Types of Taxes in Ontario
Deciphering the different taxes in Ontario requires both time and patience. For years Peter’s Accounting has been helping businesses large and small learn how to adhere to Ontario’s different types of taxes, and take advantage of tax breaks and credits. Taxes in Ontario are used to support education, healthcare, infrastructure, transportation, and the skilled trades. Read on to learn about some of Ontario’s most commonly experienced taxes. (Please note that this article will not address Ontario’s most prevalent taxes: GST, PST, and HST.)
If you operate a business in Ontario, it is subject to both federal and provincial corporate taxes. If your business is “incorporated” and operates from a permanent address in Ontario, then you are responsible for paying an Ontario corporate tax. If you are unincorporated, then you do not have to pay this tax. However, the individuals running these businesses do need to make sure that they are paying personal income tax.
Within the corporate tax designation, you will also need to ensure that your business is registered with a business name and corporation number. To learn more about this process, visit this website.
Employer Health Tax
If you are an employer who has employees that work from an Ontario workplace, or who are paid from your Ontario business then you will be required to pay an Employer Health Tax. The Employer Health Tax ranges from 0.98% on a payroll of less than $200,000 and up to 1.95% for a payroll exceeding $400,000. For employers who pay the EHT in one lump sum, you will need to file a return within 15 days of making the payment. Learn more about the Employer Health Tax here.
Ontario Health Premium
While residents of some provinces in Canada are required to pay monthly into health care services, Ontarians pay an annual premium that is calculated based on income. This tax is then used to operate Ontario’s health care facilities. If your personal income is more than $20,000 per year, you are required to pay the premium. You will see it on your pay stub included in the income tax payment. For those who do not have their taxes deducted directly from their payroll, the premium is paid when annual taxes are filed.
From homeowners to business owners, property tax is an annual reality. Property Tax in Ontario is calculated based on the value of the property in question, and is made up of two parts: municipal assessment, and education. Your municipality will have already established the property tax associated with where your property is located. The education portion is calculated by the Minister of Finance. This portion of your property tax is intended to fund the elementary and secondary education system in Ontario. Your municipality will prepare your property tax bill for you.