The list of notifiable transactions for purposes of s. 237.4(3) essentially includes a non-resident person (NR1) entering into an arrangement to indirectly provide debt financing to a taxpayer through another non-resident person (NR2) where the taxpayer treats the interest paid by it to NR2 as subject to a lower withholding tax rate than if it paid that interest directly to NR1.
CRA confirmed that the s. 237.4(3) reporting requirements would apply where the mostly non-resident public shareholders of Foreign Parent subscribe for shares of Foreign Parent, which uses those proceeds to make an interest bearing loan and subscribe for shares of its wholly-owned subsidiary, Foreign Opco, which uses all of such proceeds to make an interest-bearing loan to Canco, with interest paid by Canco to Foreign Opco being subject to a 10% withholding tax rate; whereas the rate would be 15% had the interest been paid by Canco to Foreign Parent.
CRA went on to indicate that if NR2 (Foreign Opco) received equity financing through the issuance of shares, and used all or a portion of the proceeds to make an interest-bearing loan to Canco, the arrangement would not come within the Part XIII tax aspect of the rules (respecting s. 212(3.1).) (assuming that the shares were not specified shares as defined in s. 212(3.8), and did not meet the conditions of the character substitution rules.)