Is Organization A's preschool program considered as a separat employer 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 Please be aware that any statute or policy referred to in this letter may have been superseded.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 07-0345, June 2008
We refer to your facsimile dated XXXXXX regarding Organization A’s preschool program being considered as a separate employer for Employer Health Tax (EHT) purposes.
The Ministry of Revenue 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, in telephone directories or through other information readily accessible by the public and there is supporting evidence that the location belongs to the charity (e.g. deed, 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 and our conversation, I understand that:
- Organization A is a registered charity exempt from income tax under paragraph 149(1)(f) of the Income Tax Act (Canada).
- The members of the board of directors are elected, with no members being selected by any level of government.
- Organization A has been remitting EHT under one account at the 1.95% rate.
- Organization A has a separate preschool program that is completely different from the day school operation. The preschool program has a separate payroll, fee structure and general ledger.
- The charitable registration number of the preschool program is XXXXXXXXXRP0003.
- The preschool program operates at the same head office location.
Based on the information provided, it is our opinion that the preschool program is not a separate employer for the purpose of calculating the tax rate, and is not eligible for the tax exemption. A separate program, fee structure and general ledger does not qualify the location as a separate employer for EHT purposes. The preschool program does not file its own separate registered charity information returns nor does it have its own distinct charitable registration number. The fact that the charitable registration number of the preschool program has an RP extension number which is different from the head office does not by itself qualify it as a separate employer for EHT purposes. Hence the remuneration of the preschool program must continue to be included with the total Ontario remuneration of the head office.
