Employee ownership trusts: What they mean for Canadian business owners

May 9, 2024| Blog
By Jon Shell

Employee Ownership Trusts (EOTs) are coming to Canada! This note is intended to give business owners and their advisors a simple (albeit not short) explanation about what they are, and why they should care. I’m not a lawyer or an accountant, so I’ll try to use language that I understand (and that may in some cases not be technically perfect). So, don’t take this as legal advice, but as someone trying to explain this in a way I think I would understand.

A quick point up-front: EOTs are intended for succession — a way to sell a majority of a business to a company’s employees. They don’t help with selling a minority stake in the company — there are other approaches for that, like stock option plans and share purchase programs. So, unless you’re looking to sell your business, the EOT likely isn’t for you.

However, if you are considering selling your business in the next few years, you should be aware of the EOT. Employee ownership has a long track record of being good for employees, companies and communities, and as a result the UK and US provide significant tax incentives for business owners who sell to the workers. Canada is now following suit, exempting the first $10M of capital gains from income tax for sales to EOTs. This exemption is only available until the end of 2026, so there’s good reason to look seriously at the option.

“Employee ownership has a long track record of being good for employees, companies and communities, and as a result, the U.K. and U.S. provide significant tax incentives for business owners who sell to their workers.”

EOT-like structures are quite popular in other countries, and tax incentives are only part of the story. I’ll get into more detail about the legacy and resiliency benefits later, but here are a few stories featuring owners who have sold to their employees through this structure in the US and UK: Taylor Guitars (US), Emsworth Yacht Harbour (UK) and Craggs Energy (UK). In the US about 250 companies a year are sold to their version of the EOT, and in the UK over 300 companies have sold to their version in each of the last two years.

If you’re looking for more technical detail, I’ve added links at the end, including to the government’s own EOT explainer. If you scroll down and say to yourself “man, this is too long” feel free to skip to the end and click on one of those other links instead.

If you’re still with me, you likely have dozens of questions, so I’ll try to anticipate some of them in a Q&A format here.

Alternative ownership Employee Ownership Canada (EOC)

Share with a friend

Related reading

News release
Heather Scoffield headshot

The Canadian Tax Observatory announces Heather Scoffield as founding CEO

Heather Scoffield is founding CEO of a new independent nonprofit Canadian institution created to lead an informed national conversation on the links between taxation, economic fairness and a thriving democracy. Under her leadership, the Canadian Tax Observatory will drive in-depth research that pulls apart the strands of our current system so that we can thoroughly evaluate where we are and engage Canadians in a broad discussion about how to support economic growth while improving the fairness of Canada’s tax system. Over the next six months, the Observatory will connect with researchers in Canada, build alliances globally and develop its research agenda.

In the media
Group shot of Taproot staff meeting

Maple Ridge-based company now owned by its 750 employees | Maple Ridge-Pitt Meadows News

Neil Corbett of the Maple Ridge-Pitt Meadows News reports on locally based Taproot Community Support Services making some business history in Canada. Taproot's 750 employees in B.C., Alberta Ontario will now own 100 per cent of the business, becoming the largest Employee Ownership Trust (EOT) in Canada and the first in the social services sector. Finance minister Francois-Philippe Champagne explains why this is a perfect example of what EOTs can do, calling the trusts "a powerful, timely tool that helps Canadian employees become owners of the businesses they work for, while helping entrepreneurs find the right people to carry their legacy forward."

In the media
Taproot team members

Taproot becomes Canada’s largest employee-owned trust with 750 workers | The Globe and Mail

On Sept. 2, 2025, B.C.-based Taproot community support services surprised its 750 employees with the news they will become equal owners of the company they helped build. Minister of Finance & National Revenue Francois-Philippe Champagne joined CEO Mike Fotheringham and Social Capital Partners Chair Jon Shell to celebrate the new worker-owners and Canada’s largest Employee Ownership Trust (EOT) to date. In the Globe and Mail, Meera Raman reports on Taproot's milestone and how this succession model keeps companies Canadian, keeps jobs in local communities and builds wealth for workers.

Skip to content