Clarity does not set up or assume that you will need EHT. In order to begin using EHT, a new payroll category code will need to be set up. Please note that this article is not a tax guide, and you are encouraged to seek out the Ontario Ministry of Finance guide on this tax or the advice of your tax professional.
To set up EHT in Clarity:
- Add a new payroll category:
- Select ‘Setup > Payroll Settings > Payroll categories’
- Click the ‘+’ in the upper right corner of the screen
- Set the attributes for the payroll category:
- Choose ‘Payroll Tax’ from the provided menu (A payroll tax is an employer paid tax in Clarity)
- Choose a ‘Number’ (up to 4 characters), Name (long description) and Abbreviation for the new code
- Choose ‘Provincial’ as the ‘Tax Level’. Choose ‘Ontario’ as the Province. Choose ‘Percentage’ as the ‘Type’.
- Choose whether or not you would like the tax to appear on the employee’s paystub.
- Obtain the percentage and exemption amount from the Ontario Ministry of Finance (Usually a web search can obtain this information)
- Enter the Percentage in the appropriate field
- Select the ‘Advanced’ tab.
- Under the ‘Minimum Gross’ section, choose the ‘Apply’ check box, set the ‘Minimum Gross’ to the appropriate value (450,000 for 2014) and set the ‘Based on’ field to ‘Company YTD Gross’.
- Save the new category. Clarity will ask if the code should be applied to all employees. If you choose no, then you will need to add the code to each employee on the Master Paycard screen Note: some companies that perform work in multiple provinces are required to pay EHT on ALL wages including those outside of the province of Ontario and sometimes outside of Canada. This is a special exception and the Company needs to find out for themselves if only the Ontario wages and benefits are subject to EHT.
Once the code is created, it can be used on payroll going forward.