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RRSP Changes Guide Part 2, January 2013

January 24, 2013 Important Proposed Changes to Co-op RRSP Rules, by Hazel Corcoran If individuals in your co-op hold co-op shares in a self-directed RRSP, there are two important updates which CWCF wants to bring to your attention.  These updates are relevant in cases where individuals (or individuals along with related parties) held 10% or more of any class of the shares in a co-op on March 23, 2011, with some or all of the shares in RRSPs.  People in this situation are eligible for the transition relief provisions (meaning they need not pay the penalty tax), and the rules for transition relief are being changed for the better. Previously, for individuals who filed a form (RC341) with the Canada Revenue Agency by June 30, 2012, the transition relief period lasted for 10 years. The two changes which have been proposed by Finance Canada are to change the deadline to…

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What is Sweat Equity?

by Peter Hough, April 2003 Sweat equity is generally considered all the voluntary unpaid work that is often required in the first years of a new business. This work is usually unpaid because the new business cannot afford to pay wages or salaries during start-up. The commitment by members to provide sweat equity is often essential for the success of the business. Several issues are often raised around sweat equity: How does one ensure a fair or equal contribution between members and how can the sweat equity be recognized within the accounting system? It may be desirable to show the sweat equity within the accounting system for then the investment of work by the members is recognized on the Balance Sheet. This increase in the members’ shares makes it clear to outside lenders or investors how much the members have contributed to the business. Another result in accounting for the…

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Succession Planning Using the Worker Co-op Option

Excerpt: Succession Planning: An Opportunity & a Challenge The succession issue for small and family-owned businesses has grown due to the large number of small business owners nearing retirement. Studies in places as diverse as Australia and Quebec, have demonstrated that well over 50 per cent of small and medium sized businesses will face this challenge in the next ten to 15 years. At the same time, the overall percentage of employees working for small and medium-sized businesses has grown. There are currently 124,000 family businesses, each with sales of $1 million or more, in Canada. These companies employ about six million Canadians and generate as much as $1.3 trillion in gross annual sales. (Financial Post 2001) Successful successions are important not only to those immediately involved but to the economy at large. They are also important, not only to the owners and their families, but also to the many…

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Using Financial Models

Presentation by Peter Hough Objective: To learn to develop and use basic financial models to assist with budgeting and other financial decisions. Benefits: Assists in decision making: Shows relationship between financial parameters Easy comparison of options Sensitivity analysis – easy to vary the assumptions of multiple relationships Helps to make judgments on level of risk a decision carries …continued in attachment. Using Financial Models_0

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Strategies for Developing Immigrant Worker Co-ops

Immigrant Worker Co-op Strategies paper drafted by Hazel Corcoran of the Canadian Worker Co-operative Federation. Excerpt: I. Background Through the current Co-operative Development Initiative (CDI) Innovation and Research (I & R) Project, the Canadian Worker Co-operative Federation (CWCF), in consultation with its Diversity Committee, is prioritizing worker co-op development in immigrant communities, including approaches and resources to improve their success rates. The reason for this priority is because the need among immigrant communities for economic and socio-economic improvement is great, and the potential of worker ownership to meet these needs as well as to help empower the worker-owners is also significant. In terms of need, income disparity between native-born Canadians and immigrants to Canada is large, and on the increase. The 2006 Census data released on May 2, 2008 revealed that earnings for recent immigrants (about 80% of whom are racialized) show a grim economic reality. According to a Globe…

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So You Want to Retire

Presentation by Peter Hough Excerpt: Key Issues: -Founding and Long Term Members Retirement Security Relinquishing member/ownership and it benefits Worker Co-operative New Members Viability Cash Flow Debt Load Knowledge Transfer …continued in attachment. So You Want to Retire_0

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Guidelines for Determining Whether or Not There Is an Employer-Employee Relationship in a worker Co-op

This Brief attempts to highlight the criteria used to determine whether or not a worker co-op has an employer-employee relationship or is classed as a group of independent contractors. Excerpt: Purpose of This Document 1. The purpose of this Brief is to outline the nature of worker co-operatives and the method for determining whether or not a given worker co-operative embodies an employer/employee relationship between the co-operative and its members. Definition of a Worker Co-operative 2. A worker co-operative does not have a legal definition in most jurisdictions. In terms of a functional definition, a worker co-operative is a business functioning as a co-operative which is owned and controlled by its worker-members. In other words, a worker co-operative is a worker-owned business which is governed on the basis of the internationally recognized, democratic principles of co-operatives. 3. The Canadian Worker Co-operative Federation (CWCF) classifies as a “worker co-operative” any business…

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The Worker Co-operative Movements in Italy, Mondragon and France: Context, Success Factors and Lessons

Abstract The objective of this paper is to analyze the public policy environment, capitalization environment, availability of federation support, and the context for the worker co-op movements in each of Italy, Mondragon (Spain) and France. These three countries or regions have the largest, most dynamic worker co-op movements in the world. To grow a large worker co-op movement, a system of supports is required to enable the transfer of appropriate knowledge to many people, in addition to having access to worker coop-friendly sources of capital. Although there were some success factors in each region which could not be easily replicated in other places and although there were significant differences among regions, there were many common elements contributing to the success of the worker co-op movement in all three places. These were: (1) sufficient capital accessible to worker co-ops; (2) technical assistance provided to worker co-ops in the start-up phase; (3)…

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An Ongoing Challenge: Managing Equity

In a previous column, Alain Bridault, President, ORION cooperative research and consulting, we stressed the importance of managing the acceptability of decisions taken by the board of directors or senior management in their respective powers fields .We pointed out that the only right decisions are decisions well accepted by the members, that is to say, understood by all, so well explained through internal communication channels established by the cooperative. For more information, download the file. C7_0

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