EMPLOYEE PROFIT SHARING PLAN TRUST

ILLUSTRATION

The following example illustrates how the EPSP trust works and its benefits in overall financial planning. The year is 2008 and these numbers reflect the personal tax rates and payroll taxes at that time for the province of Alberta.

Individual at $125,000 annual income level, who has a spouse and two children.

Mr. Smith is an owner/manager whose wife works in the home, caring for the household. They have twin girls, aged fifteen years. Mr. Smith would like to reduce tax payment and is considering income splitting with his wife and daughters, but is concerned about the requirement that they be paid reasonable salaries. Mr. Smith does employ the family on a part-time basis. He pays all the family's expenses, with a large portion going to education costs.

Without EPSP Trust - Mr. Smith earns $125,000 from the business and his wife and children do not draw an income.

With EPSP Trust - If Mr. Smith established an EPSP trust for his family, his objectives of cutting tax payments and splitting his income with his family would be met. Profits of the company can effectively be split four ways to minimize the family's taxes. In addition, the company and employees would not have to worry about source deductions - income tax, EI premiums and CPP contributions.

Mr. Smith establishes an EPSP trust for his family and the trust is allocated $125,000 from profits. The trustee (Mr. Smith) allocates profits to each of the family members, and the family members all contribute to family expenses.

For more information on our corporation and our products, please contact:
R. Paul Jacobson, Q.C. Director
The Fiscal Planning Corporation
Suite 2600, 144 - 4th Avenue S.W., Calgary, Alberta, Canada T2P 3N4
Telephone: (403) 210-0278
email: jake@fiscalplanning.com