Provincial & Territorial Legislation Outside Québec – Key Vocabulary

Learning Objectives

• Explain funding models for healthcare across Canadian provinces/territories (outside Québec)
• Compute employer remittances where a health-tax/levy applies
• Recognize payroll implications of provincial privacy laws
• Administer & remit the 2 % Northwest Territories/Nunavut payroll tax
• Outline payroll duties under provincial pension statutes
• Communicate cost effects of provincial/territorial taxes on budgets & net pay

Introduction & Context

• Payroll professionals must comply with BOTH federal and provincial/territorial rules
• Chapter 7 focuses on non-Québec legislation covering:
– Health-care funding mechanisms
– Privacy requirements
– NWT/NU payroll tax
– Pension standards
– Other government statutes that interact with payroll

Canada Health Act (CHA) Fundamentals

• Guarantees residents reasonable, barrier-free access to medically necessary hospital & physician services
• Key CHA criteria (not tested but useful context): Public Administration, Comprehensiveness, Universality, Portability, Accessibility
• Federal transfer payments do NOT fully fund provincial plans; provinces choose additional revenue tools → payroll implications

Provincial/Territorial Health-Care Funding Models (Payroll Impact Overview)

• General tax revenue → NO payroll impact (Alberta, NB, NWT, NS, NU, PEI, SK, YT)
• Employer-only tax/levy → Direct employer cost (BC, MB, NL, QC)
• Combo of employer tax + employee premium → Shared cost (Ontario)

General-Tax-Revenue Provinces (No Payroll Actions)

• Alberta
• New Brunswick
• Northwest Territories
• Nova Scotia
• Nunavut
• Prince Edward Island
• Saskatchewan
• Yukon

Employer Health Taxes / Levies (Province-Specific Details)

British Columbia – Employer Health Tax (EHT)

Scope & Definition

• Applies to remuneration paid to employees who:
– Report to a BC establishment, OR
– Are paid from a BC establishment while not reporting elsewhere

Remuneration Included

• All cash income (wages, overtime, vacation, bonuses, commissions)
• Taxable benefits & allowances
• Generally matches T4 Box 14 when Box 10 = “BC”

Annual Exemptions

Tax Rates

• Regular employer
– \le 1{,}000{,}000 → 0 %
– 1{,}000,000 < P \le 1,500,000 → (P-1,000,000) \times 5.85\% – >1,500,000 → P \times 1.95\%
• Charity/Non-profit
– \le 1,500,000 → 0 %
– 1,500,000 < P \le 4,500,000 → (P-1,500,000) \times 2.925\% – >4,500,000 → P \times 1.95\%

Remittance & Filing

• Annual remitter if payroll 500,000 < P \le 600,000 • Quarterly instalments if payroll >600,000 (due Jun 15, Sep 15, Dec 15, with Mar 31 true-up)
• Annual return due Mar 31 for EVERY employer (even if no tax owing)

Penalties (selected)

• Late return: 5 % of unpaid plus escalating amounts
• Missing info: 100 each omission
• Interference with audit: 100 per contravention
• Late/insufficient instalment interest: 25 % × lesser of previous-year vs current-year tax

Manitoba – Health & Post-Secondary Education Tax Levy (HE Levy)

Application Rules

• Employer has MB permanent establishment AND pays remuneration to:
– Employees reporting to MB, OR
– Employees paid from MB even if they work elsewhere

Taxable Payroll Definition

• T4 Box 14 amounts (Box 10 = “MB”) – includes salary, wages, benefits, allowances, bonuses

Rates & Formula

Administration

• Mandatory registration through TAXcess if payroll exceeds exemption
• Monthly returns due 15th of following month (electronic only)

Non-Compliance

• 10 % penalty + interest on unpaid tax; \le 200 per day for late returns; fines up to 20,000 for record offences/evasion

Newfoundland & Labrador – Health & Post-Secondary Education Tax (HAPSET)

Coverage

• 2 % tax on taxable remuneration paid from an NL establishment
• Exemption: first 2,000,000 of total annual remuneration

Formula

\text{HAPSET} = \big(Payroll - 2{,}000{,}000\big) \times 2\% (only if Payroll > exemption)

Filing

• Monthly remittances by 20th of following month
• Annual Employer Information Return due last day of February

Key Penalties

• Late return: 100 – 5,000
• 10 % fine on unpaid tax; escalating fines & potential prison for record withholding failures

Québec – (Covered in dedicated Québec chapter)

Ontario – Dual Model (Employer Health Tax + Ontario Health Premium)

Employer Health Tax (EHT)

• Applies where employees
– report to, OR are paid from, an ON establishment, OR
– work elsewhere but are attached to ON establishment

Included Remuneration

• Salaries, wages, taxable benefits, stock-option benefits, EPSP contributions, post-employment benefits (T4 + certain T4A amounts)

Annual 1,000,000 Exemption (only for ELIGIBLE employers)

• Eligible: private-sector payroll < 5M, registered charities, non-governmental organizations • Non-eligible: public sector, payroll > 5M, certain Crown agencies → no exemption

Rates

• Eligible: 1.95 % on payroll above exemption
• Non-eligible: graduated table
– Example brackets: up to 200,000 → 0.98 %; >400,000 → 1.95 % (see Exhibit 7-5)

Filing & Payments

• Payroll >1,200,000 → monthly instalments due 15th of next month
• ≤1,200,000 → annual remittance by Mar 15 next year
• Annual EHT return due Mar 15

