How to Use a Holding Company for Tax Planning, Asset Protection, and Business Wealth Growth in Canada

Quick Summary

A holding company owns shares and assets rather than trading, which lets profits move up from the operating company as tax-free intercorporate dividends, keeps wealth out of reach of operating creditors, and gives investments a home that protects the small business deduction. Please note it adds a second corporation to file every year, so it earns its keep only when there is retained profit, real risk, or a succession plan behind it.

Reading time: 33 minutes.

The Numbers That Matter

A holding company is a type of business that owns shares in other companies. It doesn’t run daily operations but focuses on managing investments and assets. Setting up a holding company in Canada offers benefits like better corporate asset protection, tax advantages, and ways to help grow wealth for shareholders.

Key Benefits of Holding Companies

• Asset Protection: It protects assets from risks tied to operating companies. This lowers exposure to creditor claims.
• Tax Efficiency: Businesses can use tax planning strategies such as income splitting and deferring taxes to reduce their overall tax load.
• Investment Growth: Holding companies manage investments in one place, making it easier to decide how to use capital wisely.

Operating Company vs Holding Company

Knowing the difference between an operating company and a holding company helps when setting up your business. The key difference is what they do. Operating companies deal directly with customers and make money by selling goods or services. Holding companies focus on managing investments and lowering risks.

Common Structures for Canadian Businesses

Canadian businesses use several common structures when setting up holding companies. A single-tier structure has one parent holding company owning multiple operating companies, which is simple but less flexible. A multi-tier structure uses several layers of ownership where holding companies own operating companies that own others, which is good for complex setups. Family trust integration is often paired with holding companies for estate planning, because family trusts help with succession and offer tax perks. These structures let businesses pick the best fit for their goals while enjoying the benefits allowed by Canadian law.

Starting a holding company requires a few steps that may differ slightly by province, including Ontario. First, choose the business name and structure: pick a name that follows provincial rules and decide on federal or provincial incorporation. Then file Articles of Incorporation, submitting paperwork stating the company’s purpose, which is holding, and the share details. Get licenses or permits if needed, making sure you follow local rules depending on your industry, like real estate. Open corporate bank accounts and set up accounting systems, starting banking accounts made for businesses and using tools like QuickBooks or Xero to keep records neat. Finally, seek professional advice: talk to CPAs or lawyers who know CRA rules to set up properly, especially for corporate asset protection. This process helps reduce risks linked to incorporation while taking advantage of tax planning strategies in Canada’s provinces.

Associated and Connected Corporations

In Canada, understanding associated and connected corporations matters because it affects taxes. An associated corporation happens when two corporations share control or have overlapping shareholders. This means they might have to share the small business limit under CRA rules, so please note that associated corporations divide one $500,000 limit between them rather than each getting their own. A connected corporation means there is direct ownership affecting how dividends flow between them, and it is generally established where the recipient corporation controls the payer or owns more than 10% of the votes and value. This can help avoid problems with misclassification that could lead to penalties. Knowing these concepts well and working with experts during setup helps you stay compliant and benefit from effective tax planning strategies Canada offers through well-planned corporate asset protection approaches.

Corporate asset protection is a big reason to use a holding company in Canada. It helps keep valuable assets safe from business risks and creditor claims. A holding company separates risky operations from important investments or intellectual property. This limits what creditors can reach if an operating company runs into trouble.

Typically, the holding company owns shares of one or more operating companies but doesn’t handle daily business. This setup keeps creditors away from assets inside the holdco if an opco faces financial problems. Courts in Canada respect this separation when formal rules are followed and no fraud occurs. Some ways to protect assets include keeping clear share ownership records, avoiding cheap asset transfers, and following CRA rules on intercompany deals. Insurance helps but can’t replace this legal structure. In practice, many clients reduce risk by isolating earnings and real estate inside the holdco, away from risky operations.

Moving profits from an operating company to a holding company is a common tax planning strategy in Canada. It helps protect assets and grow wealth. The main way to do this is by paying intercorporate dividends. These dividends usually qualify for a deduction under section 112 of the Income Tax Act. This means the holding company receives profits without paying tax right away.

Intercorporate dividends let connected companies move profits without triggering immediate tax. This is key to holding company structures in Canada. When an operating company pays dividends to its parent holdco, these amounts usually qualify for full deduction against taxable income in the holdco where the corporations are connected. That stops profits from being taxed twice within the group. Eligible dividends paid from an operating company to its connected holding company can flow without tax. But non-eligible dividends or wrong transfers may cause Part IV tax on refundable dividend tax on hand (RDTOH), cutting benefits. So, timing and dividend types matter a lot.

