What is a holding company? A holding company is the term used to describe a corporation that holds cash and investments but does not carry on an active business. The holding company’s investments may include shares of another corporation that does carry on an active business (i.e., an operating company). Do I need a holding […]
Many Alberta business owners are aware that the general corporate income tax rate is being reduced from 10% to 8%, effective July 1, 2020. Bill 35, which would accomplish this reduction, also includes a reduction to the provincial eligible dividend tax credit in 2021. This means that the effective tax rate on eligible dividends is […]
A “pipeline” transaction can lower the tax on distributions from your corporation by using high adjusted cost base from capital gains instead of distributing as a dividend. In the past, pipeline transactions were used primarily to avoid the potential double tax that can happen when someone dies owning shares of a private corporation (often called […]
While there is no estate tax in Canada, there is a deemed disposition tax which is similar to estate tax. When someone passes away, he/she is considered to have sold all of his/her assets at fair market value (ie, a “deemed disposition” of his/her assets) and is taxed accordingly on any gains. There are certain […]
Most small businesses in Canada operate through corporations. Often times, the owner of the business/corporation owns shares of the operating corporation through a holding corporation. Using a holding corporation used to be pretty basic tax planning, but the new tax on split income (“TOSI”) rules may cause some issues with the basic holding corporation structure. There […]