6 worked Holding Company Setup case studies — the position a client typically comes to us with, what we do, and what it is worth. Each is an illustrative example built on the rules that apply to holding company setup work, not a specific client's file.
Case Study 1 · CRA review defended
$133,000 Reassessment Reduced To Nil On Review — Redundant Subsidiary, Moncton
Client: A redundant subsidiary corporation · Where: Moncton, New Brunswick · Engagement: 9 weeks, fixed fee
Reassessment reduced toNil
Tax protected$133,000
Prior filingsUndisturbed
The situation — A redundant subsidiary corporation, Moncton, New Brunswick
A review notice arrived at a redundant subsidiary corporation in Moncton, New Brunswick, covering holding company setup for two tax years. The auditor's working position was an adjustment of $133,000. It was driven by a rollover completed in an earlier year with no section 85 election ever filed for it.
What we did for A redundant subsidiary corporation, Moncton, New Brunswick
Rather than negotiate, we rebuilt the record. We confirmed that subsection 75(2) had never applied to the property. We then distributed the capital property of the trust to the resident capital beneficiaries on a subsection 107(2) rollover ahead of the twenty-one-year date. We then submitted a point-by-point response that answered each proposed adjustment with the document behind it.
The result — A redundant subsidiary corporation, Moncton, New Brunswick
The auditor accepted the documented position and closed the review without adjustment, protecting $133,000 and leaving the prior filings undisturbed.
Case Study 2 · Objection and relief
Desk-Review Assessment Of $27,500 Vacated — Discretionary Family Trust, Calgary
Client: A discretionary family trust · Where: Calgary, Alberta · Engagement: 4 weeks, fixed fee
Assessment vacated$27,500
Supporting recordsNow on file
AccountCleared
The situation — A discretionary family trust, Calgary, Alberta
A discretionary family trust in Calgary, Alberta was carrying $27,500 of penalties and interest. The charges arose from a dividend paid up to the holding company with no safe income on hand computed behind it. Much of that amount accumulated during a period the CRA itself had delayed.
What we did for A discretionary family trust, Calgary, Alberta
We filed the section 85 election on form T2057 with the elected amounts set at the cost amounts of the transferred property. We kept the non-share consideration inside those amounts, so nothing was realised on the transfer. We framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A discretionary family trust, Calgary, Alberta
The assessment was vacated. $27,500 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 3 · Scaling without breaking
Second-Province Expansion Handled, $78,000 Of Cash Released — Parent Winding Up Subsidiary, Hamilton
Client: A parent corporation winding up a dormant subsidiary · Where: Hamilton, Ontario · Engagement: 5 weeks, fixed fee
Cash released$78,000
New registrationsComplete on day one
Compliance gapsNone
The situation — A parent corporation winding up a dormant subsidiary, Hamilton, Ontario
Revenue at a parent corporation winding up a dormant subsidiary in Hamilton, Ontario was up sharply and cash was tighter than ever. Underneath it sat an investment portfolio accumulating inside the operating company, putting the qualified small business corporation tests at risk.
What we did for A parent corporation winding up a dormant subsidiary, Hamilton, Ontario
We computed safe income on hand share by share before any dividend was declared, and sized the dividend so subsection 55(2) had nothing to recharacterise. Every new obligation was set up before it was triggered, not after. That covered registration, remittance frequency and provincial filing.
The result — A parent corporation winding up a dormant subsidiary, Hamilton, Ontario
$78,000 of cash was released from the working capital cycle. The expansion completed with every registration and filing obligation covered from day one.
Case Study 4 · Structure rebuilt
Corporate Structure Rebuilt For $72,000 Of Annual Savings — Share Exchange Shareholder, Brampton
Client: A shareholder exchanging common shares for preferred shares · Where: Brampton, Ontario · Engagement: 9 weeks, fixed fee
Saving per year$72,000
DocumentationComplete
Transfer basisRollover
The situation — A shareholder exchanging common shares for preferred shares, Brampton, Ontario
The structure at a shareholder exchanging common shares for preferred shares in Brampton, Ontario dated from years earlier. It had been set up for a business that no longer existed. A freeze completed years earlier with nothing on file to support the value placed on the preferred shares had become expensive.
What we did for A shareholder exchanging common shares for preferred shares, Brampton, Ontario
We moved the redundant investments out of the operating company into a holding company on a tax-deferred basis. That brought the asset mix back inside the qualified small business corporation tests. The reorganisation used the rollover provisions rather than a taxable transfer, so no tax fell due on the restructuring itself.
The result — A shareholder exchanging common shares for preferred shares, Brampton, Ontario
$72,000 of annual saving, achieved on a tax-deferred basis. The minute book, elections and valuations are all in the file.
Case Study 5 · Planning that cut the bill
Remuneration Review Saved $61,000 Across Corporate And Personal Returns — Three-Tier Corporate Group, Barrie
Client: A three-tier corporate group · Where: Barrie, Ontario · Engagement: 11 weeks, fixed fee
Combined saving$61,000
ScopeCorporate + personal
Future yearsNo rework needed
The situation — A three-tier corporate group, Barrie, Ontario
Nothing was wrong at a three-tier corporate group in Barrie, Ontario. The filings were on time and accurate. What they were not was planned. An inter-company balance and a shareholder loan left outstanding between the corporations being merged had never been reviewed.
What we did for A three-tier corporate group, Barrie, Ontario
We reviewed the paid-up capital of each class, the capital dividend account and the eligible dividend designations before the final distribution. We dissolved the corporation and requested the clearance certificate. We ran the numbers across both the corporate and personal returns, so the saving was real rather than deferred into someone else's hands.
The result — A three-tier corporate group, Barrie, Ontario
$61,000 came off the combined corporate and personal tax bill, and the structure holds for future years without further work.
Case Study 6 · Backlog brought current
$96,000 Of Arbitrary Assessments Vacated After 5 Years — Incorporating Sole Proprietor, Vancouver
Client: An incorporating sole proprietor · Where: Vancouver, British Columbia · Engagement: 5 weeks, fixed fee
Arbitrary tax vacated$96,000
Years brought current5
Account statusCurrent
The situation — An incorporating sole proprietor, Vancouver, British Columbia
5 years of unfiled returns had turned into notional assessments at an incorporating sole proprietor in Vancouver, British Columbia. Underneath lay all future growth accruing to shares the founder already held, with no freeze in place. Collections had already started.
What we did for An incorporating sole proprietor, Vancouver, British Columbia
We cleared the inter-company balances and the shareholder loan before the reorganisation closed. We papered each step with the resolutions and agreements the structure has to rest on. We then filed every outstanding year in chronological order so the CRA could vacate the notional assessments cleanly.
The result — An incorporating sole proprietor, Vancouver, British Columbia
All 5 years were accepted as filed. $96,000 of arbitrarily assessed tax was vacated, collections action stopped, and the account is current for the first time in 5 years.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. These case studies are illustrative worked examples composed from the CRA rules that apply to this type of work, not specific client files; figures are representative and outcomes depend on your own facts.
