Finance abandons the surplus stripping rules for now
On October 19, 2017, the Department of Finance (“Finance”) announced that it will abandon the proposed tax measures aimed at restricting the conversion of income into capital gains (“anti-surplus stripping rules”).
The controversial anti-surplus stripping rules were introduced on July 18, 2017 (see CBT’s summary here) with immediate effect. The proposed measures created uncertainty and may have caused unintended tax consequences on the intergenerational passage of family businesses and distributions by private companies to their shareholders.
With today’s announcement, it appears that the tax planning strategy to avoid double tax on death (commonly referred to as “pipeline planning”) may resume with the pre-July 18, 2017 cautions.
The Government also announced its intent to review how to make intergenerational transfers of farming businesses, and other small businesses more efficient and less difficult.
Information is current to October 19, 2017. The information contained in this release is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, there can be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. No one should act upon such information without appropriate professional advice after a thorough examination of the particular situation.