Employer Health Tax (EHT)
Find out if you need to pay EHT and how to register for an account, pay instalments and file a return.
This online book has multiple pages. Please click on the Table of Contents link above for additional information related to this item.
Overview
The Employer Health Tax (EHT) is a payroll tax on remuneration (for example, salaries, wages, bonuses, taxable benefits, stock options etc.) that employers in Ontario provide to current and former employees.
The purpose of this tax is to assist in providing the government with revenue to fund health care in Ontario.
Who pays EHT
You must pay EHT if you have employees who either:
- physically report for work at your permanent establishment in Ontario
- are attached to your permanent establishment in Ontario
- do not report to work at any of your permanent establishments (for example, they work from home) but are paid from or through your Ontario permanent establishment
If your Ontario payroll exceeds your allowable exemption amount, you will have to pay EHT .
You do not have to pay EHT , if you are an eligible employer, as defined under the EHT Act, who has annual payroll below your exemption amount.
EHT tax exemption
The Ontario government has increased the EHT exemption for 2020 from $490,000 to $1 million due to the special circumstances caused by the coronavirus (COVID-19) in Ontario. In the 2020 Ontario Budget, the government announced it was making the EHT payroll exemption increase permanent.
The EHT exemption is indexed to inflation every five years and the next adjustment had been scheduled for 2024. Given the doubling of the exemption threshold starting in 2020, the government moved the next scheduled adjustment for inflation to January 1, 2029.
For 2019, Ontario provided EHT relief for small eligible employers through a tax exemption on the first $490,000 of total Ontario payroll each year. For 2014 – 2018, the tax exemption was $450,000.
You can claim the tax exemption if:
- you are an eligible employer as defined under the EHT Act
- you pay income taxes
- your Ontario payroll for the year (including the payroll of any associated employers) is less than $5 million or you are a registered charity
- you are not under the control of any level of government
- your board of directors does not include any municipal representatives
EHT tax exemption example
If you are an eligible employer with a total Ontario payroll of $1,800,000 per year, you would claim the EHT tax exemption on the first $1,000,000 and pay EHT on the remaining $800,000 of your payroll for the year.
Learn more about the EHT tax exemption.
Tax rates and how to calculate EHT
Rates
Total Ontario remuneration | Rate |
Up to $200,000.00 | 0.98% |
$200,000.01 to $230,000.00 | 1.101% |
$230,000.01 to $260,000.00 | 1.223% |
$260,000.01 to $290,000.00 | 1.344% |
$290,000.01 to $320,000.00 | 1.465% |
$320,000.01 to $350,000.00 | 1.586% |
$350,000.01 to $380,000.00 | 1.708% |
$380,000.01 to $400,000.00 | 1.829% |
Over $400,000.00 | 1.95% |
Calculate your EHT
Your EHT is calculated by multiplying your Ontario payroll for the year – after deducting your tax exemption – by your tax rate. The tax rate you use is based on the level of your Ontario payroll before you have deducted any tax exemption. There is no tax exemption amount available if you or your associated group of employers has more than $5 million of annual payroll.
For example, an employer with $175,000 of Ontario payroll, and who does not have any tax exemption, would have a tax rate of 0.98%, and would pay EHT of $1,715 for the year.
Register for an EHT account
It is your responsibility to register for an EHT account with the Ontario Ministry of Finance if you are an employer who is either:
- not eligible for the tax exemption
- eligible for the tax exemption but your payroll exceeds your allowable exemption
Once you register for EHT we will begin to send you annual returns.
Before you register for EHT
You must have the following information for your organization:
- 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)
Out-of-province employers
If you are an out-of-province employer, establishing a permanent establishment in Ontario for less than 24 months, it is important that you contact the Ministry. Please call 1-866-668-8297 to discuss requirements for your account registration.
Multiple accounts
An employer may set up separate payrolls for each payroll centre or payroll type and can report them separately by setting up multiple EHT accounts under one BN. A different extension number (e.g., TE0001, TE0002) will be assigned to each account.
A multiple accounts employer must file separate instalments and annual returns for each account. Eligible employers with multiple accounts must allocate the exemption between their accounts.
The tax rate for a multiple account employer is based on the combined Ontario payroll of all the employer's accounts.
How to register
You can register:
- online
- in-person by calling 1-866-ONT-TAXS (1-866-668-8297) to make an appointment with a Ministry of Finance representative
- using a self-help workstation at a ServiceOntario centre
EHT account inquiries
Online inquiries
Employers can access their EHT accounts anytime by using ONT-TAXS online.
