The Copthorne series test adds uncertainties as to the scope of s. 246.1
The apparent harshness and breadth of the proposed s. 246.1 rule for converting capital account transactions into deemed dividends to the individual recipient (but not, apparently, to the corporation) is compounded by the unpredictable nature of the concept of “series of transactions” enunciated in Copthorne, which could suggest that a capital dividend paid out of a gain, and the gain-producing transaction, are part of the same series even where the capital dividend was not planned.
The credit to the capital dividend account should not be eliminated but instead only suspended until the capital property leaves the affiliated group.
Neal Armstrong. Summary of Michael N. Kandev, "Proposed Section 246.1", Canadian Tax Highlights, Vol. 25, No. 8, August 2017, p.5 under s. 246.1.