Using intercorporate dividends lets profits stay inside the corporate structure longer. Personal taxes get deferred until money comes out as shareholder payments. Many Canadian tax plans use this to keep earnings in a holdco for reinvestment or creditor protection. The practical steps are to pay eligible intercorporate dividends, use the section 112 deduction, avoid Part IV tax on RDTOH, and time dividend payments carefully.

Safe Income and Why It Matters

Safe income means the after-tax earnings a corporation has accumulated that can support a tax-free intercorporate dividend. Knowing how to calculate safe income is vital when moving dividends between companies while protecting capital dividend accounts (CDA). Section 112 offers deductions for intercorporate dividends, but paying dividends beyond a share’s safe income can, in certain circumstances, cause part of the dividend to be recharacterized as a capital gain rather than a tax-free dividend. Regular checks of safe income help decide when and how much dividend to pay. This way, shareholders keep more wealth without breaking CRA rules about capital gains and dividend deductibility. Remember: safe income is the after-tax earnings available to support the dividend; section 112 gives the deduction; avoid paying dividends beyond safe income without advice; and reconcile safe income often for smart dividend timing. Our experience shows how well-designed share classes and dividend policies keep flows smooth while avoiding surprise Part IV taxes.

Refundable Dividend Tax on Hand (RDTOH) builds up when private companies earn certain investment incomes taxed higher than active business earnings. When these amounts get paid out as taxable dividends, either by an operating company or a holdco, the RDTOH refunds help reduce overall taxes. Investment income earned by a CCPC gives rise to RDTOH at 30⅔% of that income, and it is refundable at 38⅓% of taxable dividends paid. Since 2019 the RDTOH has been split into eligible and non-eligible pools, so the type of dividend you pay determines which pool refunds, and paying the wrong type can leave the refund stranded.

Part IV tax hits when corporations receive intercorporate dividends in circumstances the rules target, and it applies at 38⅓% of dividends received from non-connected corporations. It can also apply to dividends from connected corporations to the extent the payer received its own dividend refund, which stops double refunds. Knowing how RDTOH balances work with Part IV tax is key if you want to use holding company benefits Canada-wide. It influences when profits should move between your corporate group via intercorporate dividends. Managing your portfolio inside a holdco means balancing growth and these rules, and you can use multiple corporations or trusts linked by share ownership to better handle RDTOH recovery. Keeping good records makes it easier to follow CRA’s complex rules on passive income in holdcos.

The Capital Dividend Account

Capital dividend accounts track tax-free capital gains and certain life insurance proceeds. They allow corporations to pay tax-free dividends to shareholders, enhancing after-tax returns through strategic dividend distribution planning. Capital gains earned inside a holdco can be paid out via capital dividend accounts without extra personal tax. This is one of the most valuable and most frequently overlooked accounts in an owner-managed group.

Holding companies in Canada give some nice tax planning options. But watch your passive investment income, because it can affect your small business deduction. The CRA sets a $50,000 yearly limit on passive income for Canadian-controlled private corporations (CCPCs). Go over that, and the small business deduction shrinks or disappears. That means higher corporate tax rates for your operating company.

Passive income covers things like interest, dividends from unrelated companies, rental income not linked to active business, and capital gains from investments. Holding companies must keep tabs on these earnings because too much passive income affects the deduction for all linked companies. Passive income faces higher combined federal-provincial rates once it exceeds $50,000 per year, and this reduces eligibility for the small business deduction proportionally, cutting the $500,000 limit by $5 for every $1 above the threshold until the deduction disappears entirely at $150,000. Careful planning between operating companies and holdcos can prevent hitting those limits. For instance, keeping rental properties separate protects the opco’s active status needed for SBD eligibility. Investments might include stocks managed through brokerage accounts held in the holdco’s name.

Also, splitting assets helps protect them. Keeping active business stuff in one company and investments in a separate holding company controls risk better. It also helps manage passive income relative to those important tax thresholds. Accounting software like QuickBooks or Xero helps track everything accurately each year. Please note that dividends between connected corporations are excluded from the passive income calculation, which is exactly why moving surplus up to the holdco can protect the operating company’s low rate.