Phone or mail inquiries
When you make account-related inquiries by phone or by mail, you will be required to prove authorization by providing the following information:
- employer's name, address, and federal Business Number (BN)
- your name, telephone number and position in the employer's organization, or your position as a representative of the employer.
File an EHT return
Who needs to file
You must file an EHT annual return if:
- your annual Ontario payroll is greater than your tax exemption (or prorated portion of your exemption for partial year eligible employers)
- you:
- are not eligible for the tax exemption and have an Ontario payroll, or
- remitted EHT instalments for the year, or
- are a member of an associated group and the group's cumulative Ontario payroll exceeds the EHT exemption amount, or
- received a personalized return.
How to file and pay EHT
We will mail you a personalized annual return with an addressed return envelope.
Once you receive it, file your EHT annual return and payment on or before March 15th:
- through ONT-TAXS online https://www.fin.gov.on.ca/en/services/onttaxs/index.html
- in person at certain ServiceOntario centres
- by mail to:
Ministry of Finance
33 King St W
PO Box 620
Oshawa ON L1H 8E9
If you did not receive a return, and your Ontario payroll for the year exceeds your allowable exemption amount, call us at 1-866-ONT-TAXS (1-866-668-8297) to request a copy of your personalized return. To ensure accurate processing, please file an original, preprinted form whenever possible. Alternatively, an online generic employer health tax return is available on the ministry's website. Please access the form and follow the included instructions for completion and filing of the completed return.
Keep records and books
Employers must keep records and books of accounts with information confirming you are complying with the EHT Act and Regulations.
Visit ontario.ca/recordretention for more information.
Pay monthly instalments
Starting in the 2021 tax year, the Employer Health Tax Act requires Ontario businesses with payroll over $1,200,000 to pay monthly instalments. Prior to 2021, employers were required to make monthly instalment payments when their annual Ontario payroll exceeded $600,000. Instalment payments may be made:
- through ONT-TAXS online https://www.fin.gov.on.ca/en/services/onttaxs/index.html
- in person at certain ServiceOntario centres
- at participating Ontario financial institutions (check with your bank)
- by mail to:
Ministry of Finance
33 King St W
PO Box 620
Oshawa ON L1H 8E9
If total Ontario remuneration is greater than $1.2 million for 2021 and later
You must pay monthly instalments, and file an annual return on or before March 15th of the following calendar year.
If total Ontario remuneration is less than $1.2 million for 2021 and later years
You do not have to pay monthly instalments. File your annual return and pay EHT on or before March 15th of the following calendar year.
How to calculate the EHT instalment
The requirement for instalment payments is based on the employer's payroll from the prior year.
If you're a new employer, in your first or second year of operation, estimate your annual payroll for the current year and use that amount to determine if you will have to make instalment payments. If your estimated annual payroll is over $1.2 million ($600,000 for 2020 and prior years) then instalment payments are required as soon as your payroll exceeds the instalment threshold for the year.
Instalment Example for 2021:
If you have regular monthly payroll of $210,000 per month, you will use up your $1,000,000 exemption after 5 months. That means your payroll costs starting in May 2021 will begin to be subject to EHT . However, you do not need to start making monthly instalment payments until your payroll exceeds the instalment threshold of $1,200,000, which would happen in June. By the end of June, there would be $260,000 in taxable payroll ($210,000 monthly payroll x 6 months - $1,000,000 exemption), which should be multiplied by your EHT tax rate (1.95%). The June monthly instalment would be $5,070, due by July 15th. To calculate your instalment for each month from July onwards, take your taxable payroll amount ($210,000) and multiply it by your EHT tax rate (1.95%) for a monthly instalment of $4,095 ($210,000 × 1.95%).
Audits
Auditors may carry out audits at your place of business to ensure that you're in compliance with the EHT Act and Regulations.
Learn what to expect during an Ontario Ministry of Finance audit.
Penalties and interest
Penalties
Penalties are applied if you do not file. If you do not file your instalment, or your annual return by March 15th, you may be charged a penalty.
An instalment is considered delivered either on the date:
- the Ministry of Finance receives it
- it is submitted online in ONT-TAXS online
- a participating financial institution (check with your bank) in Ontario receives it along with your payment (annual, final and special returns are not accepted at financial institutions)
An annual return is considered delivered either on the date:
- the Ministry of Finance receives it
- it is submitted online in ONT-TAXS online
Interest charged
Interest is charged if you do not pay on time. Interest is charged on any outstanding balance on your account at a rate set by the Ministry of Finance.
