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:
Is the minimum amount of an employer's contribution to an EPSP as described in paragraph 6 of Interpretation Bulletin IT-280R calculated on a per employee basis or in aggregate?
Position:
In aggregate.
Reasons:
The provision is designed to ensure that at least a minimum annual contribution is made to the EPSP. The test will be adequately satisfied using an aggregate calculation.
XXXXXXXXXX 992212
W. C. Harding
Attention: XXXXXXXXXX
October 21, 1999
Dear Sirs:
Re: Minimum Contributions to an Employee Profit Sharing Plan ("EPSP")
This is in reply to your letter of August 10, 1999, in which you requested clarification of the calculation of the minimum contributions required to be made to an EPSP as explained in the last sentence of paragraph 6 of the Department's Interpretation Bulletin IT-280R.
In particular, you have asked whether the minimum required contribution must be calculated on a per employee basis or may it be calculated on an aggregate basis.
In our opinion the requirements of this provision will be satisfied if the minimum contribution is calculated on an aggregate basis. That is the minimum requirement will be satisfied if the contribution is at least equal to the lesser of $100 times the total number of employees and (for example) a specified percentage of the aggregate of the employees' annual contributions or salaries.
We trust this clarification will be satisfactory
Yours truly,
P. Spice
for Director
Financial Industries Division
Income Tax Rulings and
Interpretations Directorate
Policy and Legislation Branch
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