A holding company above Rocky Software Inc. lets you move surplus cash out of the operating company by tax-free inter-corporate dividend under s.112 — keeping retained earnings away from operating-company creditors, and keeping the opco qualifying for the Lifetime Capital Gains Exemption.

The LCGE on qualified small business corporation shares is $1,275,000 per individual for 2026, now indexed annually. It has two asset tests that a growing cash balance quietly breaks:

• 90% test, at the moment of sale: substantially all of the corporation’s asset value must be used principally in an active business carried on primarily in Canada.
• 50% test, throughout the preceding 24 months: more than half of asset value used in that active business.
• 24-month holding period: the shares must not have been owned by anyone other than you or a related person throughout those 24 months.

The 24-month lookback is the part that bites. A balance sheet you let drift today disqualifies a sale two years from now, and you cannot fix it retroactively.

FIRST STEP THIS WEEK — Pull Rocky Software’s current balance sheet and compute non-active assets as a share of total: cash above genuine working-capital needs, marketable securities, shareholder loans receivable. If that figure is approaching 10%, that is the test you are quietly failing. It is cheap to fix now and expensive to fix later.