Interest rates may change every 3 months, at the beginning of January, April, July and October.
Understanding your Monthly Account Summary/Notice of Assessment
In the Year - to - Date Summary section, payments are displayed in the Credit/Payment Applied column.
If your payment is greater than the Instalment Amount
The amount displayed in the Credit/Payment Applied column (A) will never exceed the Instalment Amount. If the payment amount is greater than the Instalment Amount, the credit will be displayed in the Balance column (B) of the Year-to-Date Totals. The total payment is displayed at the top of the Account Summary/Notice of Assessment (C). The credit will also be noted on line 3 of the Employer Health Tax Instalment Statement (D).
Example 1
September 2011 Instalment Amount is $1,365.00 with a $1,565.00 payment. The October Account Summary/Notice of Assessment will reflect this as follows:
If your payment is less than the Instalment Amount
If the payment amount is less than the Instalment Amount, the total amount paid will be displayed in the Credit/Payment Applied column (A) and the debit balance reflected in the Balance column of the Year - to - Date Summary (B). This debit will also be displayed in the Balance column of the Year - to - Date Totals (C) and the total payment reflected at the top of the Account Summary/Notice Assessment (D). The debit will also be noted on line 3 of the Employer Health Tax Instalment Statement (E).
Example 2
September 2011 Instalment Amount is $1,365.00 with a payment of $1,165.00 and there is not enough credit on account to cover. The October Account Summary/Notice of Assessment will reflect this as follows:
If your payment is less than the Instalment Amount but there is a credit on your account
If the payment amount is less than the Installment Amount and there is a credit on the account as shown in the previous months statement (see Example 1), this credit will be added to the payment and displayed as one total in the Credit/Payment Applied column (A). The total payment amount will be displayed at the top of the Account Summary/Notice of Assessment (B).
Example 3
October 2011 Instalment Amount is $1,560.00 with a payment of $1,360.00 and there is enough credit on the account to cover the $200.00 difference. The November Account Summary/Notice of Assessment will reflect this as follows:
Dispute an EHT assessment
If you receive an EHT assessment and you need an explanation or would like to discuss your assessment, call us at 1-866-ONT-TAXS.
Once you've spoken with Ministry of Finance staff, if you are still dissatisfied with the assessment, you can file a notice of objection.
File a Notice of Objection
- Complete a Notice of Objection form
- Mail the form – within 180 calendar days of receiving the Notice of Assessment – to:
Advisory, Objections, Appeals and Services Branch
PO Box 699, Station A
Oshawa ON L1H 8S6 - We will review the objection and notify you of a decision in writing
Please note, even if you file an objection, you still have to pay the amount on your Notice of Assessment, plus any interest.
For more information, refer to the Objection and Appeal Procedures for Ontario Taxes and Programs.
File a Notice of Appeal
If you disagree with the decision from your Notice of Objection, a Notice of Appeal may be submitted to the Ministry of Finance and to the Ontario Superior Court of Justice within 90 days of the mailing date on the Notice of Objection decision. For more information, refer to the Objection and Appeal Procedures for Ontario Taxes and Programs.
Confidential information
The Ministry of Finance is responsible for collecting and maintaining confidential employer information.
The Freedom of Information and Protection of Privacy Act prevents the Ministry of Finance from providing taxpayer information to third parties unless the ministry has the taxpayer's written consent or is authorized by the taxpayer in ONT-TAXS online. Therefore, when accountants, lawyers or other third parties make enquiries for clients, they must include the client's authorization in the request or ensure that they have been granted access by the taxpayer in ONT-TAXS online. Visit ontario.ca/taxrep for a copy of the Authorizing or Cancelling a Representative form. An employer can provide authorization and access to a representative to use ONT-TAXS online on their behalf.
For more information
Contact the Ministry of Finance at 1-866-ONT-TAXS (1-866-668-8297) or 1-800-263-7776 for teletypewriter (TTY).
Request written interpretations
Some written interpretations are included in this guide to illustrate how the Ministry has made past determinations on complex tax situations.
To request a written interpretation on a specific situation you don't see in this guide, send your request in writing to:
Ministry of Finance
Advisory, Objections, Appeals and Services Branch
Advisory Section, Employer Health Tax
33 King Street West, 3rd Floor
Oshawa ON L1H 8H5