SME Accounting
Management company (Gesco) for professionals in Quebec
July 23, 2026
You’re a medical specialist, dentist, CPA, lawyer, or vetted engineer, and your surplus is accumulating in your operating company. Your accountant may suggest that you set up a asset management firm - also known as Gesco or holdco - to optimize your tax situation. But is it really the right choice for you? How much does it cost? And most importantly, what are the real benefits beyond the accounting jargon?
This guide explains how a management company works in Quebec in 2026, when it’s worth setting one up, and how to structure it properly with an accountant specializing in corporate taxation.
A asset management firm is a corporation (CCPC) owned by a professional or entrepreneur, whose primary function is not to operate an active business but to Manage investments, hold passive assets, and optimize tax planning.
Also known as holdco (holding company) or portfolio management company. In Quebec, it is extremely common among incorporated professionals whose professional associations allow for incorporation: doctors, dentists, pharmacists, accountants, lawyers, engineers, architects, etc.
To fully understand the context, it is helpful to distinguish between a Gesco and a Traditional corporation (SPA) : An SPA operates a business, while a Gesco manages capital. Both are CCPCs, but their tax roles differ.
The most common structure among incorporated professionals combines two related companies: an Opco and a Holdco.
L'Opco is the company that carries out professional or commercial activities. For a medical specialist, it bills the RAMQ or private patients. For a dentist, it bills for clinical services. For a consultant, it bills for consulting engagements.
The Opco benefits from the Small Business Deduction (SBD) on the first $500,000 of active income, bringing the combined federal-Quebec tax rate to around 12.2%. It is this reduced rate that makes tax deferral possible.
The Holdco holds the shares of the Opco. It does not bill any clients. Its role is to Receive Opco surpluses as intercompany dividends, to invest them (in investments, rental real estate, loans) and later distribute them to the professional or their family.
The core tax mechanism of this structure is based on Section 112 of the Income Tax Act: the Dividends paid between related Canadian corporations are generally tax-exempt. The Opco can therefore transfer its surplus to the Holdco without incurring additional corporate income tax.
| Step | Financial Group | Tax Implications |
|---|---|---|
| 1. Active Income | The Opco collects professional fees | Taxed at 12.2% (SBD) on the first $500,000 |
| 2. Salary | The Opco pays the professional a salary | Deductible for the Opco, taxable for the individual (progressive tax rate) |
| 3. Surplus | The surplus remains in the Opco after payroll and taxes | Available for distribution or reinvestment |
| 4. Intercompany Dividends | The Opco pays a dividend to the Holdco | Non-taxable (Section 112 of the Income Tax Act) |
| 5. Investments | The holding company invests the funds | Passive income taxed at approximately 50% (using the RDTOH mechanism) |
This is the number one argument. If you earn $400,000 in professional fees and need $150,000 to live on, the $250,000 surplus can remain within the corporate structure at a rate of 12.2% (SBD) rather than being taxed at your personal marginal rate (up to 53.31% in Quebec in 2026).
The difference in capital available for investment is immediate and substantial. Over a 30-year career, deferred corporate taxes can generate several hundred thousand dollars in additional retirement savings.
L'Lifetime Capital Gains Exemption (LCGE) allows each eligible shareholder to realize a tax-free capital gain of up to $1,016,836 in 2026 upon the sale of eligible shares of a CCPC.
Combined with a estate freeze and a family trust, the Gesco structure allows this tax exemption to be multiplied among spouses and children. For a professional practice or an SME sold for $3 million, the tax savings can exceed $500,000.
Assets accumulated in the Opco are exposed to business risks: lawsuits, creditors, and the bankruptcy of a major client. By regularly transferring surpluses to the Holdco, you Protect your investment assets operational risk.
This separation is particularly valuable for individuals at risk (doctors, dentists, lawyers, and engineers in private practice), even though personal professional liability still applies to professional acts.
Upon death, your corporation’s shares are deemed to be sold at fair market value, which can trigger a significant capital gains tax. A well-planned Gesco structure, including an estate freeze, a family trust, and a CDA, allows you to Significantly reduce estate taxes and to pass on the assets to the heirs in an orderly manner.
The Gesco structure is not a one-size-fits-all solution. It adds administrative complexity and recurring costs that must be offset by real tax savings.
| Criteria | The Right Asset Management Company | Gesco not applicable |
|---|---|---|
| Annual surplus after compensation | $50,000 and up | Less than $25,000 |
| Investment Horizon | 5 years and older | Short-term, immediate use |
| Corporate Assets Targeted Over the Long Term | $500,000 and up | Less than $200,000 |
| Ability to Handle Complexity | Want to optimize and plan? | Looking for simplicity? |
| Sales or Succession Plan | Sale, Family Transfer, Retirement | No structured plan |
| Professional Liability | A profession at risk of lawsuits | Low exposure |
If you spend all of your income each year and don’t have an investment horizon, the cost of a Gesco will exceed the tax savings. In that case, it’s better to Focus on simple incorporation and revise your strategy when your surpluses increase.
