As the winds of change sweep through Canada’s business landscape, a monumental shift has just been codified into law. On June 21, 2024, the passage of bills C-59 and C-69 marked a historic moment for employee ownership for Canada. The establishment of Employee Ownership Trusts (EOTs) within the Income Tax Act not only opens new avenues for business succession but also paves the way for significant tax benefits, including a ground-breaking $10 million capital gains tax exemption for sales to EOTs. This tax exemption is designed to incentive business owners to sell their business locally, to their employees. To keep Canadian businesses locally owned and operated.
What exactly does this mean for business owners across the nation? Simply put, it’s a game-changer. By selling a majority stake to an EOT, entrepreneurs can now secure up to $10 million in tax-free capital gains, a provision designed to incentivize and reward those who choose to choose to transition their business to their workforce through an EOT.
But the benefits extend far beyond financial incentives. In an EOT structure, every employee becomes a stakeholder, sharing in the rewards and responsibilities of ownership. This not only fosters a culture of shared prosperity but also enhances employee engagement, reduces turnover rates, and fuels productivity and growth. For Canada, grappling with the challenges of economic inequality and business sustainability, EOTs represent a bold step towards a more inclusive and resilient economy.
At Firefly Insights we believe passionately in the transformative power of Employee Ownership. Our mission is to empower businesses to transition to employee ownership models that preserve local ownership while fostering wealth distribution and equity. By providing tailored guidance and innovative solutions, we enable companies to navigate the complexities of ownership succession, ensuring continuity and prosperity within their communities.
We are committed to championing sustainable business practices that strengthen economic resilience and promote shared prosperity, creating a legacy of empowerment and opportunity for generations to come.”
As Canada embraces this new era of business ownership, Firefly Insights stands at the forefront, ready to illuminate the path forward. For a comprehensive review of what employee ownership option is best suited for your business, reach out.
