Does a holding company and its operating company automatically qualify for the section 156 election?

Not automatically, a holding company and its operating company are a classic example of the kind of structure the section 156 election is designed for, but qualifying still depends on actually meeting the closely related test and completing the election itself; the relationship being a typical holdco-opco setup doesn't substitute for confirming the specific ownership percentages and filing the required joint election.

In practice, a simple structure where the holding company owns all, or substantially all, of the voting shares of the operating company will often meet the ownership test comfortably. But structures that look similar on the surface can differ in ways that matter, a holding company that owns only a majority stake rather than effectively all of the shares, or one where a third party holds a meaningful minority interest, may fall short of the threshold even though the businesses are clearly related in a practical sense.

Because the election has to be actively made and kept on file, and the ownership percentages have to be checked against the current test rather than assumed from the general shape of the corporate structure, a holdco-opco group should confirm both eligibility and the paperwork with a tax advisor before treating intercompany transactions as HST-free.