Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the Department.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle du ministère.
Principal Issues: Can an EPSP be established for the benefit of one employee?
Position: Question of fact.
Reasons: we have previously stated no. Because we have never seen an EPSP for one employee, we will only revisit the issue in the context of a ruling request where all of the facts are made available.
XXXXXXXXXX 2000-005614
M. P. Sarazin
Attention: XXXXXXXXXX
January 9, 2001
Dear Sirs:
Re: Employee Profit Sharing Plan
This is in reply to your letter of November 8, 2000, requesting our comments regarding the establishment of an employee profit sharing plan ("EPSP") for the benefit of one employee of the employer.
Even though subsection 144(1) of the Act refers to "employees" throughout the provision, you are of the view that section 144 of the Income Tax Act (the "Act") does not prevent an employer from establishing an EPSP for the benefit of one of its employees. To support your position, you would rely on subsection 33(2) of the Interpretation Act (Canada) which states that words in the singular include the plural and words in the plural include the singular. Consequently, the word "employees" in section 144 of the Act is deemed to include the singular (i.e., employee).
Generally, EPSPs are established for the benefit of several employees of the employer. We are not aware of any EPSPs that are established for the benefit of a single employee. Consequently, we are of the view that a review of all of the facts related to such a situation would have to be reviewed before any general comments will be provided. As you have noted, we have previously opined that an EPSP has to be established for the benefit of more than one employee. We would gladly review this position in the context of an advance income tax ruling.
Your letter dated December 4, 2000 requesting the Canada Customs and Revenue Agency's views regarding EPSP contributions and allocations being subjected to Canada Pension Plan contributions and Employment Insurance premiums has been forwarded to our CPP/EI Eligibility Division. You will be contacted when your file is assigned to someone in that Division.
We trust the above comments will be of assistance to you.
Yours truly,
Roberta Albert, CA
for Director
Financial Industries Division
Income Tax Rulings Directorate
c.c. Ray Cuthbert
CPP/EI Rulings Directorate
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