Canada Secures Permanent CGT Exemption on EOTs

EO Canada, one of our counterparts across the Atlantic, has secured government support for extended tax reliefs on its version of the Employee Ownership Trust. 

Image: Parliament Hill, Ottawa, Canada (credit: Getty Images Signature)

The $10 million Capital Gains Tax (CGT) exemption for business owners who sell to an Employee Ownership Trust (EOT) is now a permanent feature of Canada’s tax system. 

The eoa – alongside many of our members and our International Ambassador Grame Nuttall – have staunchly supported this campaign from the wings. This included securing letters from MPs and high-profile bankers to support the cause.

Canada’s own EOT was also based on best practice, evidence, and learnings from the success of the UK model.

“It’s fantastic to see Canada secure a bright future for its version of the EOT,” said James de le Vingne, Chief Executive of the eoa. 

“Canada continues to provide a shining example of taking the proven model of the EOT and adapting it for its own unique business landscape. 

“The announcement also demonstrates the importance of businesses and EO advocates working with government to create a viable ecosystem for employee ownership to flourish.” 

Extending the Window for EOTs

The CGT exception for EOTs was first introduced in Canada in the 2023 Fall Economic Statement, before being passed into law in June 2024. However, it came with an expiry date of December 31 2026.

As expected, this resulted in deals being put on hold because the policy window was closing before business owners could get deals through. It also meant advisors were hesitant to recommend EOTs to any clients with succession timelines that extended beyond 2026. 

But following the newly introduced permanent extension on tax reliefs, every Canadian business owner can plan an EOT transition on their own timeline. 

Commitment & Collaboration

The cause was spearheaded by EO Canada, who made a unified and evidence-based case for permanence and delivered an open letter to government signed by some of the nation’s most respected business leaders. 

The announcement comes a year after Grantbrook became Canada’s first-ever Employee Ownership Trust.

Elsewhere, our Chief Executive supported a campaign alongside EO Canada and Taproot Community Support Services – the largest EOT in Canada and the first in its social services sector – aimed at promoting employee ownership to Canada’s health and social care market. 

The campaign drew inspiration from and built on the groundwork laid by the ‘People Powered Care’ white paper published by Care England alongside the eoa and our member Shaw Healthcare.