Geoff Turner points out that the proposed safe-harbour for Canadian parent guarantees is too narrow

Draft s. 247(7.1) provides relief from the application of the Canadian transfer pricing rules to a guarantee of debt of a controlled foreign affiliate by the Canadian parent if the borrowed funds were used in the specific active business manner described in s. 17(8)(a) or (b).

The draft s. 247(7.1) exception is unduly narrow.  For example, if the CFA is generating foreign accrual property income, the savings generated to the corporate group by accessing the parent's credit rating through a guarantee will be captured in the Canadian tax base irrespectively of the charging (or not) of a guarantee fee.

Having said that, were CRA consistent with its position in the General Electric cases, it would not require a guarantee fee even where the draft s. 247(7.1) exception did not apply.

Neal Armstrong.  Summary of Geoffrey S. Turner, "Downstream Loan Guarantees and Subsection 247(7.1) Transfer Pricing Relief," CCH Tax Topics, No. 2166, September 12, 2013, p.1 under s. 247(7.1).