Employee Ownership Trusts

For many family businesses, the eventual retirement of its founder(s) often results in the sale of the business toa new unrelated owner, or perhaps a transfer to another–usually younger–owner within the family. However, what if a group of employees wants to take over the business instead? Recent income tax changes in Canada have introduced the concept of an “Employee Ownership Trust” for the purpose of facilitating the transfer of businesses to employees. In this course, we will examine the tax implications and various other considerations relevant when a family business is transferred toits employees through the use of an Employee Ownership Trust. 

Topics covered include:

• Different business structures in Canada• Potential options for selling or transferring a family business toa new owner• Compare and contrast tax implications from: sale to a 3rd party, sale to a family member, intergenerational business transfer, qualifying transfer to an Employee Ownership Trust (“EOT”)• Example scenario to illustrate application• Benefits of a transfer to an EOT• Review of technical rules–EOT conditions, qualifying business, beneficiaries, trustees• $10M exemption from capital gains on qualifying transfer to an EOT