A section 85 rollover lets businesses transfer shares or assets to a holding company without paying taxes right away. This works great inside a holding company structure and fits well in tax planning strategies Canada-wide. The law lets shareholders pick a transfer price between fair market value and adjusted cost base. This defers capital gains tax until something else happens down the road, like selling shares outside the rollover deal. This rollover smooths share transfers when forming or reorganizing companies without triggering taxes that eat into shareholder money or cash flow.

Corporate Restructuring

Corporate restructuring often means forming new holding companies alongside operating businesses using section 85 rollovers. These rollovers let you defer recognizing gains when transferring assets between connected corporations. This helps split operational activities from investments clearly, making risk management easier depending on each entity’s role. Connected corporation rules affect many CRA provisions such as passive income treatment, small business deduction availability, and Part IV taxes. Knowing these rules helps design share classes that keep structures flexible but compliant, supporting ongoing entrepreneurial tax planning across Canada. Keep in mind timing rules around associated corporations prevent unexpected aggregation effects that can hurt intended benefits; getting expert advice here avoids costly mistakes. In short: use a section 85 rollover to defer gains during transfers; separate operating versus investment roles clearly; understand connected corporation impact on taxes and deductions; plan share classes carefully for compliance; and watch timing and association rules closely. Our page on whether you can change your business structure covers the reorganization options.

Shareholder Loans

Shareholder loans let owners move cash in or out temporarily without triggering immediate taxable benefits if handled properly under Income Tax Act rules. These loans help manage cash flow needs and support protecting corporate assets by keeping owner funds separate from retained earnings. If not tracked carefully, loans can be treated as income leading to costly reassessments or loss of deductions. Please note the one-year rule: where a shareholder loan is not repaid within one year after the end of the corporation’s tax year in which it was made, the amount can be included in the shareholder’s personal income. Proper paperwork and repayment schedules help avoid issues affecting family enterprise finances overall. Shareholder loan agreements define terms for cash advances between shareholders and corporations, help manage cash flow while avoiding taxable benefits, and proper documentation ensures CRA compliance and audit readiness.

The lifetime capital gains exemption (LCGE) lets Canadian business owners shelter a substantial capital gain when selling qualifying small business shares. For qualified small business corporation shares the exemption is $1,250,000, confirmed in the federal budget of November 4, 2025 and indexed to inflation from 2026, so please confirm the exact current indexed amount before relying on it.

Holding companies help with the LCGE by enabling estate freezes. Shareholders swap current shares for fixed-value preferred shares while issuing new common shares that grow in value inside the holdco for family members later. To qualify, companies must meet strict active business rules set by CRA. Capital gains earned inside a holdco can be paid out via capital dividend accounts without extra personal tax. This works well with rollovers like section 85 transfers. It’s best to plan early before major sales happen, because purification, moving surplus out of the operating company so the shares stay eligible, needs runway rather than a last-minute clean-up.

Real Property in a Holdco

Many real estate investors use holding companies to protect assets by keeping property separate from active business risks. This separation reduces creditor claims against properties if the operating business faces trouble. But owning property through corporations has downsides too. You might face additional tax on a sale unless you plan the structure, and provincial land transfer taxes differ if properties are held personally versus corporately, which is important especially in places like Ontario. Smartly structured real estate portfolios inside holdcos fit well with corporate restructuring goals, helping shield liabilities and preserve wealth under Canadian law. The main points are to use holdcos to separate property from operations, beware the tax cost on property sales, consider provincial land transfer tax differences, and align real estate holding with corporate goals.

Holding companies play a big role in business succession planning and passing wealth between generations in Canadian family businesses. A common method is an estate freeze: current shareholders exchange their common shares for fixed-value preferred shares while new common growth shares go to heirs or trusts. This locks in current value but lets future growth happen under the heirs’ ownership without triggering immediate taxes, using section 85 or section 86 rollovers. A section 86 rollover allows tax-deferred share exchanges within a corporation, supporting restructuring or share class conversions without immediate tax, preserving shareholder wealth during corporate changes.

