Federal and Provincial Budgets
Budget 2023: Ottawa announces plans to create Employee Ownership Trusts
The federal government’s 2023 budget is proposing to create Employee Ownership Trusts.
“Employee Ownership Trusts enable employees to share in the success of their work,” the document states. “They support participation in business decisions and allow workers to receive their share of profits. With more than 75 per cent of small business owners planning to retire in the next decade, Employee Ownership Trusts can also give business owners an alternative succession option. Budget 2022 announced the government’s commitment to create these trusts while consulting with stakeholders to address remaining barriers.”
The budget is proposing tax changes to facilitate the creation of Employee Ownership Trusts.
“Selling the business to employees would become a more attractive proposition for owners looking to exit, and employee-owned businesses would be able to re-invest more of their profits in growth,” it said.
The government welcomes stakeholder feedback on how best to enhance employee rights and participation in the governance of Employee Ownership Trusts.
These changes would take effect for the 2024 tax year, and would reduce federal revenues by $20 million over five years, starting in 2023-24.
Earlier this year, the not-for-profit Canadian Employee Ownership Coalition (CEOC) said the trusts are a “tool for creating a stronger, more resilient economy and building middle-class wealth.” It called on Ottawa to introduce trusts, which are already in place in the United States and the United Kingdom.
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