In 2013-0499121E5, the CRA considered a simple case where an upstream loan was made to a Canadian parent (Canco) by a second tier foreign affiliate (FA 2), and was effectively sheltered by Canco’s exempt surplus in respect of FA 2. FA 2 later liquidated into the first tier foreign affiliate (FA 1). The CRA said that it would apply the helpful rule in s. 248(28)(a) to remedy the technical double tax problem that arises on these facts. Double tax arises because: (a) the loan assigned to FA 1 on the liquidation of FA 2 would become a second upstream loan to Canco from FA 1, and (b) the first loan from FA 2 would not have been repaid by Canco on the liquidation of FA 2.