When asked about interest deductibility where, in the context of a leveraged buy-out, the Bank lends to Target under a secured loan bearing interest at 5%, Target lends the same sum to Acquireco at 5.5% interest, and Acquireco uses the same sum to purchase all of the shares of Target, CRA stated:
The submitted situation is not a typical leveraged buy-out structure. It instead more resembles… C.R.B. Logging… . We are not currently disposed to take a position respecting such a hypothetical scenario, but would be prepared to consider this question in the context of an advance ruling request.