The calculation of Canadian Employer Health Tax is not handled by Vertex. A special procedure to insert these Employer Taxes for the Provinces of Ontario, British Columbia, Manitoba and Newfoundland and Labrador is done at time of implementation.
By default, the Tax Record will not display, but will adhere to the following logic:
- Current year remuneration up to the Default Exemption value will result in no Employer Health Tax calculation.
- Once the remuneration exceeds the Default Exemption, the Employer Health Tax will start calculating at the provincial Default Rate.
- If amounts are over $500,000 then double check the exemptions / rates since they will need to be manually updated.
Manual rates (Override default)
By creating a new Tax Record for Canadian Employer Health Taxes for the provinces of Ontario [ON EHT ER], Manitoba [MB HELEVY ER], and British Columbia [BC EHT ER], this will override the automated logic.
- Click on the Admin Tools button
- Click on Employer
- Double click on the Employer to add
- Click on the Tax tab
- Click on the Add New button
- Select the Canadian Employer Health Tax Name
- MB HELEVY ER
- ON EHT ER
- NL HAPSET ER
- BC EHT ER
- Enter the applicable tax rate
- Employer Health tax will calculate at the rate specified
- Blank or 0 will not return any calculation
Note: NO EXEMPTION will be applied if you create a new record for Manitoba, Ontario or British Columbia. It will start calculating immediately.
- Override Exemption checkbox will allow the user to enter and Override Exemption Value [This would only be used in the case of multiple associated employers]
- Enter an applicable Exemption amount
- Enter the Start and End Dates for the year, for that rate.
- Any date after the End Date, the system will use the Logic described above.
- Go to the Logic section
- If the rate is 0 (either due to it being in the exempt tier or due to the user entering a rate of 0 in admin tools) the tax will not appear on the check.
- End Dating a record will result in the system using the calculation defined in the Canadian Employer Health Tax – Automated Logic after that end date.
By end dating a record, the system should default to the Automated Logic for the remainder of the year. End Dating a record mid-year is not retroactively applied.
- Or select the Apply Defaults button to have the system automatically populate the default rate and default exemption values for that province.
British Columbia (BC)
Default exemption: $500,000
Default rate: 2.295%
Employer Health Tax (gov.on.ca)
Default exemption: $1,000,000
Default rate: 1.95%
Province of Manitoba | finance - Health and Post-Secondary Education Tax Levy (gov.mb.ca)
Default exemption: $2,250,000
Default rate: 4.3%
Newfoundland Labrador (NL)
Health and Post Secondary Education Tax (Payroll Tax) - Finance (gov.nl.ca)
Default exemption: $2,000,000
Default rate: 2%
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