Budget 2022: a commitment to employee ownership

Social Capital Partners (SCP) is thrilled to see that in Budget 2022 the Canadian government has committed to legislation that will bring employee ownership trusts to Canada.

“Budget 2022 proposes to create the Employee Ownership Trust — a new, dedicated type of trust under the Income Tax Act to support employee ownership.

The government will continue to engage with stakeholders to finalize the development of rules for the Employee Ownership Trust and to assess remaining barriers to the creation of these trusts.”

If designed correctly, and with the right incentives, this new policy will mean that thousands of Canadian businesses will transition to employee ownership, creating hundreds of thousands of new employee-owners and hundreds of millions of dollars in new wealth for workers.

The biggest sale of businesses in history has begun, with a “silver tsunami” of baby boomers retiring. With a made-in-Canada employee ownership trust framework in place, our country will be able to seize on this tremendous opportunity to build a more resilient and inclusive economy.

Business owners can sell their companies to these trusts, who then own them on behalf of all employees — not just management. Employee-owned companies are proven to grow faster, pay better, are less prone to lay-offs or bankruptcies in economic downturns and are more likely to keep jobs in local communities. In the United States, 14 million American workers enjoy better lives due to the wealth they’ve built through employee ownership. In the UK, over 200 companies sold to their employees through an employee ownership trust in 2021 alone, creating over 20,000 new employee-owners. Canada is now on that path.