Estate freezes work by issuing preferred shares so senior shareholders lock current values. Future growth goes to junior shareholders, usually heirs. Combining this with lifetime capital gains exemption eligibility through qualifying small business corporation shares helps reduce probate fees and defers capital gains taxes. This setup smooths control transfers while keeping access to lifetime capital gains exemptions down the road. This keeps wealth safe inside corporately protected entities while creating clear frameworks for succession supported by thorough record keeping of elections filed properly across provinces including Ontario. Share redemptions offer liquidity events without immediate personal tax if set up right, and buy-sell agreements set clear rules for share transfers during events like death or retirement, protecting shareholder wealth by preventing disputes and ensuring smooth ownership transitions. We assist clients around Toronto with valuation reports, corporate minute books, shareholder agreements, and annual reviews needed for compliant succession.

Family Trusts and TOSI

Family trusts add flexibility in wealth distribution among beneficiaries. Combined with multi-tier holdcos, they optimize succession planning and income splitting while complying with TOSI rules. Pairing family trusts with holding companies gives flexibility in sharing wealth among family members while keeping creditor protection through separate legal entities. This combo supports estate freeze methods that cut probate fees after death and keep access to lifetime capital gains exemptions via the QSBC share tests required by CRA. But be careful, because poorly set up trusts can trigger attribution rules causing back taxes that hurt cash flow across the group.

Income splitting through holding companies must handle Canada’s TOSI rules carefully. These rules limit tax benefits where split income doesn’t reflect a reasonable return for contributions made. Before TOSI, families often split income widely among relatives at low marginal rates. Now most such payments face top tax rates unless they meet exceptions: active involvement; age limits; or reasonable return tests based on labour or property input. Holding companies still help but require strong proof of participation plus expert advice because audits target aggressive splits. Getting it wrong risks reassessment plus penalties wiping out benefits. Attribution rules block shifting earned income among relatives just to reduce higher marginal taxes. Instead, top bracket rates apply where the rules are not met. You need careful reviews balancing legitimate pay against attribution traps using specialized legal and accounting advice. We advise clients in Toronto to keep detailed records showing hours worked and value added so splits stand up under scrutiny. For the estate side of this, see our guide to holding companies for long-term tax and estate planning.

Setting up a holding company structure takes some work. You have to figure out the right share classes, tax elections, and intercorporate agreements. That’s where professional advice helps you get the best holding company benefits Canada offers. Once set up, each corporation needs its own books. Both the operating company and the holdco file separate T2 tax returns every year, generally due within six months after the fiscal year-end, with the balance due earlier. Plus, you must keep up with CRA reporting rules. All this adds to your admin costs compared to running a single corporation. Tax planning strategies Canada should weigh these extra expenses when deciding if a holdco makes sense. Still, a well-built holding company can save you money over time by deferring taxes and protecting assets.

Compliance Risks

Holding companies help protect corporate assets but can attract CRA attention. Complex moves like intercorporate dividends or section 85 rollovers get checked closely. Mistakes here might cause misclassified dividends or wrong use of capital dividend accounts, which means penalties. CRA reviews often look at income splitting rules or whether passive investment income limits were breached. Keeping clean records helps you avoid reassessments or fines. Following CRA rules matters a lot. All incorporated businesses must file T2 Corporation Income Tax Returns yearly. Missing deadlines means penalties that grow fast, damaging financial health, especially when you run multiple connected corporations needing consolidated oversight systems ahead of time. Good bookkeeping backs audit readiness too. Keep accurate minutes covering dividend declarations, intercompany deals, share issuances, plus solid accounting records using tools like QuickBooks or Xero as we do at Gondaliya CPA. If a CRA letter arrives, our CRA audit representation team responds on your behalf.

Is a Holdco Right for Your Business?

Holding company benefits Canada vary depending on how big your business is and what you want to achieve. Small businesses with little retained earnings might find setup costs too high for the benefits they get in creditor protection or tax deferral. On the flip side, companies expecting to keep large profits gain more by putting assets into a holdco. This separation helps shield assets from operational risks. Business owners also use this setup with family trusts for estate freeze plans. To decide if a holding company fits your needs, look at how much retained earnings you have now, your risk exposure from operations versus investments inside corporations, plans to sell soon, and how you want to pass on wealth.

Personal-Use Property and Portfolio Investments

Putting personal stuff like RVs or portfolio investments inside a holding company has risks. The CRA watches transfers of personal-use property that don’t happen at fair market value closely. Such moves can trigger immediate taxes. Portfolio investments inside holdcos generate passive income taxed at higher rates once certain limits are hit. Also, courts sometimes ignore corporate protection when personal property gets mixed in badly, and creditors might still come after those assets. It’s safer to keep purely personal things outside the corporation. For investments held in a holdco, keep clear records showing fair market value during transfers and prove they’re part of real business activity.

