diff --git a/examples/passing/2972.purs b/examples/passing/2972.purs
new file mode 100644
index 0000000000..fbf961e5d6
--- /dev/null
+++ b/examples/passing/2972.purs
@@ -0,0 +1,13 @@
+module Main where
+
+import Control.Monad.Eff.Console (log)
+import Prelude (class Show, show)
+
+type I t = t
+
+newtype Id t = Id t
+
+instance foo :: Show (I t) => Show (Id t) where
+  show (Id t) = "Done"
+
+main = log (show (Id "other"))
diff --git a/src/Language/PureScript/TypeChecker.hs b/src/Language/PureScript/TypeChecker.hs
index cdac4bebea..819328f99a 100644
--- a/src/Language/PureScript/TypeChecker.hs
+++ b/src/Language/PureScript/TypeChecker.hs
@@ -323,7 +323,8 @@ typeCheckAll moduleName _ = traverse go
           sequence_ (zipWith (checkTypeClassInstance typeClass) [0..] tys)
           checkOrphanInstance dictName className typeClass tys
           _ <- traverseTypeInstanceBody checkInstanceMembers body
-          let dict = TypeClassDictionaryInScope (Qualified (Just moduleName) dictName) [] className tys (Just deps)
+          deps' <- (traverse . overConstraintArgs . traverse) replaceAllTypeSynonyms deps
+          let dict = TypeClassDictionaryInScope (Qualified (Just moduleName) dictName) [] className tys (Just deps')
           addTypeClassDictionaries (Just moduleName) . M.singleton className $ M.singleton (tcdValue dict) dict
           return d