Employee Ownership Program
The Ontario Employee Ownership (EO) Program was created to help meet economic challenges and encourage economic renewal. A tax credit is available to employees who set up an Employee Ownership Labour Sponsored Venture Capital Corporation, by acquiring controlling ownership of the employer company.
An EO is a Canadian corporation that is registered under Part II of the Community Small Business Investment Funds Act (Act). Before an application for registration is made, the corporation seeking registration as an EO must notify the Ministry of Revenue in writing of its intent to apply for registration as an EO. The Act contains specific requirements with respect to:
- eligible employee vote
- disclosure document
- registration
- articles of the corporation
- assets that can be held
- tax credits
- required returns/forms
- penalties/taxes/clawbacks.
The Benefit
The benefits of the Employee Ownership Program include:
- 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.
Eligibility
Specific eligibility criteria must be met by the:
- corporations seeking registration
- shareholders of the EO
- employee business
- investment being made in the employee business.
