Alternative ownership

Established in 2024, Employee Ownership Trusts (EOTs) allow business owners to sell their companies to a trust held on behalf of employees, keeping firms in Canadian hands, building worker wealth and strengthening local communities. Jon Shell makes the case for EOTs in TheFutureEconomy.ca. With a temporary capital gains tax exemption set to expire in 2026, he and other advocates are urging the federal government to make the incentive permanent before momentum stalls.

The coming wave of business successions will shape Canada’s economy for generations. In Canadian Business, Jon Shell explains how employee ownership safeguards economic sovereignty, while boosting growth, productivity and local wealth, giving employees struggling with affordability a new source of income. As entrepreneurs and owners seek alternatives to selling abroad, the employee ownership trust (EOT) provides a practical answer. Instead of letting the EOT tax incentive expire at the end of 2026, now is the time for the government to double down on employee ownership.

The federal government first proposed tax changes to facilitate employee ownership trusts in 2023. One of the key measures included in the fall economic statement that year offers a $10-million capital gains tax exemption to owners who sell their companies to their employees through the trust mechanism. But, as CP's Craig Lord writes, that exemption was only planned for three years and is set to expire at the end of 2026, unless the federal government moves to extend the measure. Advocates for employee ownership trusts say letting the tax exemption expire would undercut the model before it’s given a chance to shine.

Employee ownership offers a timely solution to some of Canada’s most pressing economic challenges, writes Deborah Aarts in Smith Business Insight. Evidence shows that when employees share ownership, businesses become more productive, innovative and resilient. Plus, beyond firm-level gains, employee ownership can help address the coming mass retirement of business owners, protect local economic sovereignty, boost national productivity and reduce wealth inequality. There is enough data about the brass-tacks benefits of employee ownership to sway even the most hardened skeptic.

Gas station giant Parkland is already shedding Canadian employees in the wake of TX-based Sunoco’s recent takeover of the Canadian fuel chain, which owns 15% of our gas stations and a key refinery in Burnaby, B.C. These layoffs were a predictable outcome of Ottawa's decision not to flex its new regulatory muscle through the Canada Investment Act to quash foreign investment deals that pose an economic security threat. As SCP chair Jon Shell writes, the government has not defined a clear strategy to build and maintain Canadian ownership of our assets. Combined with the federal budget’s focus on attracting private capital, there’s a real danger that Ottawa will enable a sell-off of Canadian firms to foreign investors.

In November, 2025, the Ontario provincial government finally stepped into the looming “succession tsunami,” launching a modest $1.9M Business Succession Planning Hub to help micro-business owners plan exits through local Small Business Enterprise Centres. Notably, the hub spotlights employee ownership and the new Employee Ownership Trust, signaling a shift toward mainstream adoption. But, as Dan Skilleter writes, Ontario’s approach focuses narrowly on retiring owners, ignoring how different buyers shape risks and benefits to workers, communities and Canada's broader economic sovereignty. This is a promising start that could and should grow into a broader succession-planning policy that protects Ontario’s long-term resilience.

Smith School of Business at Queen's University is launching Canada's first-ever research initiative focused on deepening Canada’s knowledge and understanding of a powerful succession model that can enhance outcomes for owners, employees and communities: employee ownership. With funding support from Jon Shell, the EORI will be housed in Smith’s Centre for Entrepreneurship Innovation & Social Impact (CEISI). The initiative will shape a made-in-Canada approach to employee ownership and create a multi-disciplinary network of academics, researchers, practitioners and businesses to fill gaps in relevant data, expertise and business-oriented resources to support employee-ownership activities across the country.

Blue Jays pride notwithstanding, many of Canada's most iconic companies and brands have been quietly but steadily purchased by foreign entities in recent years. As Danny Parys writes in Policy Options, policymakers should do more to keep Canadian companies in Canadian hands by providing more support to expand financing opportunities, expanding awareness of untraditional ownership models and beefing up Canada’s net-benefit review requirements. These quiet foreign sales not only lead to major frustrations for consumers, but workers also feel the impacts because, as corporate leadership moves further away from the community, so do quality and accountability.

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 on this opportunity or build adequate momentum for this promising succession model. In this statement, Employee Ownership Canada responds to the Budget and reaffirms its strong commitment to working with government and partners to make the capital gains exemption permanent, ensuring employee ownership trusts remain a viable, long-term option for Canadian businesses.

There is some confusion out there about Budget 2025 and employee ownership trusts (EOTs). To confirm, the federal government did not extend the $10M capital-gains exemption for sales through EOTs, in the budget released on Tuesday, November 4, 2025. Because the sale of a business to an EOT is a process that often takes more than a year, certainty on the rules is essential for owners, advisors and employees planning succession. In this FAQ, Employee Ownership Canada answers key questions about what’s enacted now, why the incentive matters for uptake and how the sector, businesses and the organization are moving forward from the Budget news.