A recent Tax Court of Canada decision held that a post mortem “pipeline” strategy didn’t work. Why?

In administering an estate that holds private corporation shares, a “pipeline” strategy can be used to limit the tax on the shares to the relatively low capital gains rate, instead of the higher dividend tax rate. But certain tax rules, and the CRA’s interpretations of the rules, try to stick the estate with a higher dividend tax rate. If it’s done incorrectly, the tax result may be punitive.