Penalties & Interest

• First late-filing: 5 % + (1 % × # complete months, max 12)
• Repeat offences: 10 % + 2 % per month
• Interest compounded quarterly at rates set by Ontario MoF

Ontario Health Premium (Employee Tax)

• Income-tested tax collected via payroll withholding tables
• Applies to taxable income >20,000; max 900/year
• Calculated through provincial income-tax system, NOT an employer benefit cost

Provincial Privacy Legislation Impact on Payroll

• Federal PIPEDA covers only federally regulated employers; provinces may enact own laws
• Full-scale workplace privacy acts exist in AB, BC, QC

Alberta PIPA (Bill 44)

• Allows collection/use/disclosure of employee info WITHOUT consent if “reasonably required” to establish/manage/terminate employment
• Gives little control/notice to employee

British Columbia PIPA (Bill 38)

• Same “reasonably required” standard but employers must INFORM (not necessarily obtain consent) re: data collected, purposes, unless law says otherwise
• Job-applicant data must be disposed/returned if applicant not hired (unless consent to retain)

Other Provinces

• SK, MB, NL, etc. have general privacy statutes enabling civil action for invasion of privacy (e.g., surveillance, unauthorized disclosure)

Northwest Territories & Nunavut Payroll Taxes

• Employer obligation: register within 21 days of first NT/NU payroll; withhold & remit 2 % payroll tax on employee remuneration

Definition of Remuneration

• Income under ITA ss.5(1), 6, 7: wages, bonuses, commissions, allowances, taxable benefits, RRSP employer contributions, stock options, retiring allowances

“Normally Works” Test

• >50 % of workdays in NT/NU for that employer → 2 % tax on ALL annual earnings (even income earned outside territory)
• Otherwise, tax on income earned IN the territory, but ONLY if exceeds 5,000 threshold in that territory within the year

Employer Withholding Rule

• If it becomes “reasonably determinable” that 5,000 threshold will be exceeded, start withholding

Exemptions & Relief

• Religious-order vow-of-poverty income exempt
• Possible phased-withholding if one-time lump-sum would cause employee hardship (on approval)

Example Calculation

(100,000 \text{ total remuneration}) \times 2\% = 2,000 when >50 % hours worked in NT

Provincial Pension Legislation – Payroll Touchpoints

• Provincial statutes set minimum standards for registered pension plans (eligibility, vesting, locking-in, funding, disclosure)
• Payroll department responsibilities:
– Know plan eligibility & membership triggers (start deductions on time)
– Calculate contributions based on plan-defined pensionable earnings
– Remit employee contributions within statutory timelines (e.g., ON: within 30 days following month of deduction)
– Remit employer contributions within required deadlines (often same 30-day rule)
• Pooled Registered Pension Plans (PRPPs)
– Defined-contribution style, administered by licensed financial institutions, optional for employers without formal plans

Other Key Provincial Statutes Interfacing with Payroll (High-Level)

• Workers’ Compensation Acts – mandatory registration; premiums on insurable earnings
• Labour/Employment Standards – minimum wage, vac-pay, stat holidays, termination pay, etc.
• Pay Equity Acts – equal pay for equal/like work (complaint-driven enforcement)
• Provincial Jury Duty Acts – protect employment for jurors
• Québec Income Tax Act – separate withholding régime (dealt with in QC chapter)

Exam-Relevant Formulas (Quick Reference)

• BC EHT (mid-range): Tax = (Payroll - 1,000,000) \times 5.85\%
• MB HE Levy (mid-range): Tax = 0.043 \times (Payroll - 2,250,000)
• NL HAPSET: Tax = (Payroll - 2,000,000) \times 2\%
• ON Eligible EHT: Tax = (Payroll - 1,000,000) \times 1.95\%
• NWT/NU Payroll Tax: Tax = Payroll \times 2\% (if criteria met)

Ethical & Practical Implications

• Equity: Employer-paid health taxes support universal healthcare without direct cost to employees; Ontario premium introduces progressivity on personal income
• Privacy: Balancing operational need with employees’ right to know/consent; transparency builds trust
• Compliance Risk: Non-remittance penalties, reputational harm; payroll must maintain robust calendar & audit trail

Real-World Connections & Best Practices

• Multi-jurisdiction employers must segment payroll costs to budget for varying provincial taxes
• Payroll systems should flag when cumulative NT/NU earnings approach 5,000 trigger
• Maintain clear employee communication (e.g., remote hires) that employment-province codes on T4 do NOT alter health-care entitlement (insured by residence)
• Integrate payroll & pensions teams/administrators to sync contribution data and meet statutory deadlines

Common Scenario (Remote Worker Example)

• Province of employment for tax withholding ≠ province of health-care coverage
• Employee remains insured in province of residence provided CHA definition of resident is met
• Payroll should reassure employee and adjust TD1 forms if required (e.g., MB TD1 for tax credits) while leaving health-care registration unchanged

Quick Content Reviews (Chapter Check-Points)

• Funding methods & associated provinces
• Privacy statutes in AB, BC, QC – consent nuances
• NWT/NU payroll tax basics and 50 % test
• Pension remittance deadlines influence payroll schedules
• Ontario dual health-tax structure (EHT vs Health Premium)

Study Tips

• Memorize which provinces fall under each funding model
• Practise EHT/levy calculations with exemption thresholds
• Be able to explain residency vs employment location for health coverage
• Review penalty structures to understand compliance urgency