Ottawa, August 30, 2011
2011-072

Archived - Government Invites Comments on Tax Rules for Employee Profit Sharing Plans

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As announced in Budget 2011, the Department of Finance is inviting stakeholders to comment on the tax rules that apply to Employee Profit Sharing Plans (EPSPs) to ensure that the rules continue to accommodate the appropriate use of such plans.

EPSPs are an important vehicle that enables business owners to align the interests of their employees with those of the business by sharing the profits of their business with their employees.

In recent years, these plans have increasingly been used as a means for some business owners to direct profit participation to members of their families with the intent of reducing or deferring taxes on these profits. Some employers are also using EPSPs to avoid making Canada Pension Plan contributions and to avoid paying Employment Insurance premiums on employee compensation.

To ensure that EPSPs continue to be a useful vehicle for employers that are used for their intended purpose, the Government is reviewing the existing rules for EPSPs to determine whether technical improvements are required in this area.

Comments can be sent to the Department of Finance at ConsultationsEPSP-RPEB@fin.gc.ca or to the address below. The closing date for comments is October 25, 2011.

EPSP Consultation
Tax Policy Branch
Department of Finance
140 O’Connor Street
Ottawa, Ontario
K1A 0G5

For further information, media may contact:

Jack Aubry
Media Relations
Department of Finance
613-996-8080

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