Here are the typical costs of a Gesco structure in Quebec in 2026, based on the rates charged by specialized tax and law firms.
| Position | Estimated cost | Frequency |
|---|---|---|
| Incorporation of the holding company (lawyer) | $1,500 to $3,000 | Once |
| Restructuring and Rollover (Section 85, Freeze) | $2,000 to $5,000 | Once |
| REQ Fees and Registers | $250 to $500 | Once a year |
| Holdco Financial Statements (compilation engagement) | $800 to $2,000 | Annual |
| T2 / CO-17 Holdco Return | $500 to $1,200 | Annual |
| REQ Update and Corporate Resolutions | $200 to $500 | Annual |
| Total Startup | $2,000 to $5,000 | Initial Investment |
| Total annual maintenance | $1,000 to $3,000 | Recurring |
These costs vary depending on complexity (family trust, multiple shareholders, estate freeze) and region. For a personalized overview, visit our Guide to Choosing a Tax Accountant.
A 42-year-old cardiologist bills the RAMQ $480,000 per year. She pays herself $180,000 in salary (for personal needs), sets aside $80,000 for the practice’s fixed expenses, and has a surplus of approximately $220,000 remaining. With a Gesco, she can transfer this surplus via an intercompany dividend and invest it in a long-term investment portfolio.
Over a 25-year investment period, the accumulated capital gap between a corporate strategy and a 100% personal strategy often exceeds $1 million, based on return assumptions.
A dentist who owns two clinics has one Opco per clinic and a single Holdco. The Holdco receives dividends from both Opcos and also owns the building leased to one of the clinics (held by a third company to isolate real estate risk). This structure allows for:
A SaaS founder plans to sell his business in 5 to 7 years for $5 million. In collaboration with his tax advisor, he is implementing:
At the time of the sale, his spouse and two children can each use their LCGE, thereby increasing the total tax-free exemption to over $4 million on eligible capital gains.
CPAs in private practice in Quebec are subject to specific restrictions: according to the regulations of the Ordre des CPA, they may incorporate, but their structure must comply with the Regulations Governing the Practice of the CPA Profession in a Firm. Gesco entities are permitted, but non-CPA shareholders are restricted. Verify compliance with your legal advisor before any restructuring.
A poorly managed Gesco structure can wipe out the savings it is supposed to generate. Three major pitfalls frequently arise during tax audits:
L'Refundable Tax Withheld at Source on Dividends (RDTOH) taxes passive income (interest, portfolio dividends, rental income) at a high rate (approximately 50%), then refunds a portion of that tax when the corporation pays taxable dividends. If not properly tracked, the RDTOH balance is lost over the years, and the tax is never recovered.
Your accountant must file the T2-3 schedules (investment income) annually and monitor your determined and undetermined RDTOH accounts.
Since 2019, annual passive income from a CCPC exceeding $50,000 are gradually reducing the Opco’s SBD cap at a rate of $5 in lost SBD per $1 of passive income above the threshold. At $150,000 in passive income, the SBD is completely eliminated.
A $1 million portfolio yielding 5% already generates $50,000 in passive income. At this stage, the strategy needs to evolve: Canadian preferred stocks (fixed dividends), corporate life insurance, or other vehicles to limit the impact.
The Rules TOSI (Tax on Split Income) - Article to be published in Q3 2026, in effect since 2018, tax dividends paid to a family member who does not actively and regularly contribute to the business at the highest marginal tax rate.
There are several exceptions that allow a dividend paid to your spouse or adult child to be exempt from the TOSI: a retired spouse (you are 65 or older), a child aged 25 or older with a 10% or greater ownership interest in a non-professional corporation, regular active contribution (more than 20 hours per week), etc. Strict compliance with these conditions is essential.
Bankeo connects you with a tax accountant specializing in corporate structures and incorporated professionals. Free service for entrepreneurs and professionals in Quebec.
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Setting up a management company is not something that can be done on the fly. The process requires expertise in several areas:
Most incorporated professionals find their accountant through informal referrals, colleagues, professional associations, banks. But this approach limits your options. Bankeo lets you Choose a tax accountant Specializing in corporate structures tailored to your profession and level of complexity.
If you’re starting a business and are considering whether to incorporate and then set up a Gesco, be sure to also read our Guide to the Legal Status of Independent Professionals.
Setting up and maintaining a Gesco requires ongoing accounting and tax support. To get an idea of what regular fees entail, the Bankeo Fee Barometer estimates the median at around $3,000 per year (ranging from $500 to $6,000 depending on the complexity of the case), and the Bankeo Trust Index helps you choose a verified professional who is familiar with incorporation structures.
A management company (Gesco) is a powerful tool for tax and estate planning for incorporated professionals in Quebec. When properly structured, it allows you to defer taxes on hundreds of thousands of dollars, protect accumulated assets, and plan for an orderly succession. If mismanaged, however, it becomes a source of administrative complexity, tax pitfalls (RDTOH, passive income, TOSI), and unnecessary recurring costs.
The number one factor for success remains choosing a tax accountant with experience in corporate structures for professionals. Before any restructuring, take the time to compare several accounting firms, verify their experience with your professional association, and discuss your investment horizon.
To explore these concepts in more detail, visit our Entry for “Gesco” in the 2026 Quebec Accounting Glossary, or the definition of the CCPC and the small business deduction (SBD).
General information provided for informational purposes only, based on known 2026 tax rules. It is not a substitute for the advice of a Chartered Professional Accountant (CPA): always consult a professional regarding your specific situation.
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