The PPT concept of “arrangement or transaction” may be restricted to the scope of a common-law series

Although not expressly stated in the language of the principal purpose test itself in the Multilateral Instrument, the expression “arrangement or transaction” probably implicitly includes the common law notion of “series of transactions”, which references sequenced transactions that are pre-ordained to produce a given result, with no practical likelihood that the pre-planned events would not take place in that order. This suggests, for example, that if the holding structure for a Canadian oil and gas company, such as in Alta Energy “is migrated to Luxembourg at a time when there is neither an agreement nor a specific genuine intention to sell the shares of the Canadian company, no series should exist for the purposes of the application of the PPT.”

As the PPT uses a “one of the principal purposes” test to determine the presence of an avoidance transaction, rather than the GAAR principal purpose test, it is broader than GAAR in this regard.

(As also discussed by Duff) on the face of the MLI, it appears that where it applies to deny a Treaty benefit, all of that benefit is denied rather than only the incremental benefit attributable to the tax avoidance.

Neal Armstrong. Summary of Michael Kandev and John Lennard, "The OECD Multilateral Instrument: A Canadian Perspective on the Principal Purpose Test", Bulletin for International Taxation, January 2020, p. 54 under Treaties - MLI – Art. 7(1).