A holding company (HoldCo) owns shares of your operating company (OpCo) rather than conducting business directly. In the right structure, it's one of the most powerful wealth-building tools for Quebec business owners.
Key Benefits
- Creditor protection: Assets in the HoldCo are shielded if the OpCo faces liability
- Investment accumulation: Retained earnings grow at the low corporate rate (~12.2%)
- Estate planning: Allows estate freeze techniques to minimize future estate taxes
- LCGE preservation: Proper structure preserves the $1.25M lifetime exemption
The Passive Income Trap
Since 2018, passive investment income above $50,000 in connected corporations begins clawing back your Small Business Deduction — disappearing entirely at $150,000. Factor this into your holding company strategy.
When Is It Worth It?
Generally when: your corporation generates $200,000+ in annual profit, you're accumulating retained earnings, or you want estate planning flexibility. Setup costs (~$3,000–$5,000 legal) plus ongoing accounting must be weighed against benefits.
Done incorrectly, HoldCo structures create complexity without benefit. Done right, they save hundreds of thousands over a business owner's lifetime.