Annual Filing Requirements

Effective January 1, 2014, the amount of annual Ontario payroll that may be exempt from Employer Health Tax (EHT) is increased from $400,000 to $450,000. To better target EHT relief, the exemption is eliminated for private‑sector employers with annual Ontario payrolls over $5 million. Eligible employers who are registered charities can claim the exemption even if their payroll exceeds $5 million.

Are you required to pay EHT?

You are required to pay EHT if you are an employer who pays remuneration to employees who:

  • physically report for work at your permanent establishment in Ontario, or
  • are attached to your permanent establishment in Ontario (refer to permanent establishment), or
  • do not report for work at any of your permanent establishments, but who are paid from or through your Ontario permanent establishment. For example, if you have employees in another province who work from their homes but are paid from the Ontario office, remuneration paid to these employees may be subject to EHT (refer to office in an employee's residence).

Definitions

  • Permanent establishment is any fixed place of business where day-to-day business activities are carried out. It can be an office, agency, branch, factory, farm, warehouse, mine or workshop.
  • Remuneration, in general, means employment income (box 14 of Canada Revenue Agency's T4 slip) that is taxable under sections 5, 6 or 7 of the Income Tax Act (Canada).

    Examples of remuneration include:

    • salaries and wages
    • tips and gratuities paid through an employer
    • bonuses
    • commissions and other similar payments
    • vacation pay
    • taxable allowances and benefits o directors' fees
    • payments for casual labour
    • amounts paid by an employer to top up benefits
    • advances of salaries and wages, and
    • stock option benefits.

    Refer to remuneration for more information. It does not include pension benefits. Total Ontario remuneration refers to the remuneration on which you are required to pay EHT.

  • Associated employers are connected by ownership or by a combination of ownership and relationship of the employers, either through blood, marriage or adoption. The rules for associated corporations under section 256 of the Income Tax Act (Canada) are used to determine whether employers are associated for EHT purposes. Although these rules refer to corporations, their application is extended under the Employer Health Tax Act to include individuals, partnerships and trusts. Employers are associated if they are associated with each other at any time in the year.

Do you need to file an EHT annual return?

File an EHT annual return if:

  • your total Ontario remuneration in the calendar year is greater than the $450,000 tax exemption (or prorated portion of the exemption for partial year eligible employers)
  • you are not eligible for the tax exemption and have Ontario remuneration
  • you remitted EHT instalments for the year
  • you are associated with other employers at any time during the year, or
  • you received a personalized return.

Do you qualify for a tax exemption?

Private‑sector employers are considered to be eligible employers and they do not pay EHT on the first $450,000 of their total Ontario remuneration. The exemption is eliminated for private‑sector employers with total Ontario remuneration over $5 million. Eligible employers who are registered charities can claim the exemption even if their payroll exceeds $5 million.

Eligible employers

Eligible employers for the tax exemption generally include:

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

Non-eligible employers

Employers who do not qualify for the exemption may include:

  • public sector employers
  • crown agencies
  • municipal and provincial corporations, and
  • certain trusts.

Do you need to pay monthly instalments?

For total Ontario remuneration greater than $600,000: you must remit monthly instalments and file an annual return on or before March 15th of the following calendar year.

For total Ontario remuneration $600,000 or less: you do not have to remit monthly instalments. You must file your annual return and pay EHT on or before March 15th of the following calendar year.

Associated employers

If you are a member of an associated group of employers at any time during the year, and are eligible for the exemption, and your associated group’s combined Ontario payroll is equal to or below the $5 million exemption threshold, you must enter into an agreement to allocate the $450,000 exemption amount among the group. You must not claim more than your allocated portion of the exemption amount for the year.

Only one member is required to complete the Associated Employers Exemption Allocation form and submit it to the Ministry of Finance by the return due date. The exemption for all members of the group will be denied if a completed form is not received by the ministry. For more information on allocating the tax exemption, refer to tax exemption.

How do you register for EHT?

To register for EHT, you can:

  • call the Ministry of Finance toll‑free at 1 866 ONT‑TAXS (1 866 668‑8297)
  • visit a ServiceOntario centre or visit the serviceontario.ca/business to register online
  • visit the Canada Revenue Agency website at businessregistration.gc.ca and register online, or
  • make an appointment to meet with a representative at a Ministry of Finance tax office.

What information do you need to register for an EHT account?

To register for an EHT account you must provide the following information:

  • legal name
  • trade name
  • business address
  • mailing address
  • telephone and fax numbers
  • name of contact person or authorized representative
  • payroll start date
  • payroll frequency
  • federal business number (BN)
  • employer type (for example - associated, multiple accounts or public sector employer).

What can you do if you did not file EHT annual returns for prior years and should have?

You may qualify for the ministry's voluntary disclosure program. Under the program's conditions, employers will not be penalized for late filing.

However, you must:

  • initiate the disclosure yourself, prior to any audit or other enforcement action by the ministry
  • pay the tax owing, plus any applicable interest.

For more information

If this information does not completely address your particular situation, refer to the Act and related regulations, visit ontario.ca/eht or contact the Ministry of Finance at 1‑866‑ONT‑TAXS (1‑866‑668‑8297) or 1‑800‑263‑7776 for teletypewriter (TTY). You may also send a fax to 905‑433‑5770 or mail:

Ministry of Finance
Account Management and Collections Branch
Employer Health Tax
33 King Street West
PO Box 620
Oshawa ON L1H 8E9

Page: 499  |