An individual residing in Saskatoon has created a holding company to own the shares of their CCPC (which earns only active business income).The use of the holding company will permit which of the following?
A)The corporation's income will not be taxed.
B)The individual will receive dividends from the holding company, free of tax.
C)The holding company will receive dividends from the corporation, free of tax.
D)The individual will receive dividends from the corporation, free of tax.

Question

Quizplus · Accepted Answer

The use of a holding company allows for the receipt of dividends from an operating corporation taxed at a lower rate. Therefore, the holding company will receive dividends from the operating corporation, free of tax. However, when the holding company pays dividends to the individual, there will be tax implications.

An Individual Residing in Saskatoon Has Created a Holding Company