Episode 80: “Canadian payroll compliance” series – Employer Health Tax and Workers’ Compensation Board


 

Release date: January 23, 2017
Guest: Danny An Khoi Vu
Running time: 07:22 minutes

In this second episode of our “Canadian payroll compliance” podcast series, Danny An Khoi Vu looks at Employer Health Tax (EHT) and Workers’ Compensation issues within the context of understanding total remuneration and other factors that influence the calculation of levies and premiums for these items.


Through interviews with prominent PwC tax subject matter professionals, Tax Tracks is an audio podcast series that is designed to bring succinct commentary on tax technical, policy and administrative issues that provides busy tax professionals information they require.
 

Transcript

Canadian payroll compliance for EHT and WCB premiums

Edmond: Hi, it’s Edmond Kwan of PwC Canada, and this is our second podcast of our three-part series on Canadian payroll compliance. Today, we’re here to discuss two other key areas of focus for payroll compliance, which are the Employer Health Tax and Workers’ Compensation Board premiums.

With us today is Danny An Khoi Vu, a Manager in our Indirect Tax group in Montreal. Danny specializes in Employer Health Tax and Workers’ compensation issues.

Welcome, Danny.

Danny: Thanks, Edmond – I’m glad to be here.

Edmond: Danny, can you give us an overview of what companies should be thinking about when it comes to Employer Health Tax issues?

Danny: Sure, Edmond. The most commonly known Employer Health Tax is the Ontario EHT. However, employer health taxes are present across Canada, specifically in Ontario, Quebec, Manitoba, and Newfoundland and Labrador. They are commonly known as health levies in the payroll industry. For Ontario, it is as mentioned, the Employer Health Tax (EHT). For Quebec, it is known as the Québec Health Services Fund (QHSF). In Manitoba, it is referred to as the Manitoba Health and Post-Secondary Education Tax (MBHE). And for Newfoundland and Labrador, it is known as the Health and Post-Secondary Education Tax (HAPSET). Companies are required to submit the various forms by the prescribed deadlines to the right tax authorities.

Edmond: Wow, it seems like there are different health levies out there for different provinces! What are some of the key guidelines for the different health levies?

Danny: Excellent question, Edmond.

For certain health levies, there are threshold amounts that can exempt companies from having to report. Keep in mind that association rules, meaning the rules between related entities, do apply. For the Ontario EHT, employers are exempt if they have under $450,000 in Ontario remuneration. For Manitoba’s MBHE, employers with under $1.25 million of Manitoba payroll would be exempt. For Newfoundland and Labrador’s HAPSET, employers who have under $1.2 million of Newfoundland and Labrador payroll are exempt. Unfortunately, there is no exemption from Quebec’s QHSF unless the corporation or partnership carried out a large investment project ($200 million or more) in Québec after November 20, 2012, that may, under certain conditions, be entitled to a 10-year tax holiday.

Edmond: Besides the health levies, what should companies be looking at with respect to Workers’ Compensation Board (WCB) premiums?

Danny: For WCB premiums, it is pretty straight forward in that employers registered with WCB and paying premiums, are required to submit a report to the Workers’ Compensation Board for each province or territory in which they have employees. The provincial WCBs should communicate to employers the rate at which to calculate premiums owing.

However, what is less focused on by employers is the remuneration to be included in the calculation of the premiums. As Nicole has discussed in her earlier podcast concerning taxable benefits, it’s important to include all possible forms of remuneration in the calculation of the WCB premiums.

Similarly, employers need to ensure that the right Workers’ Compensation Maximum Assessable Amounts for a year are used. For example, all gross earnings (basic, overtime, taxable benefits, pension and other income, additional payments, etc.) are usually included as gross earnings in all provinces by companies, but some amounts, such as taxable benefits and pension and other income, may not necessarily need to be included in the assessable earnings in all provinces.

Edmond: Danny, what can employers do to make sure they capture their remuneration properly for health levies and workers’ compensation premium purposes?

Danny: Companies should ensure the T4s correctly include and report the proper elements of remuneration as they are the base for calculating total wages and remuneration for health levies and workers’ compensation premium purposes.

However, I would generally like to refer companies to the respective health levies’ list of what is to be included in remuneration. As the health levies are aligned with the federal norms of remuneration, their respective list serves as a good basic guideline for remuneration that can be carved out by the specific WCBs afterwards.

Remuneration generally includes the following:

  • salary and wages
  • bonuses, commissions, and other similar payments
  • advances of salary and wages
  • vacation pay
  • gratuities paid through an employer
  • taxable allowances and benefits
  • directors' fees
  • payments for casual labour
  • amounts paid by an employer to top-up benefits
  • stock option benefits
  • employer-paid contributions to a Registered Retirement Savings Plan (RRSP)
  • employer-paid group life insurance premiums; and
  • any amount paid to the employee, including but not limited to, allowances, gifts, board and lodging, loans, profit sharing plans, etc.

Edmond: Danny, this is all great information. If you could leave our audience with a key message about health levies and workers’ compensation premiums, what would that be?

Danny: Well, I would say that employers should be cognisant of which provinces or territories have health levies and workers’ compensation premium requirements and their respective exemption thresholds. They should also make sure that the proper elements of remuneration are considered for purposes of calculating the health levies and workers’ compensation premiums.

Edmond: Thanks for joining us today, Danny, and providing insights on the Canadian payroll compliance issues surrounding Employer Health Tax and Workers’ Compensation Board premiums.

Danny: No problem, Edmond – it’s my pleasure.

Edmond: For any questions, Danny’s contact details are available on our PwC podcast website at www.pwc.com/ca/taxtracks. I encourage our listeners to stay tuned for upcoming podcasts in this series.
 

Contact us

Danny An Khoi Vu

Manager, Indirect Tax

Tel: +1 514 205 5135

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