How to Use a Holding Company to Grow Wealth Tax-Efficiently in Canada

A holding company helps Calgary professionals grow wealth tax-efficiently by deferring tax, protecting assets, and enabling smarter estate planning—all within a coordinated wealth strategy.

Financial advisor in Calgary speaking with clients

Written by

Ryan Gubic

Published on

23

Jul 2025

How to Use a Holding Company to Grow Wealth Tax-Efficiently in Canada

For professionals, consultants, and business owners who are already incorporated, a holding company (HoldCo) can be one of the most powerful—but underused—wealth management tools for building long-term wealth.

While most people think of incorporation for tax deferral or income splitting, HoldCos provide a second layer of asset protection, tax planning, and investment growth potential—especially for high-income earners in Alberta and across Canada.  A financial advisor in Calgary can help provide the advice and personalized financial planning needed to optimize.

This article breaks down when and why to use a holding company, how it works, and how to integrate it into your personal wealth management plan.

1. What Is a Holding Company?

A holding company is a corporation created to hold assets such as:

  • Shares of an operating company (OpCo)
  • Investment portfolios (stocks, ETFs, bonds)
  • Real estate or private equity
  • Corporate-owned life insurance

It doesn’t actively run a business—it simply holds and manages wealth.

In most cases, you move surplus profits or dividends from your operating company (OpCo) into your HoldCo to invest outside of your personal name—keeping your corporate earnings growing tax-deferred.

2. Why Use a Holding Company?

Tax Deferral & Compounding

Instead of paying yourself personally and triggering high marginal tax, you can transfer profits to your HoldCo and invest them at the corporate tax rate (~11–27% in Alberta, depending on income type). That means:

  • More money stays invested
  • Compound investment growth is accelerated
  • You control when to trigger personal tax

Asset Protection

Moving surplus capital out of your OpCo into a HoldCo can protect it from:

  • Business creditors or legal claims
  • Operational liabilities
  • Future business risk

This is often referred to as a “corporate freeze” or surplus strip” strategy—protecting accumulated wealth while keeping the operating company lean.

Estate and Legacy Planning

HoldCos simplify:

  • Ownership transition to the next generation
  • Use of family trusts
  • Strategic sale of a business (e.g., capital gains exemption planning)
  • Tax-efficient wealth transfer using corporate-owned life insurance

3. How to Fund a HoldCo

Your operating company can transfer funds to a HoldCo through:

  • Taxable dividends (most common)
  • Return of capital (in some structures)
  • Section 85 rollovers (for asset transfers like real estate or shares)

The goal is to build a corporate investment portfolio inside the HoldCo, which could include:

  • Marketable securities
  • GICs or bonds
  • Alternative investments
  • Real estate
  • Insurance strategies

At MRG Wealth Management, we can coordinate this with your accountant and legal team to ensure tax compliance and strategic alignment for your wealth management strategy.

4. Investment Planning Inside a HoldCo

When you invest inside a HoldCo:

  • Passive income is taxed at higher corporate rates, but…
  • Refundable tax mechanisms (RDTOH) can return a portion of that when dividends are paid
  • Capital gains and capital dividends offer tax-efficient planning
  • You may access the Capital Dividend Account (CDA) for tax-free distributions

The wealth management structure requires proper coordination between your:

  • Portfolio investment strategy
  • Personal income needs
  • Long-term estate goals

This is where most DIY investors miss opportunities—and where a Personal CFO approach makes a difference.

5. When Is a HoldCo Not Necessary?

You may not need a HoldCo if:

  • You don’t have retained earnings in your OpCo
  • Your business is in early stages or inconsistent in income
  • You plan to draw out all earnings personally each year
  • You’re not yet investing beyond TFSA, RRSP, and non-registered accounts

However, for professionals earning $250K+ annually and building corporate retained earnings, a HoldCo becomes increasingly valuable and important to discuss with a qualified financial advisor in Calgary.

✅ Build Wealth the Institutional Way

At MRG Wealth Management, we help Calgary professionals and business owners design tax-efficient corporate wealth management strategies that grow and protect wealth across generations.

As your Personal CFO, we can coordinate your accountant, legal, and investment strategy—so your HoldCo supports your long-term goals, not just tax savings.

Book a complimentary introduction call and discover whether it’s the right move for your financial future.

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Ryan Gubic is the founder of MRG Wealth Management Inc. operating as MRG Wealth (“MRG”) and is a Portfolio Manager with MRG investments of Aligned Capital Partners Inc. (“ACPI”). The opinions expressed are not necessarily those of MRG, ACPI, or Ryan Gubic. This material is provided for general information and the opinions expressed and information provided herein are subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on the information presented, seek professional financial advice based on your personal circumstances. ACPI is a full-service investment dealer and a member of the Canadian Investor Protection Fund (“CIPF”) and the Canadian Investment Regulatory Organization (“CIRO”). Investment services are provided through MRG Investments, an approved trade name of ACPI. Only investment-related products and services are offered through MRG Investments of ACPI and covered by the CIPF.  Financial planning and insurance services are provided through MRG.  MRG is an independent company separate and distinct from MRG Investments of ACPI.  

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