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Financial Planning -> Stocks, Bonds etc.

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.


bullet 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.
bullet you may be able to locate the corporation in a province with a lower corporate tax rate
bullet may help with estate planning (estate freeze)
bullet may reduce probate fees


bullet may not have any tax advantage
bullet holding companies (earning investment income) are not eligible for the $800,000+ capital gains deduction
bullet probably not worthwhile unless investments are substantial

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. 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: October 26, 2023



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