On March 25, 2020, the Ontario government announced it is increasing the Employer Health Tax (EHT) exemption for 2020 from $490,000 to $1 million due to the special circumstances caused by the coronavirus (COVID-19) in Ontario.

Please see our other articles on COVID-19 here.

Retroactive to January 1, 2020, the EHT exemption is increasing from $490,000 to $1 million for the 2020 tax year. The EHT exemption will return to $490,000 on January 1, 2021. This change will provide quick relief to employers that pay the EHT.

Only the exemption amount is changing; eligibility for the tax exemption, tax rates and everything else remains the same. For more information on the EHT exemption, visit:

https://www.fin.gov.on.ca/en/guides/eht/foremployers.html

If a registered charity already has two or more qualifying charity campuses, it can claim the $1 million exemption for each qualifying charity campus for the 2020 tax year.  Employers, including associated groups of employers, with total Ontario remuneration over $5 million are not eligible for the increase exemption, just as they are not eligible for the exemption currently.

If your business no longer needs to make instalment payments as a result of the increased exemption amount, you do not need to contact or notify the Ministry of Finance.

If your business is still required to make EHT instalment payments, you can also benefit from additional new relief measures announced in the March 2020 Economic and Fiscal Update.

If you have already filed a final or special return for 2020, the Ministry will be reviewing all 2020 EHT returns that have already been filed and correcting the returns for the new exemption level.

If you have not paid any EHT yet for 2020 and you will not owe any EHT for 2020 because of the new exemption amount (and you are not an associated employer), you do not need to file an EHT return for 2020.

If you overpay your EHT during the 2020 tax year because of the increased EHT exemption level, you will be able to make adjustments by decreasing an instalment prior to December 2020 or by making a refund claim.

You may also carry forward your payments to the next year. This will be done automatically unless you request a refund by contacting the ministry.

Please contact any Millards location if you have questions regarding the Employer Health Tax (EHT) exemption for 2020. Like so many of the client businesses we serve, Millards Chartered Professional Accountants has adopted COVID-19 procedures and protocols to guide safe interaction with others. In an effort to maintain social distancing, please contact us via phone or email only. Please continue to visit this website for ongoing information about COVID-19 as it pertains to your accounting and financial concerns.