CRA indicates that restricting s. 88(1.1) to Canadian corporations is not contrary to Art. XXV(1) or (5) of the Canada–U.S. Treaty

U.S. LLCs that had incurred non-capital losses as a result of carrying on business in Canada through Canadian permanent establishments, are wound up into their parent, which also is a U.S. LLC. S. 88(1.1) is restricted to Canadian corporations, so that those non-capital losses are extinguished, rather than being transferred to the LLC parent.

CRA confirmed in light of Saipem UK and some OECD commentary that it does not consider this result to constitute discrimination based on nationality or on permanent establishment status contrary to Art. XXV(1) or (5) of the Canada–U.S. Treaty.

Neal Armstrong. Summary of 25 May 2017 External T.I. 2017-0685651E5 under Treaties - Article 25.