Your employer will issue you a T4PS slip reporting how much you received in employee profit sharing plan (EPSP) allocations during the year. If you’re a resident of Québec, these amounts will be shown on a Relevé 25 slip instead.
In a profit sharing plan, the employer shares profits with some or all of their employees. These profits can be shared in several ways, including:
- Capital gains or losses
- Foreign income (business and non-business)
- Other income
- Foreign capital gains or losses
Since you’re taxed on your profit sharing plan allocations every year, amounts that are withdrawn from the fund when you retire or leave the company won’t be taxed a second time. Generally, allocations are taxed as employment income but aren’t pensionable or insurable (that is, aren’t subject to CPP or EI deductions). If you received EPSP allocations in other forms, such as capital gains or dividends, these amounts are taxed accordingly.
Note: If you’re a specified employee (meaning you don’t deal at arm’s length with your employer or have significant equity interest in them), you’ll have an amount in box 41 of your paper T4PS. If it’s more than 20% of your annual income, you might have to pay additional tax. Refer to the Canada Revenue Agency (CRA) website for information on how excess EPSP amounts are taxed.
Where do I claim this?
Follow these steps in H&R Block’s 2018 tax software:
- Under the QUICK ENTRY tab, click the QUICK SLIP icon. You'll find yourself here:
- Type T4PS in the search field and either click the highlighted selection or press Enter to continue.
- When you arrive at the page for your T4PS, enter your information into the tax software.