CDN Government Employer Mandated Health Plan Support by Province

Overview

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Definition of Employer Health Plan
Taxable Remuneration for ER Health Plans
Provinces that Support an Employer Health Plan and the Name of the Plan
Provinces that do not have any responsibility regarding government health insurance plans: [Informational Only]
Employer Rates/Exemption Limits by Province / EIN
Acceptance Criteria

Definition of Employer Health Plan

• The following provinces impose a tax on employers based on the total annual salaries earned by their employees who report to work, or are deemed to report for work, at an office or other permanent location of the employer located within the relevant jurisdiction.

Taxable Remuneration for ER Health Plans

• Remuneration includes all payments, benefits or allowances that must be included in the income of an employee under sections 5, 6, or 7 of the Income Tax Act (Canada).

Generally, when you calculate your employer health tax remuneration you include the same amounts you include when calculating your source deductions under the Income Tax Act (Canada).

• Manitoba, Ontario, British Columbia, and Newfoundland and Labrador to follow the above Income Tax Act and below detailed remuneration: 

• REMUNERATION:  Includes all payments, benefits or allowances paid or credited to or on behalf of each employee when an reports for work to or who is paid by an employer through an establishment in the province and which, because of subsection 5(1) or section 6 or 7 of the Income Tax Act (Canada) are declared to be or are required to be included in income of a person for the purpose of that Act and includes

• Salary and Wages
• Bonuses
• Commissions or other similar amounts fixed by reference to the volume of sales made or the contracts negotiated
• Other taxable allowances or benefits paid or accrued to an employee or officer, but does not include a pension, annuity or superannuation benefit paid by an employer to a former employee after retirement of that employee”

Provinces that Support an Employer Health Plan and the Name of the Plan

• Ontario [ON] - Employer Health Tax [EHT]

• Rename existing ER tax deduction EHT to ON EHT ER

• Quebec [QC] - Quebec Health Savings Fund [Quebec HST is not supported by Avionte]

• Existing ER Tax Deduction is QHSF ER [no changes needed]

• British Columbia [BC] - Employer Health Tax [EHT]

• • Name this NEW ER tax deduction BC EHT ER

• Manitoba [MB] - Health and Post Secondary Education Tax Levy [HE LEVY]

• • Name this NEW ER tax deduction MB HELEVY ER

• Newfoundland and Labrador [NL] - Health and Post Secondary Education Tax Levy

• • Name this NEW ER tax deduction NL HAPSET ER

Provinces that do not have any responsibility regarding government health insurance plans: [Informational Only]

• New Brunswick
• Nova Scotia
• Prince Edward Island
• Saskatchewan
• Yukon

Employer Rates/Exemption Limits by Province / EIN

It is possible that a supplier can share the same EIN

• Ontario [ON EHT ER] 

Total Ontario Remuneration	Rate
Up to $1,000,000.00	0.00%
Over $1,000,000.00	1.95%

• British Columbia [BC EHT ER]

Total British Columbia Remuneration	Rate
Up to $1,000,000.00	0.00%
Over $1,000,000.00	5.85%

• Manitoba [MB HELEVY ER]

Total Manitoba Remuneration	Rate
Up to $2,250,000.00	0.00%
Over $2,250,000.00	4.3%

• Newfoundland and Labrador [NL HAPSET ER]

Total Newfoundland and Labrador Remuneration	Rate
Up to $2,000,000.00	0.00%
Over $2,000,000.00	2.0%

Acceptance Criteria

We will be looking at the limits from an EIN/Supplier standpoint to enforce the exemption. You can have a limit in a Supplier with an EIN or multiple suppliers can share the same EIN, in this case you would have to consider multiple suppliers to enforce the limit. 

1. Set up an employee in each of the Provinces noted above. Make sure they live and work in that Province.  
2. Review that the respective Employer Health Plans got assigned verifying the names above have landed in the Tax are under Employee > Payroll > Tax.
3. All the above plans should not calculate a tax until the entire Supplier [all its employees] has reached a Total Annual Gross Payroll of the following for each Province:

• Ontario = over $1,000,000.00
• British Columbia = over $1,000,000.00
• Manitoba = over $2,250,000.00
• Newfoundland and Labrador = over $2,000,000.00

4. You will want to test an employee or employees getting paid large checks to get them under the limits to ensure there is no tax calculated and then over the limits to see that a tax calculates using the proper rates. 
5. You will want to take an employee or employees between the tiers to see that the rate changes. Also, if a check straddles two tiers ensure the calculation uses the lower rate for its wages up to the next tier and that the higher tier uses its rate to get a combined accurate deduction amount.
6. I highly recommend testing this with a single employee and then implementing others to execute on #5. Reach out should you need some help or guidance on setting up your tests. 
7. We will be looking at the limits from an EIN/Supplier standpoint to enforce the exemption. You can have a limit in a Supplier with a single EIN or multiple suppliers can share the SAME EIN, in this case you would have to consider multiple suppliers to enforce the limit. Add a test where you have employees in two different suppliers that share the same EIN. Pay an employee a flat amount of 500,000 say in Ontario. Close the payment. In a new supplier, set up the same EIN and pay the employee a flat amount of 600,000, is the amount calculated on that payment 1.95% x $100,000 to get a tax amount of $1950? Verify the taxable gross wage is only $100,000.