Employee Profit Sharing Plan (EPSP)

An EPSP is a mechanism available under the Income Tax Act that allows an employer to corporately deduct deposits made into a Company Trust that would normally be paid as income or bonuses to an employee. Both the employer and employee are exempt from CPP payroll deductions, as well as other related taxes, for example EI. Some of the highlights of EPSP include:

Highlights

Income Splitting

An EPSP allows income splitting between family members to save tax dollars by utilizing lower income taxation levels. "Kiddie tax" is not applicable..

Tax Circumvention

There is no payment taxes payable for both the employer and the employee.

Increase Cash Flow

Cash flow is increased both personally and within the corporation. Personally by combined income tax savings from income splitting and tax circumvention Corporately by tax circumvention

Bonus Surrogate

The EPSP can be utilized as an alternative to providing bonuses to employees.

Tax Deferral

Depending on the business fiscal year end, taxation can be deferred for up to 18 months.

Retirement Planning / Wealth Accumulation

The EPSP is a great way for accumulating wealth or saving for retirement without requiring more income, but rather by utilizing savings that are generated.

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