As an incentive to key employees, employer contributions to superannuation are subject to the following limitations:
- contribution amounts that exceed the mandated age-based limits lose their tax-effectiveness, and
- superannuation benefits are usually not available to the employee until retirement.
Consequently, many corporations seek to establish incentive programs that provide substantive long-term rewards that will fully vest to the employee upon the achievement of long-term performance benchmarks. While employee share schemes are widely used for this purpose, they can present material taxation issues, and, within tightly held companies, may jeopardize the continuing control of existing owners.
We will prepare an analysis of your Corporation’s existing employee incentives and will make recommendations for the establishment of an Incentive Plan that:
- clearly connects the employees’ long-term benefits with achievement of the employer’s desired level of long-term performance, and
- operates efficiently on a taxation, administration and cost basis.