What is a Holding Company – Benefits, Tax Advantages, and Downsides скачать в хорошем качестве

What is a Holding Company – Benefits, Tax Advantages, and Downsides

👉 Learn more & book a tax planning meeting: https://simplifyaccounting.ca/ Let’s talk about the benefits of a holding company, including asset protection and tax advantages. However, it’s not all positive - we’ll also discuss the downsides of a holding company, such as potential costs and accounting fees. Whether you’re a business owner or just curious, understanding the pros and cons of a holding company structure can help you make smarter financial decisions for your business. Passive income (long term rental properties, investments) is taxed at around 50% (it varies by province) in corporations, but you'll get a chunk of this back via a mechanism called the Refundable Dividend Tax on Hand (RDTOH) when your company pays dividends to its shareholders (you). You'll likely ultimately pay more taxes holding investments in a corporation versus personally. I'd typically recommend against holding passive investments in a corporation, but it can make sense if you have an active business that generates more cash than you need because you can have more cash upfront (due to the lower small business corporate tax rate) to invest, allowing those investments to compound faster. The Lifetime Capital Gains Exemption is indexed, meaning it grows in value each year. Budget 2024 proposed increasing it to $1.25M. Skip to Section: 00:00 Why a Holding Company is Not Always a Smart Decision 02:09 Reasons People Create Holding Companies 06:01 Asset Protection from a Holding Company 07:26 Tax Advantages of a Holding Company 11:20 Holding Company Structure Examples