An employer with multiple accounts must base the tax rate on the sum of the previous year`s compensation for the legal entity. For the purposes of the EHT, a legal entity may be a corporation, trust, sole proprietorship, partnership, association, joint venture or individual. The Ontario government has increased the EHT exemption from $490,000 to $1 million starting in fiscal year 2020 due to the unique circumstances caused by the coronavirus (COVID-19) in Ontario. In the 2020 Ontario Budget, the government announced that it would make the EHT payroll increase permanent. Find out more. Ontario recently released employer health tax changes for 2021 at Tax Bulletin, which says the Ontario government has permanently increased the Employer Health Tax (EST) exemption from $490,000 to $1 million. This increase in the exemption will reduce the number of employers required to pay ehT by approximately 30,000 or 90 per cent and is expected to save Ontario small businesses $360 million. It should be noted that employers with total compensation in Ontario in excess of $5 million are not eligible for the enhanced exemption because they are not eligible for the EHT exemption. While the standard is that an employer is required to pay EHT on all payrolls, there is an exception for all employers; Originally, the EHT Act provided that if the total gross compensation paid to employees was less than $450,000 at the end of the fiscal year, the employer was exempt from the obligation to calculate and pay tax. Starting with the 2021 tax year, employers with total compensation in Ontario over $1.2 million will be required to transfer their monthly payments. Otherwise, they do not have to pay monthly payments and can make their EHT payment with their annual return. For more information, see the Details of pricing and connection requirements section below. An employer who does not submit a payment or return by the due date may be subject to a contractual penalty.

A instalment statement of payment is deemed to have been issued on the date it was received by the Ministry or on the day it was received by an Ontario financial institution. A return is deemed to have been submitted on the day it is submitted online in ONT-TAXS or received by the Department. Annual, final and special returns are not accepted by financial institutions. Employers, including related employer groups, with total compensation in excess of $5 million in Ontario, are not eligible for the enhanced exemption because they are not eligible for an exemption. Employers who pay the full amount of total compensation in Ontario in a month must file a special return 15 days after the month in which it is paid. Eligible employers are required to file a special return with full payment of taxes owing if their total compensation in Ontario during that month exceeds their available exemption. You can submit your special return with ONT-TAXS online or by mail to: Department of Finance, 33 King Street West, P.O. Box 620, Oshawa ON L1H 8E9. For more information, see Associated employers. From 1. As of January 2017, special rules apply to eligible employers who are registered charities. Employers who are responsible for ehT must keep records and books of account that contain information that confirms that the employer is complying with the ehT Act and EHT regulations.

For more information, see Retention/Destruction of Books and Records, available at ontario.ca/recordretention. Employers must include stock option benefits that employees and former employees receive for shares of the employer`s business or an employer affiliate (p.B a business with which the employer does not trade on market terms). The amount of EHT payable is calculated by multiplying the Ontario employer`s taxable earnings for the year by the applicable tax rate (see Tax Rate). ONT-TAXS online is Ontario`s secure, convenient and free online tax service for businesses and their representatives. It saves time and money, reduces paper and is available 24 hours a day, seven days a week. Employers can access their EHT accounts online to make payments. To learn more about ONT-TAXS online, visit ontario.ca/taxservices. Total compensation in Ontario for an employer means payroll for: Employers eligible for the tax exemption generally include the following: Note Interest rates are subject to quarterly change in early January, April, July and October. For more information on the ehT exemption and instalment requirements, see www.fin.gov.on.ca/en/guides/eht/foremployers.html. The annual tax return and all taxes due are due no later than March 15 of the following year.

For example, the annual return for 2021 is no later than September 15. March 2022. If the 15th falls on a weekend, annual returns and payments will be accepted on time when they arrive the next business day. You can file your annual tax return with ONT-TAXS online or by mail at: Trésor, 33 King Street West, P.O. Box 620, Oshawa ON L1H 8E9. You can submit a return and payment at select ServiceOntario centres. To find ServiceOntario centres that support Ministry of Finance clients, visit ontario.ca/findservices, quickly search for “Visit a Centre” and enter your city or postal code and search for “Taxes” under Services Available. Employers can access their EHT accounts at any time using ONT-TAXS online. ONT-TAXS Online uses the Ontario government`s secure online registration service, ONe-key, to protect customers` tax information.

ONe-key verifies your identity, authorizes your access, and allows you to do business with the government securely online. You can securely communicate with the Ministry using ONT-TAXS` online messaging feature. The messaging feature also allows you to attach Word, Excel, PowerPoint, Adobe Acrobat (PDF), and plain text (.txt) files. To learn more about ONT-TAXS Online, the Department`s secure online service, visit ontario.ca/taxservices. An employer who is eligible for only part of the taxation year (including the first or final year of operation in Ontario, the year of bankruptcy, merger or change of eligibility status) must calculate the applicable payroll exemption amount ($1 million starting in fiscal year 2020) and the exemption threshold of $5 million calculated in proportion to the number of days in the calendar year, where he established a permanent establishment in Ontario with a payroll and was eligible for an exemption. The Department of Finance is responsible for the confidential collection and maintenance of employer information. EHT rates range from 0.98% for Ontario payroll under $200,000, to 1.95% for payroll over $400,000. For an employer who is part of an associated group and who submits a final income tax return, they cannot apply for an exemption at the time of filing because the allocation plan cannot be completed at that time.

However, the employer may file an amended income tax return if the associated group grants the employer an exemption at the end of the year. Exemption applications that are classified as exceeding the amounts allocated may result in penalties and interest contributions. However, private sector employers are eligible for a health tax exemption for the first benefit of $1 million.19 The exemption must be shared by the associated employers. The contribution rate is determined based on the employer`s total payroll prior to the exemption. If an employer makes account-related requests by phone or email, they must prove authorization by providing the following information: A new employer must estimate the legal entity`s annual compensation for the first and second years to determine installment tax rates for the first two years. The 2020 Budget announced the Ontario government`s proposal to permanently increase the Employer Health Tax (EST) exemption for the 2020 tax year from $490,000 to $1 million. Starting with the 2021 tax year, employers with an annual payroll in Ontario will be required to make more than $1.2 million in monthly health tax payments. The annual return ensures that an employer`s combined payments (i.e., instalments plus an annual return payment) match the tax due for the year. When the return is processed, employers will receive a notice of review.

This decision confirms the balance of the account for the tax period on the date of taxation. This means that starting in 2021, all employers would have to start making monthly payments once their annual payroll exceeds $1.2 million. If you receive an annual tax return, you will need to complete it and send it to the ministry, even if there is no EHT to pay. .