Mr. Patel is the sole owner of a holding company which owns 100 percent of the shares of his operating company that earns only active business income. Which of the following statements is correct?

Question

Quizplus · Accepted Answer

The holding company will receive dividends from the operating company tax-free because inter-corporate dividends between Canadian-controlled private corporations are generally not subject to tax, due to the dividend gross-up and dividend tax credit mechanisms designed to prevent double taxation of the same income.

Mr Patel Is the Sole Owner of a Holding Company