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This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued. Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter. Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided. In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.
Interpretation Letter 07-0261, March 2008
We refer to your letter regarding Company A and the Employer Health Tax (EHT) Act.
EHT is payable by all employers who pay remuneration to employees who report for work at a permanent establishment (PE) in Ontario or do not report for work at the employer's PE but who are paid from a PE of the employer in Ontario.
Remuneration includes all payments, benefits and allowances received or deemed to be received by an individual that, by reason of section 5, 6, or 7 of the Income Tax Act (ITA) of Canada, are required to be included in the income of the individual. This includes, but is not limited to, salaries, wages, taxable allowances, and commissions. Other payments, such as bonus, directors fees, management fees paid to an employee, are also taxable as employment income.
Based on the information you have provided in your letter, we understand that:
Because remuneration is based on the ITA, and CRA has assessed Company A payments as being taxable under section 5 of the ITA as employment income, these payments are also subject to EHT. Filing requirements for employers which pay all their remuneration during one month of the year are different from our regular requirements. Company A will need to file its EHT return and pay the EHT by the 15th of the month following the month of payment (i.e., if a payment is made to the owner and certain persons on January 2, the EHT return is due and tax is payable by February 15).