ENSURING THAT TAX RULES ARE HARMONIZED TO INCLUDE WORKER-CO-OPERATIVES

In collaboration with the Canadian Worker Co-operative Federation (CWCF), Co-operatives and Mutuals Canada (CMC) is advocating that the Government of Canada ensure that worker co-operatives are treated in terms of tax considerations. CMC and CWCF are also asking that incentives be put inplace to encourage more employee ownership of businesses, such as in Employee-Ownership Trusts and worker co-operatives.

CWCF, CMC, and others in the co-operative movement are pleased to see the Government of Canada’s interest in employee ownership, evidenced since its inclusion in Budget 2021 and the “first 10 million exemption in Capital gains” proposed in the 2023 Fall Economic Statement. In relation to the scenario of business succession through the worker co-operative model, CMC wishes to provide crucial and complementary information on the worker co-operative model. The intent is to inform the discussions and ensure incentives to encourage more business owners to sell to employees are considered, and are harmonized with the scenario of employee-owned worker co-operatives successions, not only Employee-Ownership Trusts.

There are avarious types of employee ownership structures and when the employees become owners, they should have the choice of the legal structure under which they wish to operate. As a result, the various incentives and taxation considerations for the seller, the enterprise, and the employees should receive equal treatment in the various forms of employee ownership.

CMC, as welll,as the CWCF and other subject-matters experts, would be delighted to discuss of this subject further. Please contact either Daniel P. Brunette, Senior Director, External Affairs at dbrunette@canada.coop or Hazel Corcoran, Executive Director at the Canadian Worker Co-op Federation at hazel@canadianworker.coop.

Please see the Appendix for information on the advantages of the co-operative model, as well as more on the Canadian and international experience with employee ownership and co-operative conversions.