Do different daycare centre locations qualify as separate employers for Employer Health Tax purposes?
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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 Please be aware that any statute or policy referred to in this letter may have been superseded.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 07-0283, July 2008
We refer to your letter of XXXXXX regarding Organization A and the Employer Health Tax (EHT).
The Ministry of Finance considers every branch, division, or parish of a religious or other registered charitable organization as a separate employer, provided the organization:
- is an eligible employer as defined by the EHT Act;
- is a registered charity under the Income Tax Act (Canada); and
- has some formalized evidence that each branch, division or parish is separate from the main body of the organization. Any one of the following factors may demonstrate this:
- a location is publicly advertised on the charity's letterhead, on business cards or in telephone directories and there is supporting evidence that the location belongs to the charity (e.g. property tax bill, lease agreement or other third party documentation); or
- a branch, division, parish, etc. has its own charitable registration number; or
- a branch, division, parish, etc. files its own 'Registered Charity Information Returns'.
From the information you provided, we understand that:
- Organization A is a registered charity headquartered in XXXXXX Ontario
- Organization A is exempt from income tax under paragraph 149(1)(f) of the ITA
- Organization A is registered for EHT, account number XXX-XXX-XXX
- Since XXXXXX, Organization A provides day care services in five different daycare centres
- Organization A is an eligible employer
- While Organization A receives assistance from the government, it is not under the control of any government body
- There are eleven board members and none of them come from a government entity
- Organization A provided a lease agreement with the Corporation of the Town of XXXXXX for premises located at XXXXXX, where the offices and the Centre XXXXXX is located, and
- For the locations in the school, Organization A provided agreements with the school board to reserve the gym and one room in each school for its use before and after school hours.
In order for a location of a registered charitable organization to be considered as a separate employer for EHT purposes, there must be supporting documentation that the location “belongs” to the charity. The charity must have exclusive use and control over the premises. In this instance, Organization A offers a part-time day care and educational program that uses shared space in various schools. It has restricted use of these areas and it does not have exclusive use and control over the premises.
Based on the information provided, it is our opinion that Organization A has only one location at XXXXXX. The locations at the schools do not qualify as separate employers for EHT purposes. Therefore, your request for a refund of EHT is denied.
