Thank you for your question.
As I explained, we hear less about the third category of measures because their purpose is to block aggressive tax planning. There is a proposal to amend section 84.1 of the Income Tax Act and to create section 246.1, which is an anti-surplus stripping rule. This will cover aggressive tax planning, regarding which we lost before the courts. When I say “we“, I am talking about the government. I apologize, I still have reflexes that go back to my work at the CRA. However, the scope of these amendments is somewhat broad.
The amendment to section 84.1 is going to eliminate one type of planning that was used, which we called the pipeline type, and which allowed people to avoid double taxation when an entrepreneur died. When a person dies, they are deemed to have disposed of their assets. The deceased shareholder thus has made capital gains on his or her shares, and the shares are passed on to the estate. If you decide to wind up a corporation, you then have a dividend. So there are two potential taxes. There would be ways of correcting that, of refining the act in order to block undesirable transactions, while bringing in measures to avoid the dual taxation of the estate of the deceased.
With regard to proposed section 246.1, this is a very broad rule that would apply as of July 18, 2017, on paid-out dividends. It may be that transactions done before July 18 by a corporation that generated capital gains were a part of tax planning and were done in good faith. However, people are now getting caught for having breached that rule. It might be a good idea to adopt an interim rule to cover those situations.