Unit 9: Employer Health tax

Question 1

Who pays EHT

Answer 1

all employers that have the following

1. a permanent establishment in Ontario
2. have employees that report to work at the Ontario permanent establishment OR
3. have employees who do not report for work at a permanent establishment but are paid from the Ontario permanent establishment

Question 2

What does EHT stand for

Answer 2

employer health tax

Question 3

What EHT calculated on

Answer 3

the total Ontario remuneration or employment income (usually total of box 14 of all T4s for Ontario)

Question 4

What does box 14 on T4 include

Answer 4

1. employment income : wages, salaries, overtime
2. bonuses, commissions or other similar payments based on sales volumes or contracts negotiated
3. wages in lieu of notice, vacation
4. directors fees
5. casual labour
6. top -up payments for maternity/paternity leave or WSIB payments
7. taxable allowances and benefits
8. gratuities paid or controlled by the employer
9. disability benefits paid directly by the employer under the terms of an administrative services only (aso) plan
10. remuneration paid to members of religious order, despite vows of perpetual poverty which exclude the payment or allowance from income tax
11. free accommodation or allowances paid to clergy for accommodation, included in income but considered a deduction
12. employer’s contribution to an employee trusts plan, included in the employee’s income when the trustee allocates it each year
13. amounts earned during the year where an employee has a right under a salary deferral arrangement
14. scholarships or awards paid to children of employees where there is not merit criteria in choosing the receipient
15. amounts paid by a 3rd party to an employee in consideration for the employee providing a service in Ontario to a 3rd party if:
    a) it is reasonable to believe the employee would not have been engaged to provide the service if the employee had not been an employee of the employer
    b) the service is the same or similar to that normally carried out by the employee of the employer amount not subject EHT otherwise

Ex. off-duty police officer hired by a 3rd party for traffic or crowd control at a sporting event. the police force would be required to pay EHT on the remuneration paid by the 3rd party to the officer

Question 5

EHT calculation does not include what? (11)

Answer 5

1. payrolls of embassies and consulates
2. payrolls of native people doing business on a reserve and relating to natives people working for a corporation on a reserve
3. pension, annuity or superannuation paid to retired employees
4. retiring allowances/severance pay
5. non-taxable awards from WSIB
6. scholarship or award paid to children of employees who are selected on the basis of scholastic records or other achievements
7. board and lodging provide at a special or remote work location
8. group sickness or accident insurance plans
9. private health service plans
10. supplementary unemployment benefit (SUB) plans
11. deferred profit sharing plans

Question 6

What does the EHT rate depend on?

Answer 6

depends on the employer’s gross annual payroll

Question 7

what is the EHT rate for payroll up to $200,000?

Answer 7

.98%

Question 8

what is the EHT rate for payroll from $200,001 to $230,000?

Answer 8

1.101%

Question 9

what is the EHT rate for payroll from $230,001 - $260,000

Answer 9

1.223%

Question 10

What is the EHT rate for payroll from $260,001 to $290,000

Answer 10

1.344%

Question 11

what is the EHT rate for payroll from $290,001 to $320,000

Answer 11

1.465%

Question 12

what is the EHT rate for payroll from $320,001 to $350,000

Answer 12

1.586%

Question 13

what is the EHT rate for payroll from $350,001 to $380,000

Answer 13

1.708%

Question 14

what is the EHT rate for payroll from $380,001 to $400,000

Answer 14

1.829%

Question 15

what is the EHT rate for payroll over $450,000

Answer 15

1.95%

Question 16

The first $450,000 annual payroll is exempt from EHT for employers who are what?

Answer 16

1. in the private-sector
2. organizations that are considered part of the Ontario public sector for the purposes of the social contract act and are funded by the Ontario gov. but are not controlled by it
3. Crown corporations subject to tax under Part 1 of the Income tax act

Question 17

What employers are not eligible for the EHT tax exemption?

Answer 17

1. employers with total Ontario remuneration of more than $5,000,000
2. public sector employers, including federal, provincial and municipal governments, universities, colleges, school boards and hospitals
3. crown agencies not subject to tax under Part 1 of the income tax act
4. employers exempt form income tax under paragraphs 149 (1)(a) to (d), h.1), (o) to (0.2), (0.4) to (s) and (u) to (y) of the income tax act. for example municipal and provincial corporations and certain trusts

Question 18

The EHT is an annual tax; however, the reporting and remitting requirements will depend on the size of the employer’s payroll, before the annual exemption is considered. When are installments remitted?

Answer 18

once the cumulative payroll for the year exceeds the exemption amount which is $450,000

Question 19

If an employer has an annual payroll of less than $450,000 what are the remitting and reporting requirements for EHT?

Answer 19

no instalments

no annual return

Question 20

If an employer has an annual payroll of more than $400,001 to less than $600,000 what is the remitting and reporting requiremnts for EHT?

Answer 20

no instalments
pay annual by March 15 of the following year

Annual return due by March 15 of the following year as well

Question 21

If an employer annual payroll is more than $600,000.01 what is the remitting and reporting requirements for EHT?

Answer 21

monthly instalments due 15th of the month using the pervious month’s payroll to determine payment

Annual return by March 15 of the following year

Question 22

What do employer’s paying EHT by installments receive?

Answer 22

an instalment statement (prior to due date)

Question 23

What does the EHT instalment statement have

Answer 23

top portion of this statement must be completed and returned wit the payment

bottom portion contains the employer account information and is kept by the employer

Question 24

Employer’s must complete and file an Annual return with the ministry of finance by when?

Answer 24

March 15 of the following year

Question 25

What is the purpose of filing and annual return for EHT?

Answer 25

to reconcile the tax paid for the year to the tax payable.

employers will either submit the difference in tax, or apply for a refund credit in the case of an overpayment

Question 26

Where can employers pay their EHT?

Answer 26

1. at a financial institution fee of charge
   - they need to bring their instalment statement to make the payment
2. by mail,
   will need to send the instalment statement as well
3. Deliver to any EHT regional offices or ministry of finance information centres

Question 27

What if employers have multiple accounts for EHT what can they do?

Answer 27

the can file a separate annual return for each account, rather than one combined return

Question 28

IF an employer has multiple accounts for EHT can they have the $400,000 exemption for both?

Answer 28

no it can only be applied to the total of the accounts, not each individual account

Question 29

What is the penalty for EHT remittance not paid on time?

Answer 29

10% of the tax unpaid, to a maximum of $2,500