CRA notes that a scheme to avoid the debt parking rules (by funnelling the debt through the GP of an LP) technically worked

A purchaser of an LP with substantial current losses and owing underwater debt to the parent of the main vendor of the LP units avoided the debt parking rules by: getting the vendor parent to first transfer the debt to the GP (a related person transfer); having its own parent purchase the GP shares at the same time as it purchased the LP units; and the having the GP sell the debt to it (also a related person transfer).

The Directorate acknowledged that this worked as a technical matter, but noted that there was a current GAAR review by Aggressive Tax Planning to which Lecavalier was germane.

The Directorate also noted that the allocation of essentially 100% of the partnership loss for the year to the purchaser was consistent with ss. 96 and 103.

Neal Armstrong. Summaries of 28 October 2014 Memo 2014-0529981I7 under s. 80.01(6) and s. 103(1).