The Employee Share Purchase Tax Credit offers new owners, including current employees, support to buy in and own a portion of a business to support business growth and avoid business closures.
The Employee Share Purchase Tax Credit offers support to current employees (including directors and officers) of an eligible corporation, to buy in and own a portion of a business. The aims are to support business growth, to facilitate succession planning for family businesses, and to promote employee participation. Those who buy shares from a registered employee share ownership plan qualify for the partially refundable 45 percent tax credit.
Type of Assistance
- Employees may buy 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 used in active business of up to $25 million and which pay at least 25 percent of their remuneration to employees who are Manitoba residents, are eligible to register ESOPs to raise up to $10 million in equity capital.
- Employee investments for succession planning, takeover, 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 Manitoba personal income tax incurred in either the three years prior to the share purchase year or the following 10 years, up to a maximum $67,500 annually (less the refundable tax credit).
- Employee investments to promote employee ownership or to establish a workers co-op are eligible for a fully refundable tax credit of up to $27,000 annually (equivalent to $60,000 in shares purchased).
Manitoba Tax Assistance Office