Why Employee Ownership Matters Now
One of the provisions in Bill C-30, enacted June 19, 2026, permanently makes eligible business transfers to employee ownership trusts (EOTs) and worker co-operatives exempt up to $10 million of capital gains. (canada.ca) This opens a rare window for business-owners to think differently about succession, branding, and structure.
Key Features of the Exemption
- Lifetime exemption of $10 million for qualifying capital gains, when transferring control to EOTs or co-operatives. (canada.ca)
- It’s permanent – not temporary or sunsetted.
- Applies only when the transfer meets specific conditions (to be defined in regulations), so legal structuring must be precise.
Structuring Strategies
| Strategy | What to Consider | Steps to Get There |
|---|---|---|
| Establish an EOT | Trust needs to be properly constituted, employees must be beneficiaries, governance must comply with legal rules. | Consult lawyers to draft trust deed, ensure share transfer meets requirements, define employee eligibility and voting rights. |
| Convert to worker-cooperative | Ownership shares, profit allocation, labor structure must align; may also affect access to other tax credits. | Restructure bylaws, reorganize capital structure, ensure compliance with cooperative laws. |
| Hybrid exit strategy | E.g., partial sale to Trust + remainder to family or external buyer, taking advantage of exemption on part. | Valuation of business, negotiate sale terms, document control and management rights. |
Example Case
Alice owns a manufacturing business valued at $20M. She transfers ownership worth $8M to an ESR trust (qualifies for full exemption), retaining $12M for herself. The $8M is tax-free capital gain; the rest taxed at regular rate. She stays involved as CEO, while employees sit on the Board. Over time, she stages further transfers.
Risks & Compliance Tips
- Ensure all conditions for transfers are met—trust structure, employee benefit, regulatory definition. Getting this wrong could disqualify exemption.
- Document transactions carefully; keep good valuations; use qualified professionals.
- Be aware of province-level tax implications (e.g. provincial capital gains, corporate structuring, taxes on dividends).
Actionable Advice for Owners
- If considering exit in next 1-3 years, explore EOT or co-op model now.
- Conduct business valuation early; put governance and employee eligibility in place.
- Speak with tax lawyer/accountant to map timeline and cash flow; assess effects on estate, income splitting, and personal cash flow.
Final word: The $10 million capital gains exemption under Bill C-30 provides a rare chance to redesign business succession in favour of employees, community, and long-term sustainability—if structured properly.