Setting Up Employer Health Tax (EHT)

Description

Employer Health Tax (EHT) is a payroll tax on remuneration paid to employees. If you are required to pay EHT, you will need to manually create a new payroll category. Harmony will not assume that you require EHT in your payroll.

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.
   Note: The "Code" field can only be up to four characters long.
8. Enter the correct value in the "Percentage" field, as obtained from the Ontario Ministry of Finance website.
9. Activate the toggle for the "Maximum". This will enable you to select an option from the corresponding dropdown menu to the right of it.
   
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. For more information on how to assign payroll categories to your employees, refer to your Harmony User Manual. Once you have completed this step, you can use this in your pay runs going forward.