Employee Profit Sharing Plan (EPSP)
Under the Income Tax Act (Canada), an Employee Profit Sharing Plan allows participating employees, usually corporate executives, to receive income from the corporation without either the employee or the company being subject to payroll levies such as Canada Pension Plan contributions and Employment Insurance contributions.

Ideal for self-employed corporate owners and for older corporate executives, an EPSP allows participating employees to take advantage of this ability for up to seven years without losing benefits because of the 15% drop-out rule. This can translate into accumulated savings of $25,640 for an employer-participant.

Please refer to EPSP FAQs for details.

The EPSP allows corporate executives to receive payments from the corporation without being subject to payroll levies (CPP and EI contributions) (Sec. 144 of the ITA).

Deferred Profit Sharing Plans (DPSPs)

A Deferred Profit Sharing Plan (DPSP) is a plan that allows a company to share its profits on a tax-deferred basis with employees. DPSPs are registered with the Canada Customs and Revenue Agency (CCRA) and contributions to the plan are tax-deductible for the company and tax-sheltered for the employee until the employee makes withdrawals from the plan.

Please refer to DPSP FAQs for details.