| Purpose : |
- Encourages employees to invest in the company they work for and receive a
substantial tax credit in return.
- Helps employers create a more engaged and productive workforce by allowing
- employees to have a feeling of ownership.
- Can effectively be used for recruitment and retention and even succession planning.
- Can also provide equity capital for business expansion.
|
| Process : |
- Employees set up and invest in a labour-sponsored venture capital fund, an
employee controlled investment fund, incorporated by an employee association,
established to manage the fund investments.
- The fund, in turn, is invested into their employer’s company.
- Employees receive 15% federal and 20% provincial tax credits on the first $5,000
they contribute each year.
|
| Benefits : |
- Increased employee motivation
- Reduction in high cost equipment breakdowns and mistakes
- Boosted customer satisfaction
- Increase in shareholder value
- Higher retention of your best employees
- Increased ability to attract qualified recruits
|
| Strengths : |
- Happier work place
- More accountable management
- Closer alignment of risk and reward
- Fairer distribution of profit
- Greater culture of responsibility and trust in the workplace and beyond
|
| Requirements : |
- Must be a group of employees willing to invest.
- The employer must agree to establishment of the fund
- Company must be a corporation or cooperative
- Company must have between 5 and 500 employees
- Employees must reside in Saskatchewan
- At least 25% of the salaries must be paid out in Saskatchewan
|
| Fund Guidelines : |
- May not issue equity shares for a total value in excess of $5 million.
- Must provide for equal opportunity for all employees to purchase shares, participate,
- vote, and share in proceeds upon dissolution.
- Is required to invest in the employer company within six months.
- Tax credits are available only to the first purchaser of shares.
- Unused tax credits cannot be refunded.
- Investments may be RRSP eligible.
- Investments must be held for eight years or tax credits must be repaid (unless the
employee leaves the company before eight years)
- If shares are purchased in the first 60 days of the calendar year, the tax credit may
be claimed for that calendar year or the previous calendar year, or a combination
of those two years. |
