Government must extend capital gains exemption on Employee Ownership Trusts: business leaders
Several business leaders have written to the minister of finance asking that the capital gains tax exemption be made permanent for Employee Ownership Trusts (EOTs).
“There is no bigger opportunity, in my view, than solving business succession and retention in a country where our economy is built on small businesses,” said Justine Janssen, executive director of Employee Ownership Canada in a LinkedIn post.
Among the signatories were several banks and financial institutions, as well as Shorefast and the LEAP Pecaut Centre for Social Impact.
The capital gains exemption – which applies to the first $10 million of gains realized – acts as an incentive for business owners to sell their shares to employee-owners. However, under the current legislation the incentive is only in effect for the 2024, 2025 and 2026 tax years.
Last year, social services agency Taproot transferred all ownership to its 750 employees, with profit-sharing based on the hours employees worked rather than seniority in the organization.
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