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Interpretation Letter 06-0176, July 2006
We refer to your letter dated XXXXXX regarding Organization A and its eligibility for the Employer Health Tax (EHT) exemption.
Eligible employers may claim an annual exemption for the purpose of calculating their EHT liability for the year.
Under the EHT Act, "eligible employer" includes an employer that is not,
- a person included in the public sector for the purposes of the Social Contract Act, 1993 by reason of any of clauses 1(a) to (i) of the Schedule to that Act and not subject to tax under Part I of the Income Tax Act (Canada),
The Social Contract Act, 1993 under Schedule 1, Clause 1, defines a public sector employer to include:
- the Crown in right of Ontario, every agency thereof, and every authority, board, commission, corporation, office or organization of persons a majority of whose directors, members or officers are appointed or chosen by or under the authority of the Lieutenant Governor in Council or a member of the Executive Council;
- the corporation of every municipality in Ontario, every local board as defined by the Municipal Affairs Act, and every authority, board, commission, corporation, office or organization of persons some or all of whose members, directors or officers are appointed or chosen by or under the authority of the council of the corporation of a municipality in Ontario;
- every corporation without share capital, the majority of whose members, directors or officers are members of, or are appointed or chosen by or under the authority of, an employer or employers described in clauses (a) to (d), and every wholly-owned subsidiary thereof;
As Organization A is required by the XXXXXX Act XXXX to have a majority of members of its board of directors appointed by the municipal government and the Lieutenant Governor in Council, it is considered to be a person in the public sector as described in clause 1(g) of the Schedule to the Social Contract Act, 1993. Therefore, it is our opinion that Organization A is not an eligible employer for EHT purposes and is not eligible for the exemption.
