Generally, the overall income taxes payable by an individual on investment income earned through a corporation resident in Quebec are slightly higher if the income had been earned directly by an individual resident in the province. Generally, this difference in the individual’s favour will tend to increase in the coming years because of changes to the dividends tax rates.

Accordingly, individuals may prefer to earn this income personally, in particular because of the administrative costs associated with a holding company. However, other reasons may justify the use of holding companies. Such reasons include estate freezing and limited liability for shareholders.