{"id":1029,"date":"2023-05-09T11:06:00","date_gmt":"2023-05-09T15:06:00","guid":{"rendered":"https:\/\/www.bellvest.ca\/family-wealth-peterborough\/resources\/employee-ownership-trusts-tax-benefits-succession-planning\/"},"modified":"2025-06-25T10:44:26","modified_gmt":"2025-06-25T14:44:26","slug":"employee-ownership-trusts-tax-benefits-succession-planning","status":"publish","type":"resources","link":"https:\/\/www.bellvest.ca\/family-wealth-peterborough\/resources\/employee-ownership-trusts-tax-benefits-succession-planning\/","title":{"rendered":"Employee Ownership Trusts: Tax Benefits, Owners, & Succession Planning"},"content":{"rendered":"
\n

\u201cYou don’t build a business. You bild people, and people build the business.”<\/em><\/p>\n

\u2013 Zig Ziglar<\/p>\n

\n<\/p><\/blockquote>\n

Having given countless motivational speeches and even trained the likes of Will Harris, a bestseller and international speaker in his own right, Ziglar knew how to build people up. As the prolific American author did so, the people built the foundation for successful businesses themselves.<\/p>\n

With the addition of Employee Ownership Trusts (EOTs) introduced in Budget 2023, will Canadian small business owners achieve the same? Or will the qualifying conditions and tax benefits limit EOTs as a viable succession planning tool?<\/p>\n

The Landscape for Canadian Small Business Owners<\/span><\/h3>\n

In a 2023 report from the Canadian Federation of Independent Business (CFIB), named Succession Tsunami<\/em><\/a>, <\/em>it\u2019s made clear that a tidal wave of businesses changing hands will hit the economy sooner rather than later. To name a few key statistics:<\/p>\n

\"Infographic<\/p>\n

To bring it all together, over $2 trillion in business assets are set to change hands over the next decade. To put that into perspective, that\u2019s larger than Spain\u2019s 2021 gross domestic product (GDP), according to the World Bank<\/a>, but less than one tenth of business owners have an established succession plan to ease these transactions along smoothly.<\/p>\n

What Is An Employee Ownership Trust?<\/span><\/h3>\n

In its most simple terms, Canadian business owners now have a new option for succession planning. Coming into force on January 1, 2024, EOTs allow employees to become partial owners of their workplaces by purchasing the business over time.<\/p>\n

Research suggests that employee-owned businesses grow at faster rates<\/a>, are more resilient to failure<\/a>, and tend to be more productive<\/a> than ones with concentrated ownership structures. From a business perspective, it seems beneficial. On a human level, the data<\/a> points toward increased employee retention, benefits, retirement savings, and a slew of other benefits.<\/span><\/p>\n

How to Qualify as an Employee Ownership Trust<\/span><\/h3>\n

The criteria necessary to form an EOT are as follows:<\/span><\/p>\n