Ontario Employer Health Tax: Exemption, Rates, and Filing Deadlines

The Ontario Employer Health Tax is a self-assessed payroll tax owed by employers who pay remuneration to employees reporting for work at a permanent establishment in the province. Eligible private-sector employers can exclude the first $1,000,000 of annual Ontario payroll, and rates on the taxable portion run from 0.98% to 1.95% depending on total remuneration. No one sends you a bill: you calculate what you owe, file a return, and pay.¹

Who Owes the Tax

Any person or organization that pays remuneration to an employee reporting for work at a permanent establishment in Ontario owes EHT. A permanent establishment is a fixed place of business — an office, warehouse, factory, or retail location.

An employer outside Ontario can still owe EHT on wages paid to employees attached to Ontario operations. The Ministry of Finance looks at where the employee’s supervisor works, where instructions originate, and where the employee submits expenses or attendance records.²

A home office generally is not treated as the employer’s permanent establishment. It can qualify only if all of these apply: the home is used regularly and continuously for important business functions including in-person client meetings; the employer requires the employee to maintain the office and pays the related expenses; and the office is publicly identified with the employer through signage, website listings, or directory entries.² Most work-from-home setups will not clear that bar. The common situation is a remote employee who reports to a supervisor at the employer’s Ontario office; the employee is considered attached to that office, and the wages are subject to EHT.

The $1 Million Exemption

For 2020 through 2028, eligible private-sector employers pay no EHT on the first $1,000,000 of total Ontario remuneration each year.³ A business with $1,400,000 in Ontario payroll owes EHT only on the $400,000 above the exemption. Stay at or below $1,000,000 and you owe nothing.

Associated Employers Share One Exemption

Corporations that are associated must share a single $1,000,000 exemption across the whole group. The members sign a written agreement allocating pieces of the exemption among themselves and file the Associated Employers Exemption Allocation form with the Ministry of Finance by March 15. Every member must be listed on the form, including those with no payroll or no allocation. If the Ministry does not receive a completed form, the exemption is denied for every member.⁴ Missing that one form wipes out the exemption for the entire corporate family.

Public Sector Employers Are Excluded

Federal, provincial, and municipal governments, universities, colleges, school boards, and hospitals do not get the exemption. They pay EHT on Ontario payroll from the first dollar.³

Registered Charities

A registered charity that qualifies as an eligible employer can claim the $1,000,000 exemption even if its total payroll exceeds $5 million. A charity with two or more qualifying campuses can claim a separate exemption of up to $490,000 per campus, based on payroll paid to employees who report to that campus. The charity must be registered with the Canada Revenue Agency under the Income Tax Act; being a not-for-profit is not enough on its own.⁵

What Counts as Remuneration

Total Ontario remuneration is broader than salary. It includes:

Wages and salary
Bonuses, taxed in the year paid or deemed paid
Taxable allowances and benefits, such as car allowances or housing benefits
Directors’ fees
Vacation pay, taxed in the year paid out
Payments to former employees, including severance and retiring allowances
Casual labour payments
Top-up payments that supplement government benefits such as Employment Insurance⁶

Remuneration is added up before the exemption is subtracted. The total sets your rate; then you deduct the exemption to find the taxable amount.¹

Rates and How To Calculate

The EHT has nine rate tiers, keyed to total Ontario remuneration before the exemption:¹

Up to $200,000: 0.98%
$200,000.01 to $230,000: 1.101%
$230,000.01 to $260,000: 1.223%
$260,000.01 to $290,000: 1.344%
$290,000.01 to $320,000: 1.465%
$320,000.01 to $350,000: 1.586%
$350,000.01 to $380,000: 1.708%
$380,000.01 to $400,000: 1.829%
Over $400,000: 1.95%

This is not an income-tax-style bracket system. The single rate for your total remuneration applies to your entire taxable amount after the exemption. An employer with $1,300,000 in Ontario remuneration falls in the “over $400,000” tier at 1.95%. Subtract the $1,000,000 exemption and multiply: $300,000 × 1.95% = $5,850 in EHT.¹

Registering for an EHT Account

You need to register if you are not eligible for the exemption or if your payroll exceeds your exemption amount. Registration is available online, by phone at 1-866-ONT-TAXS (1-866-668-8297), or in person at a ServiceOntario centre. There is no paper registration form to mail in.¹

Have this information ready before you start:

Legal name and trade name of the business
Business and mailing addresses
Telephone and fax numbers
Name of a contact person or authorized representative
Payroll start date and payroll frequency
Federal Business Number
Employer type: associated, multiple accounts, or public sector

Once you are registered, the Ministry of Finance begins mailing personalized annual returns.¹

Filing and Payment Deadlines

How you pay depends on the size of your Ontario payroll.

