RSM424H1 Lecture Notes - Lecture 14: Verizon Communications, Leveraged Buyout, Cash Flow
11 Jun 2017
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An individual who owns shares in one or more business corporations can choose to interpose a corporation between himself/herself and the operating corporations o. This interposed corporation is referred to as a holding corporation as its primary purpose is to own shares of other corporations. A holding corporation can be a private company that owns shares in other private or public corporations, or a public corporation created for the purpose of investing in other public corporations o. The benefits derived from the use of such a structure are tied to the tax treatment given to intercorporate dividends paid by the operating companies to the holding corporation. Tax treatment of intercorporate dividends: dividends received by a corporation from another canadian corporation are not included in taxable income. However, it was also indicated that certain dividends received by a private corporation are subject to a special refundable tax.
