An OpCo is the operating company that runs a business; a HoldCo is a separate corporation that sits above it, holding shares and receiving dividends to protect accumulated wealth and create tax planning flexibility.

The HoldCo/OpCo structure is one of the most common arrangements for incorporated Canadian business owners. Dividends flow from the OpCo to the HoldCo on an intercorporate basis, generally tax-free between connected corporations, where they accumulate and can be invested or deployed without the immediate personal tax impact of distributing them to the owner.

The creditor protection benefit is equally important. Assets held in the HoldCo sit above the OpCo and are insulated from operational risks, lawsuits, supplier claims, and CRA assessments that could affect the OpCo. Keeping wealth inside the OpCo, where it remains exposed to those risks, is the structural issue the HoldCo is designed to address. The structure also creates estate planning flexibility, additional share classes, and can support a more defensible QSBC position at exit.

Whether a HoldCo structure makes sense depends on income level, asset base, and exit timeline. See how Wefinx approaches tax planning.

← Back to glossary