Pipeline planning is a structure that allows corporate surplus to be extracted as a repayment of capital rather than as a taxable dividend. In the post-mortem context, the estate transfers private-corporation shares — which carry a high adjusted cost base from the deemed disposition at death — to a new corporation in exchange for a promissory note, then extracts surplus through intercorporate dividends and repays the note as a capital repayment.
The Canada Revenue Agency's published positions indicate that a meaningful holding period (commonly a year or more) and gradual extraction support the planned capital characterization, while rapid lump-sum extraction can invite a deemed-dividend rule or a general anti-avoidance challenge. An inter vivos version uses a similar structure during the shareholder's lifetime and carries its own anti-avoidance considerations.