Your corporation had another profitable year. The operating account now holds $800,000. You do not need all of that money to pay employees, suppliers or upcoming business expenses, so you start investing the surplus. Some goes into GICs. Some goes into stocks and ETFs. Maybe the corporation purchases an investment property. At first, this can...

Your operating company is profitable. Cash is building up. You are not personally spending all of the money the business earns. Your accountant, business partner, or another entrepreneur mentions setting up a holding company. The idea sounds attractive: “Move excess cash to a Holdco, invest it there, protect the money, and save tax.” But is...