Author: Tallgrass

A recent change in federal tax policy may have long-term implications for how Canadian businesses approach succession planning.

Continue reading “Permanent E.O.T. Incentive Reshapes Succession”

Employee Ownership Trusts are gaining momentum across Canada, but for many people the terminology can feel confusing or intimidating. This glossary breaks down the most common terms in clear, everyday language, so you can understand how this ownership model works and why it matters.

Continue reading “The E.O.T. Lexicon”

Across Canada, employers are asking the same question: How do we keep great people for the long term? Pay and benefits matter, but retention is increasingly tied to something deeper…stability, purpose, culture, and a sense of shared future.

Continue reading “Employee Ownership = Employee Retention”

Trust is hard to earn and easy to lose. Customers today are more informed, more skeptical, and more values-driven than ever before. They don’t just want a good product or service; they want to believe in the company behind it. That’s where employee-owner trusts quietly but powerfully make a difference.

Continue reading “Employee Ownership Builds Brand Trust”

Across Canada, a quiet shift is happening in how businesses think about leadership, succession, and long-term success. Instead of asking, “Who will buy this company?” more owners are asking a different question:

“Who should lead this company next?”

Continue reading “Employee Ownership Builds Leaders”

Under Canada’s trust tax rules, most trusts are treated as if they sell their capital property every 21 years. This is called a “deemed disposition”. Even though nothing is actually sold, the trust is required to pay capital gains tax as if everything had been sold at fair market value.

Continue reading “What Was the 21-Year Rule?”

Selling a small, family-owned business is never just a financial transaction. It’s a deeply emotional turning point that touches employees, communities, family identity, and the long-term future of the company. When the buyer is a large corporation, the stakes feel even higher…because what happens after the sale often looks very different from the world the family built over generations.

Continue reading “Beyond the Money: The Benefits of Selling to an E.O.T.”

For many Canadian business owners, succession planning is more than a practical decision, it’s deeply personal. You’ve built something meaningful, contributed to your community, and created opportunities for your team. So, when it’s time to think about the future, you want a transition that preserves your legacy and supports the people who helped build your business.

Continue reading “E.O.T. Fundamentals”

Succession planning is a hot topic in Canada right now. Tens of thousands of business owners are approaching retirement, and many are asking the same question: How do I keep my company local, protect my legacy, and reward the team that helped build it?

Continue reading “Qualifying for Employee Owner Trusts”

Employee ownership is gaining momentum in Canada as an alternative succession strategy that keeps businesses locally rooted while rewarding the people who helped build them. One of the most exciting developments in this space is the Employee Ownership Trust (EOT)…a structure designed to make ownership transitions smoother and more tax efficient.

WHAT IS AN EOT?

An EOT is a trust that holds shares of a business on behalf of its employees. Instead of employees buying shares individually, the trust becomes the shareholder, and employees are the beneficiaries. This model ensures continuity and stability without employees being required to take on personal risk.

THE $10 MILLION CAPITAL GAINS EXEMPTION

A significant incentive for business owners considering an EOT is the capital gains exemption legislation introduced in 2024. Here’s what you need to know:

• Amount: Up to $10 million in capital gains from the sale of a qualifying business to an EOT is capital gains tax-exempt.
• Timeline: This opportunity applies to transactions completed in 2024, 2025, and 2026.
• Expiry Date: The exemption ends December 31, 2026, (Employee Ownership Canada is advocating for the exemption to be made permanent, but there is nothing confirmed yet).
• Eligibility: The business must meet qualifying conditions, and the EOT must acquire a controlling interest (a minimum of 51%) in the company.

This exemption can significantly reduce the tax burden for owners, making EOTs an attractive alternative to third-party sales.

OTHER ADVANTAGES

Beyond the capital gains exemption, EOTs offer additional benefits:

• Extended Capital Gains Reserve: Sellers can spread the tax on remaining gains over 10 years, instead of the usual five.
• Flexible Financing: EOTs can borrow from the business to fund the purchase, with repayment terms of up to 15 years.
• Exemption from Certain Rules: Relief from deemed interest-benefit rules and the 21-year deemed disposition rule for trusts.
• Alternative Minimum Tax Relief: Gains eligible for the $10 million exemption are not subject to AMT.

IF YOU ARE INTERESTED, NOW IS THE TIME TO ACT

Succession planning takes time…often years. With the exemption set to expire at the end of 2026, owners should start planning now. Waiting too long could mean missing out on substantial tax savings. Advisors recommend:

• Allow a minimum of 6-9 months for the process.
• Begin discussions early to allow for valuation, financing, and legal structuring.
• Explore phased or hybrid transitions if a full sale isn’t immediately feasible.
• Stay informed…Employee Ownership Canada is pushing for permanence, but nothing is guaranteed yet.

Employee ownership isn’t just a tax strategy; it’s a way to preserve legacies, empower employees, and strengthen communities. If you’re a Canadian business owner considering succession, the current tax incentives make now the perfect time to explore an EOT…and Tallgrass can help.