7- Employer health tax – Ontario

A taxpayer who has employees who report to work at or are attached to a permanent establishment of the taxpayer in Ontario or are paid from that establishment, must pay the employer health tax. Contributions are based on the annual payroll, as follows:

However, private sector employers are entitled to a health tax exemption on the first $1M of remuneration.²⁸ The exemption has to be shared by associated employers. The contribution rate is determined based on an employer’s total payroll before the exemption.

²⁸ Threshold usually indexed every five years; next adjustment postponed to January 1, 2029 given that it was doubled from 2020 to 2028. The exemption is not available for private-sector employers with a payroll greater than $5M (including associated corporations).