If your registered charity has employees in Ontario, payroll costs can add up quickly. Employer Health Tax (EHT) relief can make a big difference for charities. It can fully exempt your charity from paying EHT. This is true even if your payroll is much higher than the usual small‑employer limits.
The Ontario Ministry of Finance treats registered charities differently under the EHT Act compared to for‑profit employers.
The Employer Health Tax is a provincial payroll tax paid by employers on Ontario-based salaries and wages. Most employers start paying EHT once their payroll goes over the annual exemption. Registered charities, however, get special treatment.
Ontario’s EHT rules allow registered charities to claim EHT relief no matter how large their payroll is, as long as they meet certain conditions.
To qualify for Employer Health Tax relief in Ontario, your charity must:
For-profit employers lose EHT relief if their payroll goes above $5 million. Charities do not have this limit.
Important: This relief is a tax exemption. It is not a grant or refund.
For most employers, EHT is charged after a payroll exemption (usually $1 million). This exemption is reduced or removed once payroll exceeds $5 million.
For registered charities:
Charities with many employees can save tens or even hundreds of thousands of dollars each year.
GrantHub’s eligibility matcher can assist you in checking if your charity qualifies for payroll tax relief based on your structure, province, and organization type.
EHT relief is not automatic. Your charity must claim it properly when filing.
Here’s how the process works:
The exemption is applied through your filing. It is not paid out afterward.
Assuming relief is automatic
Charities must file EHT returns properly to get the exemption.
Confusing EHT relief with a refund or grant
EHT relief lowers your tax bill. It does not result in a payment to your charity.
Ignoring associated employer rules
If your charity is connected with another group, exemption rules can change. Associated employers may need to share exemptions.
Missing filing deadlines
Late or incorrect filings can lead to penalties, even if you owe no EHT.
Q: What is the Ontario Employer Health Tax exemption?
The EHT exemption removes the need to pay Employer Health Tax on eligible payroll. For registered charities, this can cover all Ontario salaries and wages.
Q: Do registered charities get EHT relief automatically?
No. Charities must file EHT returns and identify themselves as charities to claim the exemption.
Q: Is Employer Health Tax relief refundable?
No. EHT relief is a tax exemption, not a grant or refundable credit.
Q: Do associated employers share the EHT exemption?
Yes. If your charity is linked with another employer, special rules may apply and exemptions may be shared.
Q: Is Employer Health Tax deductible for income tax purposes?
Any EHT paid is usually deductible as an expense. If you are fully exempt, there is no tax to deduct.
GrantHub tracks hundreds of grant and tax relief programs across Canada. These include payroll tax exemptions and nonprofit funding. Checking which programs match your charity’s profile can help you avoid missing out on savings.
Employer Health Tax relief can lower operating costs for registered charities in Ontario. But you must claim it correctly. Review your payroll and filing process each year. GrantHub provides information to help Canadian charities stay up-to-date about tax relief programs and funding options that support long-term sustainability.
See also:
Was this article helpful?
Rate it so we can improve our content.
Canada Proactive Disclosure Data
The Canadian government has funded over 400,000 businesses through 1.27 million grants and contributions. Check your eligibility in 60 seconds.