The base erosion test in the LOB Article of the Canada-U.S. Treaty may be inadequate

The OECD commentary distinguishes between the situation where a third-state resident (who would not be entitled to good Treaty benefits if it invested directly in the source company) uses a "direct conduit" (i.e., it is the majority owner of a "Recipient" company resident in a country with a good Treaty with the source country) and where it uses a "steppingstone conduit" (i.e., it holds debt claims on the revenue streams received by the Recipient company.)

Yoshimura explains in detail that the Limitations on Benefits Article of the Japan-U.S. Treaty (which is similar to that in the Canada-U.S. Treaty) "can handle typical direct conduits while it cannot deal with typical steppingstone conduits."

Neal Armstrong.  Summary of Koichiro Yoshimura, "Clarifying the Meaning of 'Beneficial Owner' in Tax Treaties", Tax Notes International, November 25, 2013, p. 761 under Treaties – Art. 29A.