If you are planning to sell or buy a business, the province of Manitoba offers a tax credit that may help facilitate a smooth transition in business ownership. CFIB also has some resources to help with succession planning.
Employee Share Purchase Tax Credit
The Manitoba government offers a 45% personal income tax credit to assist employees transitioning to business ownership, called the Employee Share Purchase Tax Credit:
- Employees may buy up to $10 million in shares from their employer and receive a tax credit if the business has a registered Employee Share Ownership Plan (ESOP). Canadian-controlled private corporations with assets of up to $25 million and who pay at least 25% of their remuneration to employees who are Manitoba residents are eligible for ESOPs.
- Employee investments for succession planning, takeover and/or buyout purposes are eligible for a tax credit of up to $202,500 annually (equal to $450,000 in shares purchased). The first $27,000 of the tax credit is fully refundable to the employee. The remaining tax credit amount is claimable against provincial personal income tax incurred in either the 3 years prior to the share purchase year or the following 10 years. An employee may use up to $67,500 of their unused tax credit balance in a single year.
- Employee investments to promote employee ownership or establishing a workers co-op are eligible for up to a $27,000 tax credit annually (equal to $60,000 in shares purchased). The tax credit is fully refundable.
- Manitoba Finance will process applications to register an ESOP eligible for the tax credit.
For more information, contact the Financial Analysis Branch at 204-945-2770 or [email protected]
CFIB's resources for business succession planning
To help members as they start planning to exit their business, CFIB's first recommendation is to engage one's professional advisors (eg., lawyer, accountant) for their expertise on the important decisions that make up a business succession plan.
You are invited to watch a webinar, read FAQs and browse other tools and resources on our succession web site.
CFIB's Business Counsellors are available to help members learn about tools and resources to support business succession planning. Call 1-888-234-2232 or email [email protected]. We look forward to helping you!