A shareholder having an accrued foreign exchange loss on common shares of an FA and an accrued foreign exchange gain on a related party debt used to acquire those shares acquires a separate class of the FA's shares and pays dividends thereon with a view to such dividends not reducing a loss to be realized on the a sale of the original FA shares owned - in order that such loss can offset the FX gain on settlement of the debt. In indicating that GAAR would apply to the resulting avoidance of the stop-loss rule in s. 93(2.01) respecting the sale of the shares, CRA stated that a loss would be denied "unless the related debt is a debt described in subparagraph 93(2.01)(b)(ii), a provision which precisely specifies which gains are intended to have an effect on the computation of the amount of a loss to be denied on the disposition of FA shares," and that one such requirement was that an "arm's length foreign currency debt… was entered into within 30 days of the acquisition of the FA share."
"It would be difficult to arrive at a different conclusion" for similar transactions in as s. 112(3) context:
given that subsection 112(3) is a loss denial rule similar in nature to subsection 93(2.01) (and 93(2) as it formerly read). Furthermore, the absence of an exception from 112(3) similar in nature to subparagraph 93(2.01)(b)(ii) could be viewed as being indicative of an intention to not have any gains have an effect on the computation of the amount of the loss to be denied on the disposition of non-FA shares.