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Should I Hold My Investments in a Holding Company?
You may be wondering if you would be better off to form a corporation to hold your investments, rather than holding them personally. Unfortunately, this is not a simple question to answer, because every person's situation differs, depending upon the amount they have to invest, and the province in which they live.
Advantages:
 | for shareholders with a high marginal tax rate, a portion of tax on dividends from taxable Canadian corporations may be deferred until dividends are paid by the holding company to the shareholder. |
| you may be able to locate the corporation in a province with a lower corporate tax rate |
| may help with estate planning (estate freeze) |
| may reduce probate fees |
Disadvantages
| 66 2/3% of all capital gains included in income, instead of 50% on the first $250,000 in a year for individuals - effective for dispositions on or after June 25, 2024 |
| holding companies (earning investment income) are not eligible for the Lifetime Capital Gains Exemption |
Holding your investments inside a corporation will not necessarily allow you to write off additional expenses. The only expenses that are deductible by a corporation are those expenses incurred in order to produce income.
TaxTips.ca Resources
Should you incorporate? - more advantages and disadvantages of corporations in general.
Tax Tip: This is extremely complicated. Get advice from a qualified tax professional.
Revised: September 20, 2024