Does my holding company in Ontario need to register for HST?

Whether a holding company needs to register for HST depends on what it actually does. A purely passive holding company that simply holds shares in subsidiaries and receives dividends does not make taxable supplies — dividends are a financial service that is an exempt supply. Such a company would not register and would not be entitled to input tax credits.

However, many holding companies also provide management services or charge management fees to their operating subsidiaries. Those management fees are taxable supplies, and if they exceed $30,000 annually, registration is required. Once registered, the holding company can claim ITCs on its own expenses (rent, accounting fees, etc.) that relate to the taxable management services.

A holding company that manages multiple subsidiaries and charges fees may also benefit from joining a GST/HST group registration with related corporations, which can simplify intercompany accounting. The line between a true holding company and a management company is a fact-specific determination. Getting the structure reviewed by a tax lawyer when setting up or restructuring a corporate group is worthwhile.