If you are an individual, read frequently asked questions for individuals
- How is the Ontario Health Premium collected?
- Where can an employer find the new formulas for payroll deductions?
- How is information regarding the new Payroll Deduction Tables or Tables on Diskette communicated to employers?
- What should an employer do about employees who work in Ontario, but live in another province?
- Can employers pay the Ontario Health Premium on behalf of their employees?
- If a collective agreement states that the employer would cover OHIP premiums, must the employer pay for the Ontario Health Premium?
- Since the Ontario Health Premium is not being shown separately on pay stubs, but included in the income tax deduction, how will the taxpayer know how much is going toward the Ontario Health Premium?
- What if an employer has other questions about payroll deductions?
How is the Ontario Health Premium collected?
The Ontario Health Premium is implemented through the Ontario Income Tax Act and administered by the Canada Revenue Agency (CRA) under the existing tax collection agreement between Ontario and the federal government.
The Ontario Health Premium is deducted from pay and pensions of those with employment income or pension income of more than $20,000 a year, as part of federal and Ontario income tax. To ensure that employers do not incur added costs to change their payroll systems, the Ontario Health Premium is included on pay stubs as a component of the income tax withheld.
Where can an employer find the new formulas for payroll deductions?
The Payroll deduction formulas for computer programs can be obtained on the CRA website or by phone at 1 800 959-2221.
How is information regarding the new Payroll Deduction Tables or Tables on Diskette communicated to employers?
The CRA sends e-messages to employers (or pension administrators) that have signed up for its e-mail message service about new products (including FAQs) posted on its website.
Note: Effective with the January 1, 2011 edition, the CRA no longer produces the Tables on Diskette. Going forward, the CRA encourages employers to use the Payroll Deductions Online Calculator.
What should an employer do about employees who work in Ontario, but live in another province?
Payroll withholdings (including the Ontario Health Premium) are based on the province in which employees report to work, rather than the province of residence. When employees file their tax returns, their total taxes deducted for the year (including the Ontario Health Premium) will be reconciled against their total tax payable for the year for their province of residence.
The CRA has information about this type of payroll situation on their website.
Can employers pay the Ontario Health Premium on behalf of their employees?
Employers may arrange to pay the Ontario Health Premium on behalf of their employees by increasing their employees' salaries (by the amount they estimate their employees would owe for the Ontario Health Premium) or by reimbursing their employees for the amount the employees pay for the Ontario Health Premium.
Under the federal Income Tax Act, payment of the Ontario Health Premium by an employer would be considered a benefit received by the employee in the course of employment, and would be required to be included in income as a taxable benefit.
If a collective agreement states that the employer would cover OHIP premiums, must the employer pay for the Ontario Health Premium?
Unlike the old OHIP premium, the Ontario Health Premium is a tax on individuals under the Ontario Income Tax Act. This significant difference makes it unlikely that the Ontario Health Premium would be covered by an existing agreement. However, some arbitration decisions have determined that an employer is obligated to pay the Ontario Health Premium based on an existing collective agreement.
Since the Ontario Health Premium is not being shown separately on pay stubs, but included in the income tax deduction, how will the taxpayer know how much is going toward the Ontario Health Premium?
T1 General Ontario personal income tax returns include a separate section showing the calculation of the Ontario Health Premium for the tax year, which will provide information about the amount of the Ontario Health Premium that is due.
What if an employer has other questions about payroll deductions?
The CRA has an employer's guide which covers payroll deductions on its website.
