Ontario Employers Health Tax

Ontario Employer Health Tax also referred to as EHT is a payroll tax on remuneration paid to employees and former employees. Employers contribute to this according to the remuneration received by their employees that is not actively working in a permanent location of the employer but receives their pay from or via a permanent part of the employers business in Ontario. As of January 1, 2014 the EHT exemption increased to $450,000 from $400,000 of Ontario payroll, saving eligible employers up to $975 every year. Private sector employers with annual Ontario payrolls over $5 million, including groups of associated employers, are no longer eligible for the exemption. Registered charities, including those with payrolls over $5 million, continue to be eligible for the exemption.

If you are an employer and you have employees who physically report for work or do not work at your permanent establishment in Ontario and are paid from or through your Ontario permanent establishment, and have Ontario payroll in excess of your allowable exemption amount you have to pay Employer Health Tax.

You need to register for EHT with the province if you are an employer and you are not eligible for the tax exemption, eligible for the tax exemption and your Ontario payroll exceeds your allowable exemption amount, or an associated employer.

The EHT rates vary from 0.98% on Ontario payroll less than $200,000, up to 1.95% for payroll in excess of $400,000.

The amount of EHT you, as an employer, pay is calculated by multiplying your Ontario payroll for the year – after deducting any tax exemption – by the applicable tax rate. The tax rate is based on the Ontario payroll of the employer before deducting any tax exemption.

• The tax rate for a multiple account employer is based on the combined Ontario payroll of all the employer’s accounts.
• The tax rate for an associated employer is based on the Ontario payroll for that employer.

The Ministry of Finance will mail you a personalized annual return for you to use to file an EHT return. You must complete it and send it to the ministry, even if no EHT is payable. If you are not an associated employer, once you submit a nil return, the ministry will stop sending you annual returns automatically.

Employers who pay their entire Ontario payroll in one month need to file a special EHT return within 15 days following the month in which the payroll was paid while employers who amalgamate, cease to have a permanent establishment in Ontario, or who are ceasing operations in Ontario, are required to file a final return within 40 days of ceasing operations.

Annual returns are due March 15th of the following calendar year. For Special returns, due are on the 15th of the month after the payroll was paid. While for the Final returns, due are 40 days after your business closes or the amalgamation date.

Ontario Ministry of Finance: www.fin.gov.on.ca/en/tax/eht/

CPA Professional Development Seminars and Schedules and Registration by Region: www.payroll.ca/en/ProfessionalDevelopment/RegionalSchedules/Regional_Schedules.aspx

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