News Summary

Business leaders in Canada are urging the federal government to extend a tax incentive that encourages company founders to sell their businesses to employees through Employee Ownership Trusts (EOTs). This tax break, introduced in the 2023 federal budget, offers up to $10 million in capital gains tax relief and is set to expire at the end of the year. The advocacy group Employee Ownership Canada has called for the incentive to become a permanent policy, highlighting its benefits in keeping businesses Canadian-owned and supporting local economies. The initiative has gained support from leaders of major Canadian banks and tech companies, who argue that EOTs provide a viable alternative for business succession, helping to maintain jobs and strategic economic capacity within the country. A study from the UK has shown that businesses under EOTs are more productive and invest more in research and development. With many Canadian business owners planning to exit in the next decade, extending the incentive could encourage more to consider selling to employees.