Annual Filers ($1.2 Million or Less)

If your total Ontario remuneration is $1,200,000 or less, you file an annual return and pay the full EHT owing by March 15 of the following year. You can file through the ONT-TAXS online portal, the separate EHT Annual Return Portal (no login required), in person at certain ServiceOntario centres, or by mail to the Ministry of Finance at 33 King Street West, PO Box 620, Oshawa, ON L1H 8E9.¹

Monthly Instalment Filers (Over $1.2 Million)

If your total Ontario remuneration exceeds $1,200,000, you pay monthly instalments, each due by the 15th of the month after the payroll month. Instalments are not required until your cumulative payroll for the year actually crosses $1,200,000, so employers just above that line often start instalments partway through the year. New employers in their first or second year base the instalment requirement on an estimate of their annual payroll. Payments can be made through ONT-TAXS online, online banking, in person at participating financial institutions or ServiceOntario centres, or by mail. Monthly filers still owe an annual return by March 15.¹

Penalties and Interest

Missing an EHT deadline gets expensive quickly, and the amounts stack on top of the tax you already owe.

Late Annual Returns

When an annual return is late and the balance owing is $1,000 or more, the penalty is 5% of the balance due on the deadline, plus 1% for each complete month the return remains outstanding, up to 12 months. For an employer who has already been penalized for late filing in any of the previous three years and has received a demand for the return, the penalty doubles: 10% plus 2% per complete month, up to 20 months.¹

Late Monthly Instalments

Failing to submit a monthly remittance statement on time carries a penalty of 5% of the instalment owing on the due date, provided that amount is $1,000 or more.¹

False Statements

Knowingly making an incorrect statement or omitting information on a return carries a penalty of 25% of the additional tax found to be payable.¹

Interest and Broader Non-Compliance

Interest on overdue balances compounds daily, and the rate resets quarterly. For April to June 2026, the rate is 7%.⁷ If a due date lands on a weekend or holiday, payment is due the next business day. An employer who fails to comply with any provision of the Employer Health Tax Act can also be convicted of an offence carrying a fine of up to $5,000 per day the violation continues.¹

Disputing an Assessment

If you receive an assessment you disagree with, start by calling the Ministry of Finance at 1-866-ONT-TAXS. Many disputes are resolved on the phone.

If that does not settle it, you can file a Notice of Objection within 180 days of the date on the Notice of Assessment or Re-Assessment. Filing an objection does not pause your obligation to pay the assessed amount; interest keeps accruing while the objection is under review.¹

If the objection decision goes against you, the next step is a Notice of Appeal filed with both the Ministry of Finance and the Ontario Superior Court of Justice within 90 days of the mailing date on that decision.¹

How Long To Keep Records

Keep all EHT-related books and records for at least seven years after the end of the fiscal year they relate to. That covers payroll registers, remuneration calculations, exemption allocation agreements for associated employer groups, and copies of filed returns. The seven-year rule applies across all Ontario tax statutes, including the Employer Health Tax Act.⁸ Destroy them early and you may not be able to support your filings if you are audited.

1
Government of Ontario. Employer Health Tax (EHT)
2
Government of Ontario. Employer Health Tax (EHT) – Permanent Establishment
3
Government of Ontario. Employer Health Tax (EHT) – Tax Exemption
4
Government of Ontario. Employer Health Tax (EHT) – Associated Employers
5
Government of Ontario. Employer Health Tax (EHT) – Registered Charities
6
Government of Ontario. Employer Health Tax (EHT) – Remuneration
7
Ontario Data Catalogue. Tax Interest Rates
8
Government of Ontario. Ontario’s Tax System – Retention/Destruction of Books and Records