Ontario Employer Health Tax Calculation

Ontario's employer health tax is a mandatory contribution employers must make to the province's health care system. This tax supports the Ontario Health Insurance Plan (OHIP) and helps fund health care services for residents. Understanding how to calculate this tax is essential for employers to ensure compliance and budgeting.

What is Ontario Employer Health Tax?

The Ontario Employer Health Tax (EHT) is a payroll tax that employers must remit to the Ontario government. It is calculated based on the total insurable earnings of employees covered by OHIP. The tax rate is set by the provincial government and is used to fund the OHIP program.

Employers must calculate and pay the EHT on a monthly basis, typically through their payroll system. The tax is remitted to the Ministry of Finance, which then distributes the funds to the Ministry of Health for OHIP administration.

Note: The EHT rate is subject to change by the Ontario government. Always verify the current rate before making calculations.

How to Calculate Employer Health Tax

Calculating the Ontario Employer Health Tax involves several steps. First, determine the total insurable earnings for all employees covered by OHIP. Then, apply the current EHT rate to these earnings. The result is the total employer health tax that must be paid.

The calculation is typically done monthly, but some employers may choose to calculate it quarterly or annually. The key factors in the calculation include:

The total insurable earnings of all employees covered by OHIP
The current EHT rate set by the Ontario government
Any applicable exemptions or adjustments

Formula and Calculation

The basic formula for calculating Ontario Employer Health Tax is:

Employer Health Tax = Total Insurable Earnings × EHT Rate

Where:

Total Insurable Earnings is the sum of all insurable earnings for employees covered by OHIP
EHT Rate is the current employer health tax rate set by the Ontario government

The insurable earnings for each employee are calculated as follows:

Insurable Earnings = Gross Earnings - (CPP Contributions + EI Premiums)

Where:

Gross Earnings are the total earnings before deductions
CPP Contributions are the Canada Pension Plan contributions
EI Premiums are the Employment Insurance premiums

Worked Example

Let's walk through a practical example to illustrate how to calculate Ontario Employer Health Tax.

Scenario

An employer has 10 employees with the following insurable earnings:

Employee	Gross Earnings	CPP Contributions	EI Premiums	Insurable Earnings
1	$3,000	$150	$75	$2,775
2	$3,200	$160	$80	$3,040
3	$2,800	$140	$70	$2,610
4	$3,500	$175	$87.50	$3,237.50
5	$2,900	$145	$72.50	$2,682.50
6	$3,100	$155	$77.50	$2,887.50
7	$3,300	$165	$82.50	$3,052.50
8	$2,700	$135	$67.50	$2,527.50
9	$3,400	$170	$85	$3,145
10	$3,000	$150	$75	$2,775
Total	$30,400	$1,580	$790	$27,030

Assuming the current EHT rate is 1.65%, the calculation would be:

Employer Health Tax = $27,030 × 1.65% = $443.045

The employer would need to pay approximately $443.05 in employer health tax for this month.

FAQ

What is the current Ontario Employer Health Tax rate?: The current EHT rate is 1.65%. However, this rate can change, so employers should verify the current rate before making calculations.
How often is the Ontario Employer Health Tax calculated?: The EHT is typically calculated monthly, but some employers may choose to calculate it quarterly or annually depending on their payroll practices.
Who is responsible for calculating and paying the Ontario Employer Health Tax?: Employers are responsible for calculating and remitting the EHT to the Ontario government. This is usually done through the employer's payroll system.
Are there any exemptions or adjustments to the Ontario Employer Health Tax?: There are no standard exemptions for the EHT. However, employers may need to adjust their calculations for employees who are not covered by OHIP or for specific pay periods.
Where can I find more information about Ontario Employer Health Tax?: For more detailed information, employers can visit the Ontario government website or consult with a payroll professional.