The Federal Government Abandons The Surplus Stripping Rules

 On Thursday, October 19, 2017, the Federal Government announced that it will not move forward with the income tax proposals targeting the conversion of income into capital gains. The proposals were announced on July 18, 2017.

The Federal Government acknowledged the feedback that it received from the public expressing concerns that the proposals would result in numerous unintended tax consequences, including adverse tax consequences relating to intergenerational transfers of businesses and estate planning.

It would appear that the Federal Government's announcement eliminates the concerns particulary relating to:

• the ability of a private corporation to pay non- taxable capital dividends;