T4PS without CPP And EI

Tax Topics
1

I used to see quite a lot more T4PS when I was articling years ago, but haven’t encountered any T4PS for some awhile now.

I think it was when the specified employee requirement introduced, the benefit of the T4PS became minimal.

For a shareholder of a holding company, received money from the company other than dividend, I don’t see how it can be designated as other employment income and put under T4PS instead of T4 to avoid the CPP and EI

I checked CRA’s website, the closest exemption is payment of personal and living expenses that’s not pensionable, but other than that, any other forms of payment other than dividend, should have CPP and EI on them?

Thanks

2

A T4PS is only used if there is a Profit Sharing Plan in effect. (PS = Profit Sharing)
If your shareholder got money that is not a dividend, and it isn’t a repayment of a shareholder loan, it’s taxable and pensionable. It may not be insurable, if it is a closely held corporation where he wouldn’t qualify to receive EI benefits.

3

RBC uses these for their employees. Don’t know if it a specify class of employee

4

Yeah. It’s odd that I couldn’t find any reference on the income tax act or I couldn’t find any changes under IT-280R.

Maybe I wasn’t looking close enough. But I found the info in Knotia database, the change was made in 2012

To discourage excessive employer contributions, the 2012 federal budget introduced a special tax payable by specified employees on excess EPSP amounts