Koroll & Company Blog

Earlier this year the provincial government announced an additional relief measure to support businesses.  This included increasing the exemption on Employer Health Tax from $490,000 to $1 million. The exemption will return to $490,00 on January 1, 2021. It will be further adjusted based on inflation in 2024.  They are also providing 5 months of relief to businesses that are not able to file/remit their taxes. Today we are going to provide some clarity about EHT and whether you need to file it.

Employer Health Tax (EHT)

The EHT is a tax paid on income paid to current and former employees. 

Contributions must be made by employers who have employees who are

• physically work at your permanent Ontario establishment, or
• paid for from or through your permanent Ontario establishment, or
• attached to your permanent Ontario establishment 

A permanent establishment can include …

• a fixed place of business where day to day business is carried out for gain or non-profit 
• if there is no fixed place of business, a place where the employer conducts business does a large portion of business
• a business carried on via employees who have authority to fill orders or contract for the employer
• a place where the employer uses machines or equipment
• if the employer does not otherwise carry on business in Canada, a place where anything is: 

• owned or leased property 
• the head office 
• a place where an insurance company can do business by registration or license

EHT Exemption

If your annual payroll does not exceed $1 million, you do not have to pay the EHT tax for 2020. 

You are also not required to pay EHT on self-employed individuals. 

There are some exceptions to this rule. 

If you are part of an associated group of employers. In this case, you must look at the total remuneration paid by all the associated entities. If the total amount of remuneration paid by all entities is below $1 million in 2020, you do not have to make EHT contributions.  

In addition, if you have a municipal representative on your board or you are controlled by any level of government, you are usually not eligible. 

Finally, if your payroll is more than $5 million and you are not a registered charity, you are not eligible for the exemption. 

For more information on EHT and registered charities, please visit the Ministry of Finance website. 

If you are not exempt or your payroll exceeds the exemption amount of $1 million in 2020, you have to register for EHT. 

The EHT tax rates are based on the amount of payroll you incur before any tax exemptions. 

Ontario Payroll (Total Remuneration) Rate

Up to $200,000.00 0.98%

$200,000.01 to $230,000.00 1.101%

$230,000.01 to $260,000.00 1.223%

$260,000.01 to $290,000.00 1.344%

$290,000.01 to $320,000.00 1.465%

$320,000.01 to $350,000.00 1.586%

$350,000.01 to $380,000.00 1.708%

$380,000.01 to $400,000.00 1.829%

Over $400,000.00 1.95%

If you have payroll over $600,000, you will be required to pay in monthly installments. This starts once your payroll exceeds the $1 million exemption amount. 

To file your return, you should fill out the forms mailed to you by the Ministry of Finance. If you do not receive forms, you will want to contact the Ministry of Finance. 

The forms must be filed even if there is no EHT payable. They are due on the March 15^th of the following year. 

Employers who pay their entire payroll in a single month or employers who exceed their exemption in a single month must file a special return. These are due on the 15^th of each month. 

If you close a business or amalgamate, your return will be dues 40 days after the date of amalgamation or closure. 

For more information on EHT or for help filing your return, contact us today.