Month-end close: payroll in Ontario

Ontario adds the Employer Health Tax, with a $1 million exemption for employers under $5 million of payroll, and WSIB premiums reported by payroll size.

This is part of the payroll checklist. Do the Canada steps first. Ontario adds the Employer Health Tax, filed with the Ontario Ministry of Finance, and premiums to the WSIB.

Rate. The Employer Health Tax (EHT) is 0.98% on the whole payroll when it is up to $200,000, and 1.95% over $400,000. The band is set on payroll before the $1 million exemption comes off.

Filing. EHT is an annual return, with monthly instalments only once payroll passes $1.2 million. WSIB is monthly at $1,000,000 or more of annual payroll, quarterly from $20,000, and annual below that.

Due. EHT by March 15, and instalments on the 15th of the following month. WSIB quarterly on April 30, July 31, October 31 and January 31, and annual on April 30.

The trap. A late EHT return costs 5% of the amount owing if it is $1,000 or more, plus 1% for each complete month, up to 12. From December 1, 2026, banks no longer take paper vouchers for EHT.

The month-end steps

1. Check whether the EHT exemption applies. The exemption is $1 million. An employer can claim it if its Ontario payroll, with that of any associated employers, is under $5 million, or if it is a registered charity. Above $5 million of payroll there is no exemption, except for registered charities [1] [2]. Done when the exemption decision for the client is on file.
2. Check the EHT rate. The rate follows total Ontario remuneration before the exemption comes off [1]. Done when the EHT liability account equals the year's payroll less the exemption, times the rate for the band the full payroll falls in.

For example, an employer with $1,300,000 of Ontario payroll uses 1.95%, takes off the $1,000,000 exemption, and owes 1.95% of $300,000, which is $5,850 [1]. 3. Schedule the EHT return and instalments. The annual return and any payment are due on or before March 15 [1]. A business with payroll over $1,200,000 must pay monthly instalments: once cumulative payroll passes $1.2 million, it remits the portion above the allowable exemption on the 15th of the following month [1]. From December 1, 2026, financial institutions no longer accept paper remittance vouchers for in-person bill payments, so a client that pays EHT that way needs another method [1]. Done when the March 15 date and any instalment dates are on the client's calendar. 4. Know what a late EHT return costs. The penalty is 5% of the amount owing on the due date if that is $1,000 or more, plus 1% of the amount owing for each complete month until the return is received, up to 12 months [1]. Done when the return went in by March 15, or the client has been told. 5. Find the WSIB reporting frequency. It follows annual payroll. Reporting payroll and paying premiums are two steps, and a late report and a late payment each carry a fee [3]. Done when the client's frequency matches its WSIB account.

6. Check the WSIB figures. The 2026 maximum insurable earnings is $121,700. The average premium rate is $1.23 per $100 of insurable payroll, but each employer's own rate depends on its class [4]. Done when the premium on the register uses the client's own rate and stops at the maximum.
7. Check vacation. An employee with under five years of employment is entitled to two weeks of vacation and pay of at least 4% of gross wages, not counting vacation pay. With five or more years it is three weeks and at least 6%. An employee who reaches five years partway through a year gets 6% of that whole year's wages [5]. Done when the vacation accrual uses 4% or 6% by length of service.
8. Tie the liabilities. Done when the EHT and WSIB accounts are at zero after the month's payments, or equal the amounts not yet due. The CRA remittances are on the Canada payroll page.