An analysis by Borden Ladner Gervais
Over the next decade, 76 per cent of Canadian business owners plan to exit their business which represents a potential transition of more than $2 trillion worth of business assets. However, only 9 per cent of business owners have a business succession plan.
Canada’s Employee Ownership Trust (EOT) regime, introduced in the 2023 Federal Budget and effective from 1 January 2024, offers additional tax incentives to encourage business owners to consider an EOT as a viable business succession option. These incentives include a 10-year capital gains reserve, temporary exemption on the first $10 million of capital gains, and benefits for EOTs and employees. However, challenges include the gradual receipt of proceeds and potential concerns about relinquishing control.
Pamela L. Cross and Grace Pereira from Borden Ladner Gervais analyse this new regime, its benefits and weaknesses for both owners and employees in further detail here.
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