Employer Health Tax relief
ON, Canada
Health tax exemption for Ontario employers
grant_single_labels|summary
grant_single|eligibleFinancing
- grant_single|noCondition
grant_single|deadlines
- grant_single|openingDateMay 12, 2020
- grant_single|grantStatusClosed
grant_single|financingType
Tax Credits
grant_single|eligibleIndustries
- grant_single|allIndustries
grant_single|grantors
- Ontario Ministry of Finance
- Government of Ontario
grant_single|status
grant_card_status|open
grant_single_labels|preview
Access an exemption from paying the Ontario Employer Health Tax on the first $1 million of your annual remuneration (payroll).
grant_single_labels|projects
grant_single|admissibleProjectsExample
$160,000
Creating an environmental conservation education program
$250,000
Expanding a farm-to-table delivery service to support local agriculture
$120,000
Launching a digital literacy campaign to help senior citizens
$500,000
Developing an advanced fintech solution to streamline loan processing for credit unions
$200,000
Setting up a community recycling program for a local non-profit organization
$150,000
Improving accessibility at a community theatre
grant_single_labels|admissibility
Eligibility for the Employer Health Tax (EHT) exemption is determined by specific requirements related to the employer's status and payroll levels.
- The employer must be an eligible employer as defined under the EHT Act.
- The employer must pay income taxes.
- The Ontario payroll for the year, including that of any associated employers, must be less than $5 million, or the employer must be a registered charity.
- The employer must not be under the control of any level of government, such as having municipal representatives on their board.
grant_eligibility_criteria|who_can_apply
Eligible employers, as defined under the EHT Act, can apply for the Employer Health Tax (EHT) exemption if they meet the following conditions: they pay income taxes, their Ontario payroll is less than $5 million, or they are a registered charity, and they are not controlled by any level of government.
grant_eligibility_criteria|eligible_expenses
Eligible expenses for this grant include:
- Remuneration paid to employees
- Salaries, wages, bonuses, taxable benefits, stock options, etc.
grant_single_labels|criteria
There are evaluation and selection criteria for this grant. The criteria include:
- Employers are required to pay EHT on remuneration paid to employees who meet certain conditions
- Eligible employers must register for an EHT account with the Ontario Ministry of Finance
- An exemption amount is available for eligible employers based on their Ontario payroll
- Associated employers must share the tax exemption for the year and meet specific requirements
- Specific tax rates apply based on the level of Ontario payroll
grant_single_labels|register
Here are the steps to apply for this grant:
- Step 1: Register for EHT Account
- Gather necessary information such as legal name, trade name, business address, and federal business number (BN).
- Decide on the registration method: online, phone, or at a ServiceOntario centre.
- If you are not eligible for the exemption or your payroll exceeds the allowable exemption, complete the registration.
- Step 2: Calculate EHT Liability
- Determine the total Ontario remuneration before any exemptions.
- Identify the applicable tax rate based on your payroll bracket.
- Calculate the EHT owed by applying the tax rate to remuneration after deduction of any exemptions.
- Step 3: Submit Annual Return
- Receive a personalized annual return and addressed return envelope from the Ministry of Finance.
- File the return through ONT-TAXS online, in-person at a ServiceOntario centre, or by mail.
- Ensure the return is filed on or before March 15th.
- Step 4: Pay EHT
- Determine if you need to make monthly instalments based on your payroll size.
- Complete payment through ONT-TAXS online, in person at a bank, or by mail.
- Step 5: Record Keeping
- Maintain detailed records and books of account as required under the EHT Act and Regulations.
grant_single_labels|otherInfo
In addition to the eligibility criteria and processes, here are some further details on managing Employer Health Tax (EHT) duties in Ontario:
- Employers are expected to maintain an accurate record and keep books in line with the EHT Act and Regulations.
- The interest rates on any outstanding balance for EHT obligations may change quarterly, which employers must stay updated on.
- Employers needing assistance with specific scenarios can request written interpretations from the Ministry.
- The Ministry of Finance offers interest and penalty relief during specified periods, such as the COVID-19 relief window.
- It is essential for employers to accurately complete all information required on EHT-related forms to avoid penalties.
- Employers who disagree with EHT assessments can file a Notice of Objection or Appeal within designated timeframes.
- Out-of-province employers establishing themselves in Ontario for less than 24 months should contact the Ministry to understand their obligations.
- Benefits of compliance include avoiding fines, penalties, and potentially harsh legal repercussions for incorrect filings or misstatements.
Apply to this program
Understanding Employer Health Tax (EHT) in Ontario
The Employer Health Tax (EHT) is a significant payroll tax applied to employers in Ontario, whose revenue supports the province's healthcare system. The incentive includes exemptions for eligible employers, underscoring compliance with filling requirements and the facilitation of health services funding.
Detailed Explanation of the Employer Health Tax and Its Implications
The Employer Health Tax (EHT) represents a pivotal element in Ontario’s taxation framework, aimed at sustaining the province’s comprehensive healthcare services. Serving as a payroll tax, the EHT is levied against remuneration paid to employees, including salaries, wages, bonuses, and other taxable benefits associated with employment in Ontario. This tax mandates that all employers, whose payroll exceeds certain exemption thresholds, contribute a portion to support the healthcare system, thus playing a crucial role in financing public health infrastructure.Ontario’s EHT is structured such that it allows for an annual exemption on the first $1 million of payroll, making smaller businesses more resilient to payroll tax pressures. This threshold considers scenarios influenced by inflation adjustments and has notably increased permanently from $490,000 in 2021, reflecting the province’s response to economic conditions imposed by unprecedented global circumstances such as the COVID-19 pandemic.Eligible employers must adhere strictly to compliance guidelines to leverage their tax benefits effectively. Those categorized under associated employers, where connections via ownership or control are present, must file the proper allocation forms. This ensures that the shared exemption does not exceed the $5 million ceiling for collective payrolls within associated groups. Compliance with these nuances is crucial; failure to accurately file exemptions or meet return deadlines can lead to severe penalties, including financial fines and legal consequences.The EHT rates are progressive and based on the employer's total Ontario payroll before the deduction of any exemptions. These rates start at 0.98% for payrolls up to $200,000 and ascend up to 1.95% for higher payroll brackets, ensuring that tax responsibilities are proportional to the payroll scale.Additionally, there are special provisions for out-of-province employers and registered charities. These entities have unique obligations that must be met if they establish a business presence or pay remuneration through an Ontario location. Understanding these specific conditions can avert potential breaches of non-compliance.From a procedural standpoint, employers are required to register for an EHT account upon meeting specific payroll criteria, and regular monthly instalments must be observed if annual payroll exceeds $1,200,000. The timely filing of returns, facilitated through online systems such as ONT-TAXS, helps maintain compliance while optimizing administrative processes.Penalties for non-compliance can include not only interest on overdue taxes but also substantial fines and, in severe cases, imprisonment for fraudulent activity. A robust understanding of EHT obligations and efficient record-keeping practices can mitigate these risks, enabling seamless operation within the province’s legislative framework.This tax fundamentally reflects Ontario’s commitment to sustainably funding its healthcare infrastructure while maintaining a supportive environment for businesses, especially SMEs. Navigating the complexities of the EHT with diligence ensures support not only for corporate growth but also the broader societal benefits of a robust healthcare system in Ontario."
