DPSP is a plan that can be created for all or a designated section of employees. This plan is put into place in order for the employer to share the profits of the company with the employees. This payment can be done through a percentage of the profits or a fixed amount, percentage of profits is more common. In this plan only the employer makes contributions to plan, and the employee does not. This can be used to supplement a companywide RRSP plan or a pension plan. Like any other register retirement savings plan the DPSP must be registered with the CRA and confide to tax regulations. The contributions are tax deductable by the employer and are not taxed to the employee until they have been paid out.
- Flexible payments. As the employer you can determine how much you want to pay your employees, and this amount can be changed if outcome changes.
- Contributions are tax deductable for employer
- Those receiving the benefit do not pay tax until withdrawn.
- Provides a direct relationship between the employee and the profits generating a higher loyalty and motivation.
- With DPSP the employees can still make contributions to RRSPs.
The implementation and management of a DPSP can and be an overwhelming process. To learn more about DPSPs and how Svab Insurance can help you implement one in your business please get in touch with us from the link below.
