Is Company A required to pay Employer HEalth Tax on remuneration paid to its construction project employees currently working in Alberta?

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Interpretation Letter 08-0108, October 2008

We refer to your letter dated XXXXXX, regarding whether Company A is required to remit Employer Health Tax (EHT) for remuneration paid to its construction project employees currently working in Alberta.

EHT is payable by all employers on remuneration paid to employees who report for work at a permanent establishment (PE) in Ontario, and to employees who do not report for work at a PE of the employer, but who are paid from or through a PE of the employer in Ontario.

An employee is considered to be reporting for work at a PE of the employer if the employee comes to the PE in person to work. If the employee does not come to the PE in person to work, the employee is considered to be reporting for work at a PE if he or she may reasonably be regarded as attached to the PE.

For EHT purposes, the definition of PE includes any fixed place of business, including the owning or leasing of land, an agency, a branch, a factory, a farm, a gas well, a mine, an office, an oil well, timberland, a warehouse and a workshop.

The information provided by you is as follows:

  • New location in Alberta will be opening its first phase by XXXXXX, 2009
  • Alberta location is on land owned by Company A
  • Since the beginning of 2008, the construction crew in Alberta is comprised of twelve (12) Company A employees, six (6) of whom work from the Ontario warehouse, two (2) of whom work from the US head office, and others were hired locally
  • The employees from the Ontario warehouse work exclusively at the Alberta site for 2 to 3 weeks before returning home for their extended weekend
  • During their extended weekend rest time, these employees do not work at home nor report back to the Ontario warehouse
  • Physical aspect of construction work is performed by local sub-contractors
  • The warehouse in Ontario has existed for 4 years
  • The Canadian business is part of the U.S. corporation – i.e., there is no separate Canadian entity
  • Payroll hours are submitted by the Ontario warehouse for that location while pay cheques, etc. are prepared at the U.S. head office.

Based on the information provided, it is our opinion that Company A has a PE in Alberta since Company A owns the land. Company A's Alberta resident employees who are working on the Alberta plant construction project are considered to be reporting for work at that location. The employees from the Ontario warehouse who are assigned to the Alberta project are reporting for work at the Alberta PE. Therefore, for EHT purposes, Company A is not required to include any of the remuneration of the Ontario employees, who are working in Alberta, or the remuneration of the Alberta resident employees.

The construction project employees who travel back and forth between the US head office and Alberta are not relevant for EHT purposes.

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