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NOTE: This article only applies to Canadian Harmony customers.

Setting Up Employer Health Tax (EHT)

Description

Employer Health Tax (EHT) is a payroll tax on remuneration paid to employees. By default, Harmony comes with a predefined EHT category. This article will be for those who require multiple EHT's setup.

Note: This article is not a tax guide. You are encouraged to seek out the Ontario Ministry of Finance or the advice of your tax professional for information about EHT and its relevance to your organization.

Important: Some companies that perform work in multiple provinces/territories 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 it is your responsibility to determine if only your Ontario wages and benefits are subject to EHT.

Prerequisites

  • Have the correct percentage and exemption amounts ready from the Ontario Ministry of Finance. You can usually find these amounts on their website.

Solution

  1. Navigate to Payroll Setup > Payroll Categories.
  2. Click the “+ New” button in the upper left corner of the page.
  3. Select “Tax” from the classification menu.
  4. On the upper left corner of the screen, select 'Provincial' from the dropdown menu. By default, it is set to 'Federal'. Select 'Ontario' in the dropdown field that appears.
  5. Select 'Percentage' as the "Basis" field.
  6. Select 'Employer' in the "Paid" by field.
  7. Enter a "Code", "Name", and "Paystub Abbreviation" that’s appropriate. If you do not want this payroll category to appear on your employees’ paystubs, toggle off "Paystub Abbreviation" and do not enter any values into the field.
  8. Enter the correct value in the "Percentage" field, as obtained from the Ontario Ministry of Finance website.
  9. Activate the toggle for the "Minimum". This will enable you to select an option from the corresponding dropdown menu to the right of it. This will be used if your company needs to claim the exemption amount.

  10. From the dropdown menu, select 'Company YTD Gross'.
  11. Click the save icon on the upper right corner of the page.
  12. Assign your newly-created EHT payroll category to the applicable employees.