Frequently Asked Questions

Shares (Nature of Ownership)

Ownership means equity shares in a company, whether public or private, as long as the company meets the eligibility requirements.

Any private or public company is eligible as long as it meets the following requirements:

  • incorporated or registered to do business in B.C.
  • B.C. payroll of at least 25% of total payroll
  • have less than $500 million in assets

Yes, the shares have to carry voting rights and not be restricted in their right to share in the profits of the company or in the division of the company's assets on dissolution.

Yes, in most cases, investments can be made from or transferred to a self-directed RRSPs which can results in further tax benefits.

If your employer is a private company, you must complete a request for redemption and submit it to your company. Your plan or share offering document will state the date(s) each year when your redemption will occur.

Your redemption will normally take place on the redemption date which follows the date you submit your redemption form to the company. If your employer is a public company, you may sell your shares on the public market once the 3 year hold period expires.

 

Tax Credits

Any B.C. resident who is employed for at least 20 hours a week by the company and does not own, together with associates and family members, 10% or more of the company. The individual must purchase the shares after the registration of the ESOP plan with the Government of British Columbia.

There is a $2,000 annual limit on tax credits.

An employee can invest up to $10,000 annually and be eligible to receive tax credits of 20%.

There is no lifetime limit on tax credits.

Out of province employees are able to purchase shares under the registered ESOP plan but only British Columbia residents are eligible for tax credits under the plan.

The company applies for the tax credits on behalf of the employee investors by completing a Tax Credit Application (PDF 65 KB) and forwarding it to the Administrator.

 

Cost Sharing

The Government of British Columbia will reimburse the company, or an employee group, 50% of the eligible costs of professional advisors used in the establishment, registration or ongoing administration of an ESOP plan. This reimbursement is limited to $2,500 annually.

Any company with fewer than 150 employees is eligible to apply, or any group of employees no matter what the company size.

The company or employee group representative completes the Cost Sharing Application (PDF 87 KB), attaching original copies of the professional advisors' invoices, and forwards them to the Administrator.

 

Registration

There is no minimum or maximum time. Your plan will be registered when you request registration as long as all the requirements of the Employee Investment Act are met. There are no fees payable to the government in order to register your ESOP plan.

 

After Registration

The company must file an Annual Return (PDF 141 KB) with the Administrator and meet the requirements stated in the plan documents with respect to employee investors.

The company applies to the Administrator for revocation of the plan after obtaining the written consent of a majority of the employee shareholders to the revocation of the plan.

 

For Employees

 

How do I redeem my shares prior to the 3 year hold period ending?

Complete an Application for Early Release from Escrow (PDF 176 KB) and forward it to the Administrator.

A group of employees may apply to the Administrator for certification as an employee group. This allows the employee group to claim cost sharing for amounts spent by the employee group for professional services relating to the negotiation, evaluation or implementation of an employee share ownership plan. Click here for the Certification of Employee Group Form (PDF 94 KB).

Yes, the amount you may purchase is only limited by your company's ESOP plan. However, only the first $10,000 investment per year is eligible for tax credits. For succession plans, you can invest more than $10,000 initially and have this investment recorded for tax purposes as if it will occur over a number of years in order to maximize the tax credits you may receive.

They are released to the RRSP trustee or to the employee shareholder if there is no trustee. For shareholders of public companies, please enquire with your employer as to their company policy.

 

How much do I have to repay in tax credits if I redeem my shares prior to the 3 year hold period ending?

You must repay 20% of the original investment amount. If your shares have fallen in value, the repayment amount is subject to a revision. For more information contact us.

To the attention of the ESOP Program Coordinator at the office listed on the Contact Us page. A money order or certified cheque should be attached to the Application for Early Release from Escrow (PDF 176 KB) payable to the "Minister of Finance".