6.4 Provincial Payroll Taxes

6.4.1 Employer Payroll Taxes

Certain Canadian provinces levy an employer payroll tax, which contributes to funding their respective healthcare (and sometimes post-secondary education) systems. The provinces that currently have employer payroll taxes are British Columbia (since 2020), Manitoba, Newfoundland and Labrador, Ontario, and Quebec.

Each province sets their rates based on the size of payroll, and most jurisdictions exempt employers whose total remuneration falls below a certain threshold. For example, an employer whose total pay for all employees is less than $500,000 is exempt from the employer health tax in BC; an employer whose total pay for all employees is less than $1 million is exempt from the employer health tax in Ontario (Government of British Columbia, 2024; Government of Ontario, 2024).

A comparison of payroll tax rates and exemptions can be found here: Provincial Payroll Tax

See the table in Chapter 8.3 Payments and Remittances for specifics and remittance due dates.

To find more information about each province’s payroll tax, explore these government resources:

Additional Quebec Employer Contributions

In addition to the Health Services Fund, Quebec employers are also responsible for two additional mandatory payroll contributions:

• Contributions to Labour Standards (Commission des normes du travail): Employers must contribute to Quebec’s labour standards fund. The rate is determined by the employer’s total worldwide payroll and employer type. The annual amount owing is calculated by multiplying the applicable rate by the Quebec annual payroll.

• Workforce Skills and Development Fund (WSD Fund): Employers with an annual payroll exceeding $2 million must invest 1% of their total payroll in eligible employee training expenditures or remit the equivalent amount to Revenu Québec.

References

CanPay Software. (n.d.). Provincial payroll tax. https://www.canpay.com/payroll-information/provincial-payroll-tax.html

Government of British Columbia. (2024). Employer health tax overview. https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax/employer-health-tax-overview

Government of Newfoundland and Labrador. (n.d.). Health and post-secondary education tax (Payroll tax). https://www.gov.nl.ca/fin/tax-programs-incentives/business/education/

Government of Ontario. (2024). Employer health tax (EHT). http://www.ontario.ca/document/employer-health-tax-eht

Manitoba.ca. (n.d.). The health and post-secondary education tax levy. https://www.gov.mb.ca/finance/taxation/taxes/payroll.html

Revenu Québec. (n.d.a). Employer contributions to the Health Services Fund. https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/calculating-source-deductions-and-employer-contributions/employer-contributions-to-the-health-services-fund/

Revenu Québec. (n.d.b). Total payroll threshold and Health Services Fund contribution rate. https://www.revenuquebec.ca/en/businesses/source-deductions-and-employer-contributions/calculating-source-deductions-and-employer-contributions/employer-contributions-to-the-health-services-fund/total-payroll-threshold-and-health-services-fund-contribution-rate/