The next paragraph.....
Generally, interest expense on funds borrowed to acquire shares in a corporation is deductible to the borrower. Accordingly, a non-resident is often advised to set up a Canadian holding company to borrow the funds required to make a share acquisition. Once the acquisition has been completed, it might be possible to have the acquired company wound-up into or merged with the holding company, thus enabling interest expense to be offset against the acquired company’s earnings.
The seller of shares may realize a capital gain or capital loss on the shares, which is included in income in the usual manner.
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