Employer Health Tax relief
Highlights
Hello,
We know you're busy, so let's keep this simple. The Employer Health Tax (EHT) program in Ontario is a great opportunity for your business. You can claim an exemption on the first $1 million of your annual payroll. This means you won't have to pay the EHT on that portion, potentially saving your business a significant amount of money each year. It's a straightforward way to reduce expenses and support your business's financial health.
Why should you apply? If your total Ontario payroll is less than $5 million, this exemption is designed to help you manage payroll costs. This is especially beneficial if you're a registered charity or part of an associated group of employers. By taking advantage of this program, you can allocate more resources to grow your business while fulfilling your tax obligations.
It's easy to qualify, and being approved means more funds in your pocket to invest back into your business. Think of it as a smart move to keep your business thriving while contributing to Ontario's healthcare system. Let's make your business goals a reality with this simple yet effective tax relief.
Financing Details
Tax Credit: The Employer Health Tax (EHT) offers a tax credit, allowing eligible businesses to claim an exemption on the first $1 million of total Ontario remuneration each year. This effectively reduces the amount of EHT payable.
Eligible Expenses: The tax credit applies to remuneration paid to employees, which includes salaries, wages, bonuses, taxable benefits, and stock options. These are expenses directly related to employee compensation.
Non-Eligible Uses: The funds saved from this tax credit cannot be applied towards non-payroll expenses such as utilities, rent, or equipment purchases.
Fees: There are no additional fees associated with claiming the EHT exemption. However, businesses must ensure compliance with all filing requirements to benefit from this tax credit.
Qualifications
Location Requirement: The business must have a permanent establishment in Ontario.
Payroll Requirement:
- The business's annual Ontario payroll must be less than $5 million.
- If part of an associated group, the combined annual Ontario payroll must not exceed $5 million.
Tax Exemption Eligibility:
- The business must be eligible to claim the tax exemption under the EHT Act.
- The business must pay income taxes.
Control and Ownership:
- The business must not be under the control of any level of government. This includes having no municipal representatives on the board of directors.
Associated Employers:
- If the business is part of an associated group, it must enter into an agreement to share the tax exemption using the Associated Employer Exemption Allocation form.
Registered Charities:
- Registered charities are eligible regardless of payroll size.
Disqualifications:
- Businesses with an annual Ontario payroll exceeding $5 million are not eligible for the exemption.
- Associated groups exceeding a combined annual Ontario payroll of $5 million cannot claim the exemption.
- If any associated employer is missing from the exemption allocation form, the entire group is disqualified from claiming the exemption.
Description
The Employer Health Tax (EHT) program in Ontario offers a valuable opportunity for your business. You can claim an exemption on the first $1 million of your annual payroll. This means you won't have to pay the EHT on that portion, potentially saving your business a significant amount of money each year.
This exemption is designed to help businesses like yours manage payroll costs while contributing to the funding of Ontario's healthcare system. If your total Ontario payroll is less than $5 million, you can benefit from this exemption. This is especially beneficial if you're a registered charity or part of an associated group of employers.
By taking advantage of this program, you can allocate more resources to grow your business while fulfilling your tax obligations. It's a straightforward way to reduce expenses and support your business's financial health.
Program Steps
Gather Required Information
Collect the following details about your business:- 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 (e.g., associated, multiple accounts, public sector employer)
Prepare Documentation
Ensure you have the necessary documents ready for your application, including:- Associated Employers Exemption Allocation Form (if applicable)
- Annual payroll records
- Any other relevant financial documents
Register for an EHT Account
You can register online, by phone, or at a ServiceOntario center. Make sure to provide all the required information during registration.File Your Annual Return
If your payroll exceeds the exemption amount, you must file your EHT annual return by March 15th. You can do this through ONT-TAXS online, in person, or by mail.Pay Any Required EHT
If your payroll exceeds the exemption amount, ensure you pay any EHT owed by the deadline. You can pay online, in person, or by mail.Keep Records
Maintain accurate records of your payroll and EHT filings to ensure compliance with the EHT Act. This includes keeping track of any associated employers and their payrolls if applicable.Monitor Changes
Stay informed about any changes to the EHT program or exemption amounts, especially if your business circumstances change.
