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Entrepreneurship Manitoba offers tools and a tax credit for business succession planning

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If selling or buying a business is on your horizon, Manitoba Entrepreneurship’s Counselling and Advisory Services can help facilitate a smooth transition in business ownership.

Business owners, individuals and employee groups seeking to transition, sell or purchase a business can access the following resources and services:

  • Workshops and seminars
  • Guides and checklists
  • Information on financing business succession
  • Counselling and access to industry professionals

To learn more about the province’s tools to help with your business succession plans, contact the Business Succession Resource Centre by calling 204-945-8200 or 1-855-836-7250 or emailing [email protected].

Employee Share Purchase Tax Credit

In June 2014, the Manitoba government created a new 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.
  • Shares purchased by the employee, through their RRSP (subject to regulations) or TFSA accounts are eligible for the tax credit.
  • Manitoba Finance will process applications to register an ESOP eligible for the tax credit.

CFIB knows succession planning is important for the business owner, the small- and medium-sized business sector and the economy. CFIB’s recent report, Passing the Business to the Next Generation reveals over 50% of our members thinking about selling their business do not have a succession plan and approximately two-thirds plan to exit their business within the next 10 years. If you are starting to work on how you will exit your business, contact CFIB today for our Building a Succession Plan book. This resource is available to CFIB members free of charge.

Questions?

CFIB’s Business Counsellors are always available to help members learn more about tools and resources for business succession planning. Contact CFIB at 1-888-234-2232 or [email protected]. We look forward to helping you!

Not a member of CFIB yet? JOIN CFIB today for more help and information