On May 2, 2013, the Ontario government unveiled its 2013 Budget.   The Budget focused on deficit reduction and initiatives that the Government believes will stimulate economic growth and assist those in need.  Proposed changes to the provincial Employer Health Tax (the "EHT") may have a material impact on those that carry on business in Ontario.
The Budget proposes to increase the EHT Exemption to $450,000, beginning January 1, 2014. Thereafter, the EHT Exemption will be adjusted every five years to account for the effects of inflation. Using projected inflation rates, the Government estimates that the EHT Exemption will increase to $500,000 in 2019.

The increased EHT Exemption is likely to be warmly received by many employers.  Beginning January 1, 2014, the Budget proposes that the EHT Exemption be eliminated entirely for private sector employers, including associated groups, with annual Ontario payrolls of over $5 million per year. (Registered charities will continue to be permitted to claim the EHT Exemption under the Budget proposals, irrespective of the size of a particular charity's payroll.)

The Government estimates that, while small businesses will save up to $975 per year, and approximately 12,000 small employers will no longer have any EHT liability, however more than 5,000 large employers and associated groups of employers will be required to remit up to $7,800 per year in additional EHT as a consequence of the proposed EHT amendments. These changes reflect a desire of the Government to shift the EHT burden to larger entities.

© Copyright 2013 McMillan LLP

 


Comments

10/10/2013 8:13am

Excellent and helpful post… I am so glad to left comment on this. This health tax post is very informative thanks to provide this.

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05/26/2017 1:10am

The government should continue on making changes that can make the economy grow. However, they should consider a lot of factors before approving the proposed changes. A lot of companies will have a negative reaction about this so they need to have a talk with them will be a good idea. Thank goodness the charities will still be able to claim the EHT Exemption. May the government find the right solution to increase the economy.

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