Specialty Manufacturing Ltd. v. R., 99 DTC 5222, [1999] 3 CTC 82 (FCA) -- summary under Article 9

McDonald J.A. found that the capitalization of the taxpayer by non-resident related shareholders with close to 100% debt financing meant that the loans were those that no arm's-length lender would have made. Accordingly, it was not necessary to consider the taxpayer's argument that because the loans were those that arm's length persons would have made, Article 9 of the Canada-U.S. Convention effectively overrode the rule in s. 18(4) of the Act.