The Ontario Government created the Employee Ownership Program to help meet economic challenges and encourage economic renewal. The Program provided a tax credit to employees who set up an Employee Ownership Labour Sponsored Venture Capital Corporation (EO), and acquired controlling ownership of their employer company.
In 2005, the Government announced that no new EOs could be registered after August 29, 2005. There are no existing EOs registered with the Program.
How the Program Worked
A group of interested employees first set up a corporation and registered it as an EO with the Ministry of Revenue. Once registered, the EO issued shares to eligible employees. Using the funds raised from the sale of these shares, the EO purchased controlling ownership of the employer company on behalf of its employee shareholders. Employees who bought shares were eligible to receive tax credits from the Government of Ontario based on the amount of their investment in the EO.
Benefits
The benefits of the Employee Ownership Program included:
- a tax credit for investors, based on the amount of their investment
- potential returns on their investment
- promoting growth, and creating jobs
- strengthening the Ontario small business sector with new sources of capital
- EO shares are RRSP eligible.
For further information, please contact:
Ministry of Revenue
Tax Advisory Services Branch
Income Tax Related Programs Section
33 King Street West
Oshawa ON L1H 8H5
