| 19(1) | 5-8717 |
| J.D. Jones | |
| (613) 957-2104 | |
| December 14, 1989 |
Dear Sirs:
Re: Ontario Employer Health Tax Act 1989 (Bill 47)
This is in reply to your letter of September 20, 1989, wherein you requested our opinion on whether the payments of the tax imposed under the above-noted Act will be deductible from business income by the employer and whether there will be taxable benefit to employees with respect to the payment of such tax.
We have reviewed Bill 47 which received first reading in the Legislative Assembly of the province of Ontario on July 10, 1989, and it is our understanding that this Bill proposes to implement a new employee health tax to replace Ontario Health Insurance Premiums. This Act will impose a tax on employers having permanent establishments in Ontario varying in rate form 0.98% to 1.95% per year depending on the total remuneration paid in the year by the employer to his employees. The tax will be calculated by multiplying the total amount of remuneration paid by the employer to his employees in Ontario in the calendar year by the tax rate applicable to that amount of remuneration.
Based on our understanding of this proposed Act as outlined above, it is our view that this tax will be a deductible expense for income tax purposes to the employer and will not be a taxable benefit in the hands of the employees.
We trust our comments are of assistance to you.
Yours truly,
P.D. Fuocofor DirectorBusiness and General DivisionSpecialty Rulings DirectorateLegislative and IntergovernmentalAffairs Branch
c.c. Provincial and InternationalRelations Division