EMPLOYEE PROFIT SHARING PLAN TRUST

TRUST REQUIREMENTS

The requirements of an EPSP trust are set out in the Income Tax Act. One of the essential requirements is that payments from the company to the trust must be computed by reference to profits. This means that the payments must be a certain percentage or share of part or all of the profits derived from the business.

There must be a binding obligation on the company to make payments in accordance with a formula in which profits are the principle variable, and these payments must be made in the event of profits. A plan registered with Revenue Canada, however, deems any amount calculated to be "computed by reference to profits". This provides much flexibility.

A trustee (who could include the employer) is required and a bank account must be established for the EPSP trust. There is no requirement for the trust document to be registered with the Minister of National Revenue. However, the plan is filed with the Minister to ensure it qualifies as an employee profit sharing plan.

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