Income Tax Act — I-3.3 (a)
employee ownership trust means an irrevocable trust that, at all relevant times, satisfies the following conditions: (a) the trust is resident in Canada (determined without reference to subsection 94(3)), (b) the trust is exclusively for the benefit of all individuals each of whom (i) is either (A) an employee of one or more qualifying businesses controlled by the trust (other than an employee who has not completed an applicable probationary period, which may not exceed 12 months), or (B) if the trust permits, an individual (or the estate of an individual) who is a former employee (other than a former employee who did not complete an applicable probationary period, of up to 12 months, during their employment) of one or more qualifying businesses controlled by the trust and who was an employee of the qualifying business while the trust controlled the qualifying business, (ii) does not own, directly or indirectly (other than through an interest in the trust), shares of a class of the capital stock of a qualifying business controlled by the trust, the value of which is equal to or greater than 10% of the fair market value of the class, (iii) does not own, directly or indirectly, together with any person or partnership that is related to or affiliated with the individual, shares of a class of the capital stock of a qualifying business controlled by the trust, the value of which is equal to or greater than 50% of the fair market value of the class, (iv) immediately before the time of a qualifying business transfer to the trust, did not own, directly or indirectly, together with any person or partnership that is related to or affiliated with the individual, shares of the capital stock or indebtedness of the qualifying business, the value of which is equal to or greater than 50% of the fair market value of the shares of the capital stock and indebtedness of the qualifying business, and (v) is not an individual who claimed, or is related to an individual who claimed, a deduction under subsection 110.61(2) in respect of a qualifying business controlled by the trust; (c) the capital and income interests of each beneficiary described in clause (b)(i)(A) or (B) are determined in the same manner as the other beneficiaries described in those clauses, as applicable, based solely on any combination of the following criteria: (i) the total hours of employment service provided by the beneficiary to the qualifying business in respect of a particular time period, (ii) the total salary, wages and other remuneration paid or payable to the beneficiary by the qualifying business in respect of a particular time period, not exceeding, for any calendar year in the particular time period, twice the first dollar amount referred to in paragraph 117(2)(e), as adjusted by section 117.1, for the year (prorated based upon the number of days of the calendar year in the particular time period), and (iii) the total period of employment service the beneficiary has provided to the qualifying business since a particular time, (d) the trustees are prohibited from exercising their discretion to act in the interest of one beneficiary (or group of beneficiaries) to the prejudice of another beneficiary (or group of beneficiaries), (e) each trustee of the trust is either a corporation resident in Canada that is licensed or otherwise authorized under the laws of Canada or a province to carry on in Canada the business of offering to the public its services as a trustee or an individual (other than a trust), (f) each trustee has an equal vote in the conduct of the affairs of the trust, (g) at least one-third of the trustees must be beneficiaries described in clause (b)(i)(A), (h) if any trustee is appointed (other than by an election within the last five years by the beneficiaries described in clause (b)(i)(A)), at least 60% of all trustees must be persons that deal at arm’s length with each person who has, directly or indirectly in any manner whatever, as part of a transact