The foreign affiliate dumping rules currently apply where a non-resident corporation, a multinational, owns a corporation resident in Canada or controls them. The corporation resident in Canada wants to avoid Canadian tax, so they engage in what is called a foreign affiliate dumping transaction. Those are generally used to extract earnings from Canada while reducing Canadian tax.
One example might be instead of paying $1 million dividend from the Canadian corporation up to the foreign parent, which could attract a 5% withholding tax, representing a tax cost of $50,000, they might instead purchase shares of another company within the group bringing them under Canada for $1 million, which does not attract a withholding tax. In that sense, the money is dumped in the foreign affiliate or in respect of the foreign affiliate.
That's how the rules currently work.
As I said before, the rules currently apply where a non-resident corporation controls a corporation resident in Canada but the same sorts of planning opportunities and risks arise where a non-resident individual or a trust owns the Canadian corporation. What this measure would do is that it would extent the existing anti-avoidance rules that are intended to address these types of foreign affiliate dumping transactions.
I just gave one example. There are numerous iterations. It expands them to apply also where the parent on top is an individual or a trust instead of just a foreign corporation.