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Ministry of Finance accepting comments on new Employer Health Tax rules for charities

Health taxSpeaking of constantly changing laws and regulations; the Ontario Ministry of Finance (“MOF”) is proposing a new regulation under the Employer Health Tax Act, to include special Employer Health Tax (“EHT”) rules for registered charities. The new regulation could be effective as early as January 1, 2017.

Among other things, the regulation would:

  • Provide only one exemption for each qualifying location of a registered charity. This proposal would replace an existing preferential administrative practice, which allows registered charities to claim more than one exemption for each location in certain circumstances. (The EHT is a payroll tax. Currently, each location of a charity, which meets certain requirements, is entitled to an exemption from EHT on the first $450,000 of its payroll, regardless of payroll size. Non-charity organizations get the exemption only if their payroll is less than $5M. The impact is that registered charities pay less EHT than they otherwise would).
  • Require registered charities to file an annual return for each of its qualifying locations and to combine the payrolls of all of their qualifying locations to determine the applicable EHT rate.
  • Require some registered charities that currently make annual remittances, to change to monthly installments. However, this would not affect the amount of tax a charity would pay, and would apply only if both the combined payroll of all of its qualifying locations exceeds $600,000 and the charity has EHT payable.

The changes could increase the EHT liability and administrative burdens for some charities.

The MOF is inviting registered charities to provide comments on the proposed regulations by October 19, 2016.

Read the MOF release and provide comments here.

Apolone Gentles, JD, CPA,CGA, FCCA, Bsc (Hons)

Apolone Gentles is a CPA,CGA and Ontario lawyer and editor with over 20 years of business experience. Apolone is leveraging 20 years of business and accounting experience to build a commercial litigation practice with an emphasis on construction law. She has held senior leadership roles in non-profit organizations, leading finance, human resources, information technology and facilities teams. She has also held senior roles in audit and assurance services at a “Big Four” audit firm. Apolone has also lectured in Auditing, Economics and Business at post-secondary schools. Read more here

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