Understand Employee Ownership Trusts and Their Role in Family Business Transitions.
For many family businesses, the eventual retirement of its founder(s) often results in the sale of the business toa new unrelated owner, or perhaps a transfer to another–usually younger–owner within the family. However, what if a group of employees wants to take over the business instead? Recent income tax changes in Canada have introduced the concept of an “Employee Ownership Trust” for the purpose of facilitating the transfer of businesses to employees. In this course, we will examine the tax implications and various other considerations relevant when a family business is transferred toits employees through the use of an Employee Ownership Trust.
Topics covered include:
• Different business structures in Canada• Potential options for selling or transferring a family business toa new owner• Compare and contrast tax implications from: sale to a 3rd party, sale to a family member, intergenerational business transfer, qualifying transfer to an Employee Ownership Trust (“EOT”)• Example scenario to illustrate application• Benefits of a transfer to an EOT• Review of technical rules–EOT conditions, qualifying business, beneficiaries, trustees• $10M exemption from capital gains on qualifying transfer to an EOT
2 activities • 1 videos • duration: 1h 22m
Educator and Tax Advisor
Alex Garber, CPA, CA, MTax has been working in public accounting since 2004, focusing primarily on income taxation for Canadian owner-managed businesses and their shareholders. Alex presents PD seminars for CPA Ontario and facilitates at the CPA Canada In-Depth Tax Program. Alex is also a faculty member at the Schulich School of Business, York University, where he teaches income taxation at both undergraduate and master's levels. Alex started his career with Deloitte and Touche LLP in Toronto. He is currently an independent tax advisor, assisting various clients, sole-practitioners and CPA firms in Ontario.
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Good introduction to this new option available to business owners who are considering selling their business to a 3rd party vs. employees. Significant tax saving opportunity for an Owner considering selling, along with ownership opportunity for employees, but a clear understanding is needed. This is a good start.
Good overview of EOTs. Some outstanding questions, which were not directly addressed, include: 1) How long does someone need to be an employee of QB for prior to sale, for the employee to qualify as a beneficiary of EOT? 2) Can you only utilize say the bare minimum of employees (say 11) as beneficiaries of EOT rather than 100% of the employees of QB? 3) It does not appear that this will work if Mom owns her shares of QB through a Holdco. However, I am not certain.
Easy to understand
very informative
