Budget 2025 did not extend the $10M capital-gains exemption for sales through EOTs

Budget 2025 and the Future of Employee Ownership Trusts in Canada

We share the disappointment felt across Canada’s business and advisory community that Budget 2025 did not make the $10 million capital gains exemption for sales through Employee Ownership Trusts (EOTs) a permanent feature of Canada’s tax system. The current incentive, passed only in 2024 with an expiry set for December 2026, means that the business community has not had adequate time to act.

This decision creates uncertainty for many business owners and advisors preparing for ownership transitions that often take more than a year to complete. The exemption was designed to make it easier for business owners to sell through an EOT, keeping jobs, ownership, and prosperity rooted in local communities. Without it, some owners may delay or reconsider transition plans, slowing the broader shift toward employee ownership.

Even so, there is reason for optimism. The August 2025 legislative updates, continued cross- party support, and strong engagement from business owners, employees, and advisors all point to growing recognition of the value EOTs bring to Canada’s economy.

We remain committed to working with government and partners across the ecosystem to make the capital gains exemption permanent, ensuring employee ownership trusts remain a viable, long-term option for Canadian businesses.

Employee ownership is more than a policy. It is a pathway to shared prosperity, inclusive growth, and resilient local economies. We’ve seen how this model can preserve legacies, empower employees as co-owners, and strengthen communities. In the United Kingdom, where EOTs have been supported through permanent tax incentives, a business is sold to an EOT every day.

As we look ahead, we call on our members, partners, and champions to continue advocating, educating, and building awareness to demonstrate why expanding employee ownership is not just good for business, but essential for Canada’s economic future.

To become an EOC member or learn more about the benefits of Employee Ownership Trusts for Canada’s economy, visit www.employee-ownership.ca.