Edward A. Heakes, "Another Wave of Foreign Affiliate Proposals", International Tax Planning, Volume XVIII, No. 4, 2013, p. 1275

De minimis partnership interests are included in test (p. 1276

[I]f a taxpayer holds 5% of the shares of a listed company and is a partner in a partnership that holds 20% of such shares, the 25% test would be met.

Under the current draft, the size of the taxpayer's interest in the partnership is not taken into account in determining whether the listed shares are taxable Canadian property and this has the potential to create various anomalous results….

Avoidance of s. 85.1(4) eliminated (p. 1276)

It is currently arguably possible to avoid this limitation [in s. 85.1(4) by utilizing a triangular merger structure and relying on the tax-deferred treatment under the foreign merger rules contained in section 87, rather than on subsection 85.1(3). The July 12 Proposals would add a new restriction to the foreign merger rules to deny tax-deferred treatment of the shareholder where the shares of the merged company are excluded property and the shares or substituted property are sold to an arm's length person (or to a partnership that has an arm's length person as a member) as part of the same series of transactions….

Narrowness of connected definition (p. 1275)

[A]ssume that A is a non-resident that owns 100% of the shares of two first tier Canadian holding companies (B and C) and that B and C in turn each own 50% of the shares of another Canadian corporation (D), which owns 100% of the shares of a CFA (F). If D transfers the shares of F to B and C, the exception does not appear to apply as neither B nor C is connected with D under the current draft.