A holdco/opco structure consists of a holding company (holdco) that owns shares of one or more operating companies (opcos). The opco runs the active business while the holdco holds retained earnings, real estate, and investments. This structure provides liability protection (keeping accumulated wealth separate from operational risk), tax deferral (dividends flow to holdco at low corporate rates), estate planning flexibility (easier to freeze value and transfer growth to next generation), and asset protection (creditors of the opco generally cannot access holdco assets). For Mississauga business owners with significant retained earnings or planning for succession, a holdco/opco structure is often the foundation of tax-efficient planning.

Since 2019, passive investment income (interest, dividends, rents, capital gains) earned inside your operating company reduces access to the small business deduction. For every dollar of adjusted aggregate investment income (AAII) over $50,000, you lose $5 of small business deduction room. This means investment income over $50,000 can quickly eliminate your ability to access the preferential 12.2% tax rate on active business income. The solution for most Mississauga business owners is a holdco/opco structure: pay dividends from opco to holdco, then invest inside the holdco where passive income doesn’t affect the opco’s small business deduction. We help clients implement this structure and track AAII to avoid unexpected tax increases.

A section 85 rollover allows you to transfer assets (shares, real estate, equipment, etc.) to a corporation on a tax-deferred basis, meaning you don’t trigger capital gains on the transfer. Common uses include transferring shares of an opco into a new holdco, moving real estate into a separate corporation for liability protection, implementing an estate freeze by transferring assets in exchange for preferred shares, and adding family members to a corporate structure. The section 85 election must be filed with CRA within specific timelines and requires careful valuation and documentation. Our Mississauga CPA team handles section 85 elections regularly and ensures compliance with all technical requirements to avoid costly challenges.

Yes, but Canada’s Tax on Split Income (TOSI) rules impose strict requirements. Adult family members (25+) can receive dividends without TOSI if they meet one of several exclusions: they own 10%+ of votes and value AND the corporation earns less than 90% from services, they work substantially in the business (20+ hours/week average), or they receive capital gains on qualified small business corporation shares. For family members under 25, the rules are even stricter. We help Mississauga business owners structure share ownership and document family member contributions to maximize legitimate income splitting while staying fully compliant with TOSI. Proper planning can still save $20,000-$50,000+ annually in family tax.

An estate freeze locks in the current value of your business for tax purposes while transferring future growth to the next generation—typically children or a family trust. You exchange your common shares for preferred shares with fixed redemption value (a section 86 reorganization), while new common shares are issued to family members or a trust. Benefits include capping your eventual capital gains tax liability, allowing you to use your LCGE now, transferring future growth (and tax) to lower-income family members, and facilitating gradual succession while you retain control. Estate freezes are typically appropriate when your business has significant value (500,000+), you have family members you want to benefit, you want to start succession planning while retaining control, and your business is expected to continue growing. We implement estate freezes for Mississauga business owners regularly and coordinate with legal counsel to ensure the structure meets your family and business goals.

To qualify for the Lifetime Capital Gains Exemption (LCGE) on sale of shares, your operating company must be a Qualified Small Business Corporation (QSBC) at time of sale. This requires: 90%+ of assets must be used in active business carried on primarily in Canada (the “90% test”), you or a related person must have owned the shares for 24+ months before sale, and for 24 months before sale, more than 50% of assets were active business assets (the “50% test”). The challenge with holdco/opco structures is that holding company shares typically don’t qualify because the holdco holds passive investments. The solution: sell opco shares (which do qualify) rather than holdco shares, or purify the holdco by paying out excess cash/investments before sale. We help Mississauga business owners track QSBC status annually and implement purification strategies when a sale is planned, ensuring you don’t lose access to 200,000+ in tax-free gains.

Management fees are payments from an operating company to a holding company (or between related corporations) for management, administrative, or consulting services. They’re tax-deductible to the opco and taxable income to the recipient. Benefits include moving income from opco to holdco without Part IV refundable tax (unlike dividends), creating deductions in higher-tax jurisdictions to offset income in lower-tax jurisdictions, and providing legitimate income for services actually rendered. However, CRA scrutinizes management fees carefully—they must be for services actually provided, amounts must be reasonable (typically 3-10% of opco revenue), and you need written agreements and contemporaneous documentation. We help Brampton and Mississauga clients draft management agreements, calculate defensible fee amounts, and maintain documentation that withstands CRA review.

Yes, absolutely. Each corporation is a separate legal entity and must maintain its own books, bank accounts, and financial records. Commingling funds or expenses between corporations is one of the most common mistakes we see—and one that CRA loves to challenge. Each corporation needs its own bank account and credit cards, separate QuickBooks or accounting files, individual tracking of revenues, expenses, assets, and liabilities, and clear documentation of all inter-company transactions (loans, management fees, dividends). We provide multi-corporation bookkeeping services for Mississauga clients that maintain clean separation while giving you consolidated reporting to understand your overall position. Proper bookkeeping for multiple entities isn’t just about compliance—it’s essential for making informed decisions and defending your structure if ever reviewed.

GRIP (General Rate Income Pool) and LRIP (Low Rate Income Pool) are tax accounts that track your corporation’s ability to pay eligible vs. non-eligible dividends. GRIP builds when your corporation pays tax at the general corporate rate (rather than small business rate)—typically on income over 500,000 or on investment income. LRIP builds when you receive non-eligible dividends from other corporations. These pools matter because eligible dividends receive better tax treatment for shareholders (lower personal tax) than non-eligible dividends. For multi-corporation structures in Ontario, proper GRIP/LRIP tracking allows you to designate dividends optimally, flow eligible dividends through holdco to shareholders, and minimize overall family tax burden. We track GRIP and LRIP for all client corporations and advise on optimal dividend designation strategies annually.

Multi-corporation accounting fees vary based on complexity, transaction volume, and services required. A typical holdco/opco structure with two corporations, monthly bookkeeping, and annual tax returns generally ranges from 6,000-12,000 annually. More complex structures with multiple opcos, extensive inter-company transactions, or reorganization planning may range from 12,000-25,000+. However, the tax savings typically far exceed the accounting costs—most clients save 3-10 times our fees through proper planning. We provide transparent fixed-fee pricing quoted upfront based on your specific situation, and our initial consultation includes a cost-benefit analysis so you can make an informed decision. For most Mississauga business owners with 200,000+ in corporate income, the investment in proper multi-corporation accounting and planning pays for itself many times over.