EMPLOYEE PROFIT SHARING PLAN

What is it:

An employee profit-sharing plan (EPSP) is an arrangement where an employer shares business profits with some or all employees. The employer makes contributions to a trustee, who holds and invests the funds for the benefit of plan members.

• In a given tax year, the employer may pay or allocate amounts from the plan to employees.
• These payments or allocations are reported on a T4PS slip.
• Allocated amounts are taxable in the year they are reported, even if the employee does not actually receive them until a later time (similar to a non-registered investment account).

T4(PS) not available through CRA My Account:

T4(PS) slips will not appear in a client’s CRA My Account and cannot be retrieved through auto-fill.

The T4(PS) might not be mailed to employees and since an employee may not have received an actual payment, they might not think of it.

When preparing a return for an employed client, it is a good idea to ask whether their employer has a profit-sharing plan. If so, they should check their employer’s online portal or contact their employer directly to obtain the T4PS slip amounts.

UFile entry:

Under the category of Interest, investment income and carrying charges, click the + next to T4PS. Enter the box amounts. Any amount in box 35 will be reported on Line 10400 as other employment income.

References:

• CRA website - Other Employment Income - Profit Sharing Plans
• T4(PS) slip