Guide to Global Payroll Management - 2020 - 11-161

A Primer on Payroll in Canada
Similar to Manitoba, the HAPSET for Newfoundland and Labrador must be paid by all
employers who provide remuneration to:
 employees who report for work at an establishment of the employer in the province of
Newfoundland and Labrador; or
 employees who are not required to report for work at any permanent establishment of
the employer but who are paid their remuneration from a permanent establishment in
Newfoundland and Labrador.
The HAPSET is based on remuneration that is taxable under Sections 5 (1), 6 and 7 of the
Income Tax Act. This generally includes the remuneration reported in Box 14 of the T4 (e.g.,
salary, wages, bonuses, commissions, taxable benefits, allowances, etc.) It excludes pension
annuities, superannuation allowances, and retiring allowances.
If two or more corporations are associated with one another at any time during the year
(associated as defined in Section 256 of the Income Tax Act) then they are deemed to be a
single employer for the purposes of the payroll tax.
The payroll tax rate is 2% of taxable remuneration as defined and the exemption threshold is
$1,300,000. Once the payroll exceeds the exemption in the calendar year the employer is
required to register with the Department of Finance and submit the return starting the month that
the payroll exceeds the allocated exemption. The tax is payable on the 20th of the month
following the month in which remuneration is paid. Employers may submit their remittances
using an electronic tax service called e-Filing. More details and the application forms are
available on their website given below.
The penalties for non-compliance with the reporting and remitting requirements of the
Newfoundland and Labrador Health and Post-Secondary Education Tax are:
 failure to file the Employer Information Return by the required due date may result in a
penalty of up to $100 per day for each day the return is outstanding
 failure to remit the monthly tax by the due date will incur an interest charge at the rate of
1.2% compounded monthly for monthly amounts over $100
 failure to pay the correct tax at the time required can incur a fine of 10% of the amount of
the tax that is unpaid
An Annual Return is only required if there is a balance due to report.
EMPLOYER HEALTH TAX (ONTARIO)
Similar to Manitoba and Newfoundland and Labrador, employers in Ontario are required to pay
a payroll tax called the Employer Health Tax (EHT).
The EHT is paid by all employers who have a permanent establishment in Ontario and who:
 have employees who report for work at the Ontario permanent establishment; or
 have employees who do not report for work at a permanent establishment in Ontario but
who are paid from the Ontario permanent establishment.

© The Canadian Payroll Association/L'Association canadienne de la paie 2020 11-161
Guide to Global Payroll Management - 2020

Table of Contents for the Digital Edition of Guide to Global Payroll Management - 2020
