First of all, section 245 of the Income Tax Act is the general anti-avoidance rule. If you make an attempted avoidance transaction that is for the purpose of only getting a tax benefit, and if it's determined that the transaction is abusive, then the Canada Revenue Agency is able to force you to pay a tax notwithstanding the attempted transaction. In this case, it's the non-arm's-length debt in the corporate subsidiary of the income trust that CRA can go in and say, “We don't permit you to have this high level of debt, we don't permit you to use a 15% interest rate”, just as an example. The thin capitalization rule, if it's used in conjunction with that, which is section 18.4...you are limited to having two times the debt relative to the equity in a non-arm's-length debt transaction.
The consequence is that they're forced to have that 2:1 ratio, and they don't get the interest deduction that is presently in existence, even in the case of a private income trust. The tax advisers are telling the foreign acquirers to come to the country because this new income trust tax legislation for you today applies to publicly traded. They're saying that if you come in and acquire this and make it private, you'll get the same ability to use the high non-arm's-length debt and get a full interest deduction for that.
I'm saying Canada Revenue Agency can say to that foreign private equity buyer or to that master limited partnership, “You're not allowed to do that. We're going to use these sections of the act and force you to not have such a deduction and have profits”—they're not all stripped out—“and you'll pay taxes to the Canadian government.” It would be grossly unfair not to apply that GAAR section and thin capitalization rule after having just removed the tax advantage for individual Canadians.
It's also essential, in my opinion, in the debate of hollowing out of Canadian corporations and income trusts, that we not have a tax advantage in this country that draws all those billions of floating capital in the world to our market because we're a tax haven for them. We stop ourselves being a tax haven by using this thin cap rule in the non-arm's-length step. They can do it for the royalties in the anti-trust as well. GAAR would apply to the artificially high royalty agreements within the energy trust.