2005 Ruling 2005-0123631R3 - Thin Capitalization Rules -- summary under Subsection 245(4)

GAAR will apply to prevent what otherwise would be the avoidance of the thin capitalization rule when debts owing by a Canadian corporation to a non-resident affiliated corporation (Finco) are transferred by the Finco to a partnership organized by that Canadian subsidiary and a Canadian affiliate in consideration for the issuance of interest-bearing debt by the partnership to the Finco.