6 worked Holding Company Tax Return 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 tax return work, not a specific client's file.
Case Study 1 · Missed incentive claimed
$30,500 In Credits Claimed That Prior Filings Had Missed — Incorporating Sole Proprietor, Barrie
Client: An incorporating sole proprietor · Where: Barrie, Ontario · Engagement: 11 weeks, fixed fee
Credits claimed$30,500
Years adjusted3
Review outcomeNo adjustment
The situation — An incorporating sole proprietor, Barrie, Ontario
An incorporating sole proprietor in Barrie, Ontario had been filing for 3 years. In that time, the incentives its activity qualified for were never claimed. Behind that sat an inter-company balance and a shareholder loan left outstanding between the corporations being merged.
What we did for An incorporating sole proprietor, Barrie, Ontario
We tested each activity against the eligibility criteria rather than the description on the invoice. Then 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.
The result — An incorporating sole proprietor, Barrie, Ontario
$30,500 in credits claimed, with the open prior years adjusted as well. The claim passed review without adjustment.
Case Study 2 · Backlog brought current
Collections Halted And $106,000 Cut From A 3-Year Backlog — Buyout Shareholder, Kelowna
Client: A shareholder buying out a departing co-owner · Where: Kelowna, British Columbia · Engagement: 3 weeks, fixed fee
Balance reduced by$106,000
Backlog cleared3 years
CollectionsHalted
The situation — A shareholder buying out a departing co-owner, Kelowna, British Columbia
By the time a shareholder buying out a departing co-owner in Kelowna, British Columbia called, 3 years were outstanding. The CRA had assessed on estimates. Underneath it sat a capital dividend account balance that would have been lost on dissolution had the final distribution gone ahead as planned.
What we did for A shareholder buying out a departing co-owner, Kelowna, British Columbia
We reconstructed the records year by year. We wound the subsidiary up into its parent under subsection 88(1) and moved the property across at its cost amounts. We closed the subsidiary program accounts once the final return had been assessed. Each filing replaced an arbitrary assessment with a real one.
The result — A shareholder buying out a departing co-owner, Kelowna, British Columbia
The account is current. Filing on real numbers rather than CRA estimates reduced the balance by $106,000, and a relief application addressed part of the accumulated interest.
Case Study 3 · Objection and relief
Desk-Review Assessment Of $41,000 Vacated — Redundant Subsidiary, Guelph
The situation — A redundant subsidiary corporation, Guelph, Ontario
A redundant subsidiary corporation in Guelph, Ontario was carrying $41,000 of penalties and interest. The charges arose from all future growth accruing to shares the founder already held, with no freeze in place. Much of that amount accumulated during a period the CRA itself had delayed.
What we did for A redundant subsidiary corporation, Guelph, Ontario
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 framed the relief application on the specific grounds the CRA guidelines recognise rather than on general hardship.
The result — A redundant subsidiary corporation, Guelph, Ontario
The assessment was vacated. $41,000 came off the account, and the documentation now on file makes the same position straightforward to defend next time.
Case Study 4 · Records and systems rebuilt
Books Rebuilt From Source, $17,000 In Unclaimed Input Tax Found — Owner Separating Surplus Assets, Lethbridge
Client: An owner separating surplus assets from the operating business · Where: Lethbridge, Alberta · Engagement: 7 weeks, fixed fee
Unclaimed tax found$17,000
Records rebuilt33 months
ProcessDocumented
The situation — An owner separating surplus assets from the operating business, Lethbridge, Alberta
An owner separating surplus assets from the operating business in Lethbridge, Alberta could not answer basic questions about its own numbers. A trust still holding capital property with its twenty-one-year deemed disposition inside the planning horizon sat between the bank statements and the ledger.
What we did for An owner separating surplus assets from the operating business, Lethbridge, Alberta
We filed the short-year T2 for each predecessor corporation and chose the first year-end of the amalgamated corporation deliberately. We carried the predecessor loss balances forward under the continuity rules. We then documented the process so the work does not depend on any one person remembering how it was done.
The result — An owner separating surplus assets from the operating business, Lethbridge, Alberta
Records rebuilt and reconciled, $17,000 recovered in input tax credits that the old file could not support, and a documented monthly process now in place.
Case Study 5 · Planning that cut the bill
$73,000 Cut From The Annual Tax Bill — Investment-Heavy Operating Company, Toronto
Client: An investment-heavy operating company · Where: Toronto, Ontario · Engagement: 10 weeks, fixed fee
First-year saving$73,000
RepeatsAnnually
Filing positionUnchanged in risk
The situation — An investment-heavy operating company, Toronto, Ontario
An investment-heavy operating company in Toronto, Ontario was compliant but paying more than it needed to. The prior year had been filed correctly. It still left an inter-company balance and a shareholder loan left outstanding between the corporations being merged on the table.
What we did for An investment-heavy operating company, Toronto, Ontario
We modelled the current position against the alternatives before changing anything. Then 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.
The result — An investment-heavy operating company, Toronto, Ontario
The change saved $73,000 in the first year and repeats annually. Nothing about the filings became more aggressive. The position is simply the one the rules already allowed.
Case Study 6 · CRA review defended
$138,000 Proposed Adjustment Withdrawn In Full — Parent Winding Up Subsidiary, Calgary
Client: A parent corporation winding up a dormant subsidiary · Where: Calgary, Alberta · Engagement: 7 weeks, fixed fee
Adjustment withdrawn$138,000
File closed in7 weeks
Penalties assessedNone
The situation — A parent corporation winding up a dormant subsidiary, Calgary, Alberta
A parent corporation winding up a dormant subsidiary in Calgary, Alberta received a proposal letter opening a review of holding company tax return. The CRA had identified a dividend paid up to the holding company with no safe income on hand computed behind it. It proposed an adjustment of $138,000, with 30 days to respond.
What we did for A parent corporation winding up a dormant subsidiary, Calgary, Alberta
We treated the response as an evidence exercise rather than an argument. 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 then indexed every supporting document against the specific line the auditor had questioned.
The result — A parent corporation winding up a dormant subsidiary, Calgary, Alberta
The proposed adjustment was withdrawn in full — all $138,000 of it. The file closed in 7 weeks with no change to the assessed amounts and no penalty.
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.
