Employer Health Tax - EHT

To Whom Does This Apply?

This document is based on information from the Ministry of Finance's " Employer Health Tax Guide for Employers " revised May 2006 and Information Bulletin 2-98 " Tax Exemption " dated September 2001 (published at http://www.trd.fin.gov.on.ca).

Summary

Employer Health Tax (EHT) is paid by employers who have annual total remuneration for the year
(exceeding the exemption amount allowed) paid to employees or former employees who:

• report for work at a permanent establishment of the employer in Ontario, or
• do not report for work at a permanent establishment of the employer but are paid from or through a
  permanent establishment of the employer in Ontario.

Note :

• Eligible employers are exempt from tax on the first $400,000 of annual remuneration.
• Eligible employers who are associated are required to share the exemption among members of the
  associated group.
• Employers may be required to pay EHT on remuneration paid by a third party to an employee.

For further information:
visit these Web sites:
EHT Information Bulletins and Circulars
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_6713_1.html
Remuneration
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_6699_1.html
Permanent Establishment
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_6701_1.html

Exemption Levels
For the first $400,000 of the payroll, eligible employers are exempt from paying the Employer Health Tax.

Eligible Employers for EHT Exemption
Eligible employers generally include the following:

• private sector employers;
• organizations that receive financial assistance from any level of government but are not under the control of government; and
• Crown corporations that are subject to federal income tax under Part I of the Income Tax Act (Canada).

Non-eligible Employers for EHT Exemption
The following employers are not eligible to claim the EHT exemption:

• public sector employers; including federal, provincial and municipal governments, universities, colleges, school boards and hospitals;
• Crown agencies not subject to tax under Part I of the Income Tax Act (Canada); and
• employers exempt from income tax under paragraphs 149(l)(a) to (d.6), (h.l), (o) to (o.2), (o.4) to (s.2), and (u) to (z) of the Income Tax Act (Canada), for example, municipal and provincial corporations and certain trusts.

For further information:
visit the Web site:
Information Bulletin 2-98 Tax Exemption
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_3645_1.html

Payment Schedule

• $600 000 or less - One payment due with the annual return
• $600 000.01 and over - Monthly instalment payments

Tax Rates
For specific information on current EHT rates applicable to your business, please contact the nearest Employer Health Tax Office.

For further information:
visit the Web site:
EHT - Enquiries
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_6693_1.html  

How to Register for EHT

The following employers are required to register with the ministry:

• employers who are not eligible for the tax exemption;
• eligible employers whose total Ontario remuneration exceeds the exemption threshold;
• employers who are associated.

To register for EHT, an employer may:

• call or visit any Ministry of Finance tax office, listed under ‘Taxes’ in the blue pages of the telephone directory;
• visit the ministry website at: www.trd.fin.gov.on.ca  and select ‘Online Services’;
• visit an Ontario Business Connects (OBC) location and register electronically by using the self-help workstations or visit the OBC website at: www.cbs.gov.on.ca/obc;
• visit the Canada Revenue Agency (CRA) website at: www.businessregistration.gc.ca . and register
  electronically.

Once registered, the employer receives an EHT account number. Employers who have a federal business
number, a Retail Sales Tax account number, or an Ontario Corporations Tax account number should provide this information when registering for EHT.

One EHT account number is usually assigned to each employer; however, an employer can have more than one for different payroll centres or payroll types. Multiple account employers are required to file separate instalments and annual returns for each account.

For further information:
visit these Web sites:
Ontario Business Connects (OBC)
http://www.cbs.gov.on.ca/obc/english/4THRMM.htm
Ministry of Finance Tax Offices
http://www.trd.fin.gov.on.ca/userfiles/HTML/cma_3_1945_1.html  

Note: Multiple account employers (i.e. employers who have more than one EHT account number set up for different payroll centres or types) can allocate the exemption to any of their multiple accounts to the extent that it does not exceed the total exemption allowed for the year.
 
Employers who already have an Ontario Retail Sales Tax account number (i.e. a vendor permit number) or a Canada Customs and Revenue Agency Business Number - BN should provide that number when registering for EHT.

For further information:
see the document:
Business Number - BN

• Important Notices

DISCLAIMER
Information contained in this section is of a general nature only and is not intended to constitute advice for any specific fact situation. For particular questions, the users are invited to contact their lawyer. For additional information, see contact(s) listed below.

Ontario Contact(s):
Hamilton Tax Office
Ministry of Finance - MOF
15th Floor
119 King Street West
Hamilton, Ontario  L8P 4Y7
Telephone: (905) 521-7504
Fax: (905) 521-7868
Toll-free (information): 1-800-263-9229