One of the less-heralded bits of news in this week’s spring economic update is the announcement that a juicy tax incentive for business owners who want to sell their companies to employees is not going to expire at the end of this year as originally planned.
The federal government is making the incentive permanent, exempting business owners who sell their companies to Employee Ownership Trusts (EOTs) from tax on up to $10 million in capital gains, much to the delight of proponents of the new structure.
With more than 75 per cent of small business owners planning to exit over the next decade and $2 trillion in assets at stake, it’s a change that boosters say could give more employees a stake in their workplace and keep businesses under Canadian ownership.
“The government has made a wise decision that will keep our companies Canadian, keep good jobs in local communities and increase worker wealth,” says Jon Shell, chair of Toronto-based wealth advocacy group Social Capital Partners.
“It’s perfect timing given all the forces we’re facing, and I can’t wait to watch the future of employee ownership develop. One day hundreds of thousands of Canadians will look back at this as the reason that they now own a share of their businesses.”
