The existing income tax rules have two relevant rules related to interest payments.
One regime is called the thin capitalization regime. That restricts the deduction of interest, by corporations typically, in circumstances where their debt to equity ratio is too high. The assumption is they're using excess debt to create tax deductions in Canada and reduce the Canadian tax base. That's one set of existing rules.
We also have withholding taxes that can apply on payments of interest across the border to non-residents of Canada.
The back-to-back loan measure in budget 2014 addresses structures that avoid either of those sets of rules, essentially by interposing an arm's-length non-resident, typically a foreign bank. In essence, the structure is a Canadian subsidiary, for example, a foreign parent company, a loan arrangement between the two, that would be subject to the thin capitalization rules and/or the withholding tax rules, potentially both. By interposing a foreign bank as a conduit for the interest payments, taxpayers could avoid those rules.
We don't have data precisely on how prevalent the structure was, but we did have information that it was being observed in the private sector.