Photo by: Courtney Carmody
licensed under Creative Commons Attribution 2.0 Generic
Along with an RESP, a small business-owner has another ace up his or her sleeve to pay for a child’s education – an Employee Profit Sharing Plan (EPSP).
An EPSP allows you as a small business-owner to income split with your children. By directing a portion of your income to your children through the use of an EPSP, you can effectively reduce the overall tax paid on the total household income. EPSPs are also exempt from payroll deductions like CPP and EI and do not require the withholding of any taxes. The money you pay your children can be used to pay for their education, while also being taxed at the child’s tax rate.
When you add up the savings of both lower taxes and no CPP or EI payments, your dollar is stretching that much further.
Is there an age requirement for the child to be considered? My children are ages 11 and 10. Thanks!
Hi Rosalie,
The only requirement is that your children be an employee of your company. It definitely wouldn’t be difficult to justify a 10 and 11 year old being employed by your company.
Best,
Scott
Thanks for sharing your thoughts on business owner. Regards