On January 1, 2009, Computershare Trust Company of Canada began offering Group TFSAs for employee share purchase plans (ESPP). Share purchase plans offered within the framework of a TFSA enable employees to acquire equity and share in their company’s success while tax sheltering the dividends earned and capital gains realized from their investments.

“We know that the average annual investment in an ESPP per employee is usually less than $5,000,” says Dave Nugent, Senior Vice President of Computershare Plan Managers, “We also know that the ESPP is a contributionbased, mediumterm savings vehicles for people. Both of these features make the Group TFSA a great fit for members of ESPP programs.”

Within an ESPP, employees make small deposits through payroll contributions that are normally matched at some level by the employer. The taxes that become payable on dividends and capital gains erode the earnings in an ESPP. Offering the TFSA within share purchase plans provides a tax shelter for that growth.

Generally ESPPs only attract a portion of employees to invest in the company stock depending on the employer match. Computershare expects that offering this taxsheltering benefit within a share purchase plan will appeal to employees and increase their participation in company plans. How could you use the TFSA creatively with your employees?

This entry was posted on Wednesday, June 17th, 2009 at 8:23 am and is filed under Advice. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.