Employee RRSP contribution or cash bonus?

Discover the benefits of offering your employees an RRSP+ with the Fonds de solidarité FTQ employer contribution program instead of a cash bonus program1.

Fonds de solidarité FTQ

Employee attraction and retention are at the heart of every employer's concerns. As a result, many employers—especially SMEs—want to enhance their benefits to not only meet their employees' needs, but also become more competitive on the market.

Rather than offering raises, some employers prefer to wait until the end of the year to pay employee bonuses based on their company's performance. However, there is a way to give your employees more while reducing your costs. Simply opt for the RRSP+ with Fonds de solidarité FTQ employer contribution program.

A worthwhile alternative to traditional bonuses

Generally speaking, companies that offer bonuses do so by paying their employees a lump sum at the end of the year. Since each employee's bonus must be added to their total salary to calculate applicable payroll taxes, they don't benefit from the full bonus amount. Plus, you end up spending more.

Fortunately, there is a solution that allows your employees to take full advantage of their bonus while also reducing your payroll costs. By setting up an RRSP+ with the Fonds contribution program for your employees, they'll not only benefit from your full employer contribution, but also receive the additional 30 percent tax savings 2 on this amount.

Planning to give each employee $1,000?

Here's a breakdown of the two scenarios3.

Traditional payroll bonus

Employer contribution to the employee's RRSP+ with the Fonds

Amount offered to the employee

$1,000

$1,000

Employer's payroll taxes4

$125

N/A

Actual cost to the employer

$1,125

$1,000

Gross amount paid to the employee

$1,000

$1,000

Employee contributions (QPP, QPIP, and EI)

$74

N/A

Tax savings

N/A

$300 2

Total gross profit for the employee

$926

$1,300

Contributing to your employees' RRSP+ with the Fonds has three distinct advantages:

You give more to your employees at a lower cost

Setting up an RRSP+ with the Fonds employer contribution program allows you to give an amount that fits your budget and that your employees can fully benefit from while enjoying additional tax savings2.

You stand out in the job market

The RRSP+ with the Fonds will enhance your benefits package, helping you to attract and retain the best candidates and improve your employee experience.

You encourage healthy saving habits

By contributing to your employees' RRSP+ with the Fonds, you encourage healthy saving habits and help them reach their goals.

Did you know?

You can contribute to your employees' RRSP+ with the Fonds with every paycheque. Of course, you can vary the amounts for different employees, or choose a contribution amount based on your own pre-established criteria, such as job position or seniority. All this is optional and at your discretion.

Legal notes

1 This article deals with a situation where an employer chooses to set up an employer contribution program through the Fonds de solidarité FTQ. It does not deal with a situation where employees can individually choose to receive their bonus in cash or in Fonds de solidarité FTQ shares.

2 To the extent that the annual maximum eligible for the tax credit has not otherwise been reached.

The Fonds de solidarité FTQ's shareholders will receive 15% in tax credits from the Québec government and 15% from the federal government. They are capped at $1,500 per fiscal year, which represents a $5,000 purchase of shares of the Fonds de solidarité FTQ.

3 Example based on the 2020 tax year, for a person with a gross employment income of $40,000. The calculated amounts are estimates and may vary depending on your tax situation.

4 Employer payroll taxes are calculated on the gross bonus amount, or $1,000 in this example. Payroll taxes charged to the employer include the Quebec Pension Plan (QPP), Employment Insurance (EI), the Quebec Parental Insurance Plan (QPIP), the Health Services Fund (HSF), and the Commission des normes, de l'équité, de la santé et de la sécurité du travail (CNESST). Certain contribution rates vary according to the employer's specific situation.



Please read the prospectus before buying Fonds de solidarité FTQ shares. Copies of the prospectus may be obtained on the Website fondsftq.com, from a local representative or at the offices of the Fonds de solidarité FTQ. The shares of the Fonds de solidarité FTQ are not guaranteed, their value changes and past performance may not be repeated.

Prospectus_EN (641 ko)

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Legal notes

*The Fonds de solidarité FTQ's shareholders will receive 15% in tax credits from the Québec government and 15% from the federal government. They are capped at $1,500 per fiscal year, which represents a $5,000 purchase of shares of the Fonds de solidarité FTQ.

Please read the prospectus before buying shares of the Fonds de solidarité FTQ. Copies of the prospectus may be obtained on the Website fondsftq.com, from a local representative or at the offices of the Fonds de solidarité FTQ. The indicated rates of return are the historical annual compounded total returns including changes in share value and reinvestment of all dividends and do not take into account income taxes payable by any security holder that would have reduced returns. The shares of the Fonds de solidarité FTQ are not guaranteed, their value changes and past performance may not be repeated.

Prospectus_EN (863 ko)

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