Long-Term Efficiency and Regulatory Change

How well a holding company works over time depends on changes in laws around intercorporate dividends, capital gains exemptions on QSBC shares, passive income taxes, plus province-specific fees or deadlines. Ontario has its own quirks that affect costs. Safe-income calculations remain central when moving funds between connected companies without triggering unexpected tax, and businesses need regular checkups on their structures to stay compliant while keeping tax advantages from multi-tiered holdings common among Canadian SMBs served by firms like Gondaliya CPA in Toronto and Ontario. Simplifying ownership matters too: a good holding company structure makes owning several different businesses easier. By putting all equity interests under one parent entity instead of many individual stakes, governance becomes simpler, boards oversee all subsidiaries clearly, financial statements consolidate efficiently saving time during audits, and banking relationships improve, boosting credit profiles especially during uncertain times. Also legal costs drop since internal reorganizations usually mean share transfers not asset sales, which is much less paperwork and due diligence. Our experience shows how multi-opco holdings allow quick acquisitions or sales, adapting smoothly as client needs change while preserving protections unique to proper incorporation maintained year-round.

Additional Considerations for Holding Company Success

• Corporate Minute Books: Maintain accurate minutes of meetings, resolutions, and shareholder decisions to support legal compliance and audit readiness.
• Shareholder Agreements: Clearly define rights, obligations, dispute resolution processes, and transfer restrictions among shareholders to protect interests.
• Fraudulent Conveyance Legislation: Avoid asset transfers intended to defraud creditors; improper actions may lead to reversal or penalties under Canadian law.
• Timing Restrictions on Asset Transfers: Follow CRA timelines carefully when moving assets between corporations to prevent unexpected tax liabilities or penalties.
• Insurance Overlap: Complement legal asset protection with adequate insurance but do not rely solely on coverage for creditor proofing.
• Fiduciary Duties: Directors must act honestly and in the corporation’s best interest, managing conflicts and following corporate laws to avoid liability.
• Refund of Taxes Paid on Investment Income: Use mechanisms like RDTOH to recover taxes paid on investment income efficiently within the corporate group.
• Share Redemption Tactics: Employ share redemptions tactically for liquidity events or succession without triggering immediate personal taxes when structured correctly.

Check Whether a Holdco Fits Your Business

This quick self-check flags whether a holding company is likely to earn its cost for your group. Please answer the six questions below.

Want a checklist to work from? You can download our free holding company setup checklist before your consultation.

How a holding company helps varies by sector, usually because of what the business holds and how it eventually changes hands. Here are ten sectors and where the holdco opportunity sits.

• Medical doctors & physician professional corporations: Incorporated physicians who invest retained earnings corporately are the classic holdco case, because moving the investments up protects the professional corporation’s small business deduction. Specialists certified through the Royal College of Physicians and Surgeons of Canada plan the same way.
• Dentists & dental practices: A practice regulated by the Royal College of Dental Surgeons of Ontario is usually sold eventually, so purifying the practice shares through a holdco keeps the lifetime capital gains exemption available on that sale.
• Daycare, childcare & CWELCC services: Where an owner builds surplus from CWELCC-funded operations, a holdco holds that surplus apart from the operating and licensing risk of the centre.
• Real estate investors, landlords & holding companies: Keeping rental properties in a separate holdco protects the operating company’s active status needed for SBD eligibility, and separates the property from the trading risk entirely.
• Property developers & builders: With several project entities carrying real risk, a holdco above them protects accumulated profit from any single project going wrong, and simplifies governance across the group.
• Construction, general contractors & skilled trades: For electricians, plumbers, and HVAC firms the trading company carries genuine liability, so sweeping retained profit up to a holdco shields it, and formal shareholder loan agreements keep seasonal cash moves clean.
• Technology startups & SaaS: Layered share classes allow eligible dividends to flow between companies while retained earnings stay invested, and a freeze before an exit shifts future growth to the next generation or a trust.
• E-commerce & online retailers: Online businesses can be volatile, so sweeping surplus into a holdco keeps accumulated profit safe from the swings of the operating store while keeping the opco clean for a sale.
• Restaurants & food and beverage: Where property is owned alongside the restaurant, holding it in a separate holdco keeps it apart from the operating company’s day-to-day risk and simplifies succession.
• Transportation, logistics & trucking: Fleet and equipment sit in a risk-heavy operating company, so a holdco holds the surplus and, where relevant, the equipment behind a legal wall.

