A pure holding company with one asset is not tested on its own terms. The exemption looks through it.
Short answer
Yes, potentially — but the holding company is not tested in isolation. Where more than 50% of a corporation’s assets by value are “shares of the capital stock or indebtedness of one or more other corporations that were connected” to it, the qualified small business corporation share test looks through to the connected corporation’s own active business assets rather than stopping at the holding company’s balance sheet.
The definition of “qualified small business corporation share” in subsection 110.6(1) requires the corporation to be a small business corporation, and the definition of that term in subsection 248(1) is itself recursive: a holding company’s shares or debt in a connected operating corporation count toward the 90%-active-assets test based on what that operating company holds, not on the holding company’s own asset mix in isolation.
The look-through only helps where the corporations are genuinely connected within the meaning of subsection 186(4) and the operating company itself would pass the active-asset test. A holding company sitting on a portfolio of unconnected investments, or on an operating company that has failed to purify itself of excess passive assets, gets no benefit from the look-through — it simply confirms what the operating company actually holds.
In one file, a holding company with exactly one asset was tested on what that asset’s own operating business actually did, not on the holdco’s bare balance sheet. A related file shows the exemption question one step further along, once a prior crystallization has already used part of the room the test would otherwise open up.
A 30-minute call is enough to tell you whether your structure holds up.
Canadian small-business transaction data is not published anywhere, so most valuations in this country quote an American benchmark. The Deavo–Treadstone Acquisition Index is a daily record of Canadian listings built to replace that: asking-price distributions by province and city are published now, and days on market, departure rates and asking-to-sale spreads follow as the series lengthens. Leave an email and we will tell you as each measure lands.
No pitch, no listings. One email when the first report lands.
