A foreign corporation ("ForeignCo") acquires a Canadian company ("Opco"): a wholly-owned newly-incorporated subsidiary of ForeignCo ("Holdco") uses borrowed money to acquire all the shares of Opco, Holdco transfers a portion of the common shares of Opco to ForeignCo as repayment of a portion of its indebtedness to ForeignCo, and ForeignCo then transfers those shares to another Canadian subsidiary ("Newco1").
In order to transfer interest expense from Holdco to the Opco business, Holdco transfers its common shares of Opco to a newly incorporated Canadian subsidiary ("Newco2") in consideration for a promissory note of Newco2 and for share consideration, and Newco2 and Opco then amalgamate.
A favourable interest deductibility ruling.