(b) of the French version of the Act before subparagraph (i) is replaced by the following:

  • b) le représentant légal du contribuable peut, dans la déclaration de revenu du contribuable (sauf celle produite en vertu des paragraphes (2) ou 104(23), de l’alinéa 128(2)e) ou du paragraphe 150(4)) dans laquelle il énumère un ou plusieurs biens, sauf un compte de stabilisation du revenu net, qui ont été transférés ou distribués à la fiducie au moment du décès du contribuable ou postérieurement et par suite de ce décès et dont la juste valeur marchande globale immédiatement après ce décès est au moins égale au total des dettes non admissibles du contribuable, faire un choix pour que, à la fois :

• (6) Subsection (2) applies to taxation years that begin after 2006.

210. The portion of subsection 72(2) of the French version of the Act before paragraph (a) is replaced by the following:

• 211. (1) Subsection 73(2) of the Act is replaced by the following:

  • Marginal note:Capital cost and amount deemed allowed to spouse, etc., or trust

    (2) If a transferee is deemed by subsection (1) to have acquired any particular depreciable property of a prescribed class of a taxpayer for an amount determined under paragraph (1)(b) and the capital cost to the taxpayer of the particular property exceeds the amount determined under that paragraph, in applying sections 13 and 20 and any regulations made under paragraph 20(1)(a)

    • (a) the capital cost to the transferee of the particular property is deemed to be the amount that was the capital cost to the taxpayer of the particular property; and

    • (b) the excess is deemed to have been allowed to the transferee in respect of the particular property under regulations made under paragraph 20(1)(a) in computing income for taxation years before the acquisition of the particular property.

• (2) Paragraph 73(3)(a) of the Act is replaced by the following:

  • (a) the property was, before the transfer, land in Canada or depreciable property in Canada of a prescribed class, of the taxpayer, or any eligible capital property in respect of a fishing or farming business carried on in Canada by the taxpayer;

• (3) Subsection (1) applies to transfers that occur after 1999.

• (4) Subsection (2) applies to dispositions of property that occur after May 1, 2006, other than a disposition in respect of which a taxpayer has made an election under subsection 11(5) of the Budget Implementation Act, 2006, No. 2.