The Employer Health Tax is a provincial payroll tax in provinces like Ontario and BC, levied on an employer's total payroll above an exemption threshold.
Several provinces fund health care partly through an employer payroll tax. In Ontario the Employer Health Tax applies above a payroll exemption (around $1 million for eligible private employers); British Columbia, Manitoba and Quebec have their own versions. The tax is on total remuneration, not on profit, so it applies even to a business making no money.
The exemption means many small employers pay little or no EHT, but growing payrolls cross the threshold. It is a cost that scales with headcount and wages, and it is easy to overlook when budgeting the true cost of employing staff.
An Ontario company with $1.5 million in payroll pays EHT on the amount above its roughly $1 million exemption, so on about $500,000, at the applicable rate, regardless of whether it turned a profit.
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