In 2004, I provided a technical review of employees profit
sharing plans ("EPSPs") as part of a
paper that I wrote for the Canadian Tax Foundation. The 2012
Federal Budget significantly changed the game. Accordingly, I
thought it might be time to update my 2004 analysis.
A. Overview
The use of EPSP in Canadian owner-manager remuneration planning
has become very common over the recent past. Accordingly, the
purpose of this blog is to comment on certain issues that must be
reviewed to ensure technical integrity when utilizing EPSPs in
owner-manager remuneration planning, and discuss 2012 recent Budget
changes.
B. Definition of EPSP
An EPSP is defined in the Income Tax Act (the "Act")
to be an arrangement under which payments computed by reference to
an employer's profits from the employer's business (or a
corporation that does not deal at arm's length with the
employer) are required to be made by the employer to a trustee
under the arrangement for the