• Holding company (holdco): A corporation that owns shares, investments, or assets rather than running a business.
• Operating company (opco): The corporation that actually carries on the trading business.
• Intercorporate dividend: A dividend paid between corporations, deductible under section 112 where the conditions are met.
• Connected corporation: A corporation controlled by the recipient, or in which it owns more than 10% of votes and value.
• Associated corporations: Related corporations that must share one $500,000 small business limit.
• Safe income: After-tax earnings that can support a tax-free intercorporate dividend.
• Part IV tax: The 38⅓% refundable tax on dividends received from non-connected corporations.
• RDTOH: Refundable dividend tax on hand, arising at 30⅔% and refundable at 38⅓% of taxable dividends paid.
• Capital dividend account (CDA): The account tracking tax-free capital gains and certain life insurance proceeds.
• Section 85 rollover: The tax-deferred transfer of assets or shares into a corporation.
• Section 86 rollover: The tax-deferred share exchange used in reorganizations and estate freezes.
• Estate freeze: Locking today’s share value so future growth accrues to the next generation.
• LCGE: The lifetime capital gains exemption sheltering gains on qualifying small business shares.
• TOSI: Tax on split income, restricting dividends to family members without a reasonable contribution.

Frequently Asked Questions

People Also Ask

Holding Company Setup Checklist

• Confirm there is retained profit, creditor risk, or a succession goal to justify the holdco.
• Test the group for association before assuming two small business limits.
• Issue share classes that establish and preserve connected status.
• Use section 112 intercorporate dividends to move surplus up, within safe income.
• Keep passive investments in the holdco to protect the opco’s small business deduction.
• Track RDTOH and the capital dividend account, and time dividends to recover them.
• Document shareholder loans and diarize the one-year repayment deadline.
• File both T2 returns under one roof and review the structure yearly.

Who This Is For / Not For

• For: Incorporated Canadian business owners with retained profit, creditor exposure, investments, or a succession plan, who want tax deferral and asset protection.
• Not For: Owners who draw all profit personally, carry little risk, and have no investments or succession plan, for whom a holdco is usually premature.

Choosing a CPA Firm for Holdco Work

Contact Gondaliya CPA at 647-212-9559 or info@gondaliyacpa.ca to find out whether a holding company fits your business, on a flat fee, HST included, quoted in writing before any work starts. For the strategy detail, see our guide to holding company tax planning strategies, and for what goes wrong, the holdco tax mistakes that cost owners the most.

Next Steps

Holding companies bring several benefits for Canadian business owners. They help with tax planning strategies Canada-wide and protect corporate assets from risks. A solid holding company structure lets you keep earnings inside the corporation, which can delay personal taxes. It also separates assets from daily business risks, making your investments safer. Plus, holding companies help with succession planning. Getting expert help is important when creating or running a holding company, because CRA compliance issues can be tricky to understand, and without proper guidance you might face unexpected tax problems like Part IV tax or losing small business deductions due to passive income rules. Please contact us for a straight answer, gather your corporate documents while they are to hand, and let us look at the whole group before anything is restructured. Contact Gondaliya CPA at 647-212-9559 or info@gondaliyacpa.ca today, anywhere in Toronto, Ontario, or across Canada. If our content helps, please add gondaliyacpa.ca as a preferred source on Google.

Published: July 23, 2026  ·  Last updated: July 23, 2026  ·  Changelog: [EDITOR: note future updates here]

Disclaimer: This article is educational information only and is not tax, legal, or financial advice, and reorganizations require a lawyer alongside your CPA. It reflects CRA rules current to 2026, including the $500,000 federal small business limit shared among associated corporations, the passive income grind of $5 per $1 above $50,000 eliminating the limit at $150,000, the section 112 deduction for intercorporate dividends, the 38⅓% Part IV tax on non-connected dividends, RDTOH arising at 30⅔% and refundable at 38⅓% of taxable dividends paid, the $1,250,000 lifetime capital gains exemption on qualified small business corporation shares as confirmed in the November 4, 2025 federal budget and indexed from 2026, and the one-half capital gains inclusion rate. Outcomes depend on your specific facts, and rules change. Please consult a licensed CPA before acting. Fees include HST.