Finance is considering a domestic anti-treaty shopping rule which overrides treaty benefits

Although it has issued a "consultation" paper, so that all reasonable alternatives are open for consideration, it is quite clear that Finance is contemplating adopting a domestic treaty override provision (i.e., an amendment to or under the Income Tax Act that in specified circumstances would override otherwise-effective treaty shopping).  Finance considers that this could be done consistently with the OECD Commentaries, which indicate that countries do not have to grant treaty benefits for treaty abuses (i.e., Finance considers this would not be an "override" rule in the sense of blithely breaching Canada’s treaty obligations in the U.S. fashion).

Finance discusses various forms that the anti-treaty shopping rule could take.  It seems to be somewhat partial to a rule which could (based on some CRA discretion) deny treaty benefits where the entity claiming the benefits is owned or controlled by 3^rd county residents not all of whom are resident in treaty countries with equivalent relief, and the entity pays little or no tax and has no substantive business operations (other than managing investment income).

Neal Armstrong.   Summary of 12 August 2013 Department of Finance Consultation Paper on Treaty Shopping – The Problem and Possible Solutions under Treaties – Art. 29A.