EHT Associated Employer Exemption and Instalment Calculator
One exemption is shared across every associated corporation, and it disappears entirely above a combined payroll threshold. Work out your share, the tax at the graduated rates, whether monthly instalments have started, and the dates they are due.
EHT for the year
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The Group Test and Your Exemption
| Item | Basis | Amount |
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Each Employer in the Group
| Employer | Ontario Remuneration | Exemption Share | Rate | EHT |
|---|
Instalments and Deadlines
| Item | Rule | Position |
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Points That Decide This
What to Do Next
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Disclaimer: The Employer Health Tax is imposed under the Employer Health Tax Act (Ontario) on the Ontario remuneration paid by an employer. Eligible private sector employers may claim an exemption, and associated employers must share a single exemption between them under an allocation agreement filed with the Ministry of Finance; the total claimed across the group cannot exceed the available exemption. Employers whose combined Ontario remuneration across the associated group exceeds the eligibility threshold are not entitled to the exemption at all. Tax is calculated at graduated rates determined by the employer’s total Ontario remuneration, applied to remuneration in excess of any exemption claimed, rising to the top rate above $400,000 of Ontario remuneration. Monthly instalments are required where Ontario remuneration exceeds the instalment threshold, and are generally due by the 15th day of the month following the month to which they relate, with the annual return due 15 March following the calendar year. The figures used in this calculator, being a $1,000,000 exemption, a $5,000,000 associated-group eligibility threshold, a $1,200,000 instalment threshold and graduated rates from 0.98% to 1.95%, have been supplied to us and postdate our own verification; please confirm them and the current rate table against the Ontario Ministry of Finance before relying on any figure here. Whether corporations are associated is determined under the rules referenced by the Act and is a legal question that should be confirmed rather than assumed. This page is general information, not tax advice.
One Exemption, However Many Companies
The exemption is generous enough that a single small employer often pays nothing at all. The trap is that it belongs to the group rather than to each corporation, so an owner running an opco and a holdco, or four restaurants in four companies, does not get it four times.
Associated employers share one exemption and allocate it between themselves by agreement. Each entity then calculates its own tax on its own remuneration, less whatever share it was allocated.
The most common error is each company claiming the full exemption on its own return. Nothing stops the returns being filed that way, and nothing rejects them at the time. It surfaces later as an assessment across every entity in the group, with interest running from each original due date.
Above the Group Threshold, the Exemption Disappears
The exemption is not merely shared as the group grows. Once combined Ontario remuneration across the associated employers exceeds the eligibility threshold, no member of the group can claim any part of it.
That produces a cliff rather than a taper. A group just under the threshold allocates a full exemption between its members; a group just over it gets nothing, and every dollar of remuneration above zero is taxed. Crossing that line by adding one location or one senior hire is an expensive way to grow.
| Combined Group Remuneration | Exemption Available | Effect |
|---|---|---|
| Below the exemption amount | Full, often no tax at all | Many small employers pay nothing |
| Between the exemption and the threshold | Full, shared across the group | Allocation agreement required |
| Above the eligibility threshold | None | Tax on the whole payroll, no relief |
The Rate Is Set by Your Own Payroll
Tax is charged at graduated rates, and the rate that applies is determined by the employer’s own total Ontario remuneration rather than by the amount left after the exemption. A payroll above the top band attracts the highest rate on every taxable dollar.
That interaction matters when allocating the exemption across a group. Giving a larger share to the entity with the highest rate saves more tax than splitting it evenly, because the same exempted dollar is worth more where the rate is higher.
The allocation is a real decision, not an administrative formality. Within the rules you can direct the exemption where it does the most good, and the difference across a group with uneven payrolls is worth a few minutes of arithmetic before the agreement is signed.
Association Is Wider Than Ownership
Employers are associated on tests that follow control rather than a simple shareholding percentage, and they reach through related persons. Two corporations owned separately by spouses, or a holdco with a minority stake plus an option, can be associated in ways that surprise the people running them.
Because the exemption depends on it, the association question has to be settled before the allocation is filed. A group that discovers it was associated after two years of each entity claiming a full exemption has a problem across every one of those years at once.
Instalments Start at a Threshold, Not at a Tax Amount
Monthly instalments are triggered by the level of Ontario remuneration, not by how much tax is ultimately owed. An employer crossing that threshold moves from a single annual payment to twelve monthly ones, generally due by the fifteenth of the following month.
The switch is easy to miss because nothing in the payroll system announces it. A business that grows past the threshold mid-year often keeps paying annually, and the interest accrues quietly on instalments that were never made.
| Obligation | Timing |
|---|---|
| Monthly instalment | By the 15th of the following month, where the threshold is exceeded |
| Annual return | 15 March following the calendar year |
| Final balance | With the annual return |
| Allocation agreement | Filed for the year the exemption is shared |
What Counts as Ontario Remuneration
- Salaries, wages and bonuses paid to employees who report to work in Ontario
- Taxable benefits, which is where an owner-managed group most often understates the base
- Commissions, gratuities paid through the employer and honoraria
- Certain stock option benefits
- Directors’ fees paid to individuals
- Remuneration for employees outside Ontario is excluded, which matters for a business operating in several provinces
Taxable benefits belong in the base. A group that reports only cash wages understates Ontario remuneration, which understates the tax and can also disguise a crossing of the instalment threshold. The same benefits reported on the T4 feed this calculation.
What This Calculator Does Not Cover
- Whether your corporations are actually associated, which is a legal question with a real answer that has to be determined
- Employers outside Ontario and the equivalent payroll taxes in other provinces
- Public sector and publicly funded employers, whose eligibility rules differ
- Partial years, where an employer starts or ceases during the year and the exemption is prorated
- Interest and penalties on late instalments or returns
- Objections where an assessment has already issued across a group
If more than one corporation in your group has been claiming a full exemption, that is worth quantifying now rather than at the next assessment. Our employer health tax filing service covers the association review, the allocation agreement, the instalments and the annual returns across the group.
Frequently Asked Questions
Common questions on the Ontario employer health tax across a group.
Related Calculators and Guides
More tools for Ontario employers running more than one corporation.
Settle the Association Before the Allocation
Send us the Ontario payroll for each corporation and the share registers. We will confirm which entities are associated, allocate the exemption where it saves the most, set the instalment schedule and file the annual returns across the group.