Is a traveling amusement operation required to pay Employer Health Tax on remuneration paid to employees working outside Ontario?
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This interpretation letter was issued based on the specific circumstances or situation of a taxpayer or vendor and the law and tax policy in effect at the time the ruling was issued. Specific facts relevant to your situation may change the application of the tax. In accordance with the Freedom of Information and Protection of Privacy Act, all confidential and identifying information has been removed from this interpretation letter. Please be aware that any statute or policy referred to in this letter may have been superseded. Where a letter contains links to a publication, the link is to our current publication on that subject, regardless of the date that the ruling was originally issued, and the current publication may not be reflective of the information originally provided. In no event shall the Government of Ontario be liable for any damages whatsoever arising out of, or in connection with, the use of the information contained herein.
Interpretation Letter 07-0237, October 2007
We refer to your facsimile dated XXXXXX, regarding whether Company A is required to pay Employer Health Tax (EHT) on the total remuneration amount paid to employees reporting for work at locations outside the province of Ontario.
Employers are required to pay EHT on the remuneration paid to employees who report for work at a permanent establishment (PE) of the employer in Ontario. Remuneration paid to employees who report for work at a PE of the employer outside Ontario is not subject to EHT.
A PE includes any fixed place of business, it usually consists of a physical structure or building where employees work such as an agency, a branch, a factory, a farm, a gas well, a mine, an office, an oil well, timberland, a warehouse and a workshop.
An employer is also deemed to have a permanent establishment in the place where and at the time when the employer uses substantial machinery or equipment. Whether machinery or equipment can be described as substantial depends upon the context of the employer's business. Factors to be considered include the quantity, type, size and dollar value of machinery or equipment used in the employer's business or the extent of the employer's gross revenue generated by the use of the machinery or equipment.
The following information was provided regarding Company A’s business activities:
- Company A is a traveling amusement operation that travels throughout Ontario, Quebec, New Brunswick, Nova Scotia & Prince Edward Island
- 98% of their staff work seasonally in the summer, 2-3 staff work year round
- Company A sets up for 1-2 weeks at each festival/fair location
- A mobile trailer travels with staff to each location, Company A has a post office box in XXXXXX Ontario for mailing purposes
- Employees are paid from each location from the mobile trailer
- Company A pays a flat privilege fee or a percentage of their profits to obtain a site at each location
Based on the information provided, it is our opinion that Company A has a PE in Ontario. It is also our opinion that the amusement ride equipment and vehicles are considered substantial machinery and equipment so that Company A is deemed to have a PE in each location that it sets up for a fair, carnival or festival. Company A is not required to pay EHT on the remuneration paid to employees hired and reporting for work at the amusement sites outside of Ontario. All employees reporting for work at an Ontario location should be included in the remuneration for Company A, including employees that work year-round.
