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EHT in practice: registered charities scenarios

Does Location X belonging to a charity qualify as charity campus?

Information and Disclaimer

*This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued.

Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter.

Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided.

In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.

Interpretation Letter* (July 2017)

I am writing in response to your request dated XXXX, for a refund of Employer Health Tax (EHT) on remuneration paid to employees reporting for work at your office located at LOCATION X. You also wish to register this location as a qualifying charity campus under the EHT program.

Facts

From the information provided, I understand the following:

  • Organization A is a registered charity in operation since XXXX with the head office located at XXXX in Ontario.
  • LOCATION X is a location for Organization A’s new program initiated through a partnership with the City of XXXX and funded from the province through the XXXXX LHIN.
  • XXXX Housing Corporation allocates a few apartments at this location for Organization A to run the program to assist with the rehabilitation of its clients
  • Clients in this program pay subsidized rent for the apartments. Organization A does not collect the rent. It goes directly to the XXXX Housing Corporation.
  • Organization A has the exclusive right and sole use for the office space located on the same floor as the program apartment units. The office is locked for staff use only and the whole program area is separated from other residents in the apartment complex with its own entrance.
  • Based on the agreement between Organization A and XXXX LHIN, Organization A provides 24/7 food and care assistance to the clients.
  • The location at LOCATION X is not publicly advertised by Organization A and clients are referred to the program by physicians.
  • Organization A indicated that the program is a supported independent living arrangement.

Applied legislation

On January 1, 2017, Ontario regulation 423/16 took effect to codify a long-standing administrative concession regarding EHT exemptions for registered charities who are eligible employers.

A registered charity that has two or more qualifying charity campuses can claim an exemption amount for each qualifying charity campus.

A qualifying charity campus is a charity campus that is publicly advertised and that has been registered with the Ministry of Finance. The requirement for public advertising does not apply to emergency shelters, group homes or intensive support residences.

A charity campus includes all of a registered charity’s locations that are in one building, or on one parcel of land (property), or on contiguous properties (properties that touch along a boundary or at a point).

A location is a place that meets all of the following criteria:

  • The place is a permanent establishment in Ontario.
  • The registered charity has the exclusive right to occupy the place at all times.
  • The place is used and occupied solely by the registered charity.
  • The place is used and occupied by the registered charity for the purpose of carrying out its charitable activities.

Conclusion

According to your agreement with XXXX Housing Corporation, Organization A has the exclusive right and sole use of the office at LOCATION X. As a result, the office at that location belongs to Organization A and can be considered as Organization A’s campus.

Unless it is an emergency shelter, group home or intensive support residence, a charity campus must be publicly advertised to be considered a qualifying charity campus able to claim the EHT exemption.

You have indicated that the LOCATION X is a supported independent living arrangement and it is not publicly advertised. As a result, this location does not meet the qualifying charity campus requirement under the Regulation and is not eligible for the EHT exemption.

To meet the “publicly advertised” requirement, the address and phone number of the location must be publicly advertised under the charity’s name, for example in telephone directories (i.e. Canada411.ca or yellowpages.ca) or on the charity’s website.

Does Organization B’s additional location qualify as a charity campus?

Information and Disclaimer

*This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued.

Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter.

Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided.

In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.

Interpretation Letter* (March 2018)

We refer to your letter dated XXXX, 2017 requesting the Ministry of Finance to register Organization B’s additional location (Location Y) as a new charity campus effective July 1, 2017.

Facts

From the information provided, we understand the following about Organization B.

  • Organization B is a registered charitable organization (#XXXXXXXXXRR0001) that provides community support services and has an independent board of directors
  • Organization B is regulated under the “XXXXXXXXXXXX Act, 2008”.
  • Organization B provides three different services at Location Y namely:
    • Program A
    • Program B
    • Program C
  • Organization B provided a copy of the funding and service agreement, floor plans, property tax assessments, a lease agreement, and by-laws relating to election or appointment of members of the board of directors

Applied legislation

On January 1, 2017, Ontario regulation 423/16 took effect to codify a long-standing administrative concession regarding Employer Health Tax (EHT) exemptions for registered charities who are eligible employers.

A registered charity that has two or more qualifying charity campuses can claim an exemption amount for each qualifying charity campus. A qualifying charity campus is a charity campus that is publicly advertised and that has been registered with the Ministry of Finance. The requirement for public advertising does not apply to emergency shelters, group homes or intensive support residences.

A charity campus includes all of a registered charity’s locations that are in one building, or on one parcel of land (property), or on contiguous properties (properties that touch along a boundary or at a point).

A location is a place that meets all of the following criteria:

  • The place is a permanent establishment in Ontario.
  • The registered charity has the exclusive right to occupy the place at all times.
  • The place is used and occupied solely by the registered charity.
  • The place is used and occupied by the registered charity for the purpose of carrying out its charitable activities.

Conclusion

New location:

  • Organization B requested that the ministry approve the location at Location Y as a qualifying charity campus for EHT purposes.  This location meets the criteria of a qualifying charity campus for tax exemption purposes because satisfactory evidence has been provided that this location is leased by the charity, is publicly advertised, and is operated as:
    • Program A
    • Program B
    • Program C

I am forwarding a copy of this letter to our Tax Office to make the required changes to your account.

Updated: April 04, 2022
Published: March 29, 2022