Employee Profit
Sharing Plan
Established under
section 144 of the Income Tax Act, the EPSP is a special
purpose trust that allows the beneficiaries of the plan
to share in the profits of the company
How
it Works A trust called The
Employee Profit Sharing Plan for XYZ Company is set up
using a three person trust agreement. The company makes
the contribution to the trust. All funds in the trust
account must be allocated to the participants of the plan
at the end of the fiscal year. The company issues a T4PS
(profit sharing) slip. These earnings are RRSP and IPP
eligible.
What you need
to know T4PS income is not eligible for research and development grants. Please consult your accountant if your company applies for these types of grants. Loss of E.I. and CPP benefits should be considered however properly investing the savings should more than make up for lost benefits.
The chart below shows
what you are paying today as well as the history of CPP
and EI contributions in Canada.
EPSP’s –Maximum Combined Employer and Employee
Contributions
|
Year |
CPP |
EI |
Total |
Percentage
Increase |
|
1966 |
$158.40 |
- |
$158.40 |
- |
|
1975 |
$241.70 |
$323.44 |
$564.64 |
256% |
|
1985 |
$759.60 |
$1,348.88 |
$2,108.48 |
273% |
|
1995 |
$1,701.00 |
$3,051.38 |
$4,752.38 |
125% |
|
2000 |
$2,659.80 |
$2,245.20 |
$4,905.00 |
3% |
|
2002 |
$3,365.20 |
$2,059.00 |
$5,424.20 |
11% |
|
2004 |
$3,663.00 |
$1,853.28 |
$5,516.28 |
2% |
|
2005 |
$3,722.40 |
$1,825.98 |
$5,548.38 |
1% |
|
2006 |
$3,821.40 |
$1,750.00 |
$5,571.40 |
0.5% |
|
2007 |
$3,979.80 |
$1,728.00 |
$5,707.80 |
2% |
2008 |
$4,098.60 |
$1,706.47 |
$5,805.07 |
2% |
2009 |
$4,237.20 |
$1,756.30 |
$5,993.50 |
3% |
Advantages of the EPSP
- They do not attract either Employer/Employee
Canada Pension Plan (CPP) or EI contributions.
- Allows for more control over your
retirement assets.
- They are treated as pension and /or
RRSP eligible earnings.
- There are no source deductions
for Income Tax.
|
