Provincial payroll taxes explained

Just when you thought you knew all the payroll taxes… 

Paying employees? Even if you’re a small business, the amount of work that goes into following all the tax rules is huge.

Nearly 60% of your payroll processing time is spent figuring out the rules. If you can believe it, small businesses with five or fewer employees actually spend 25X more hours, up to 144 hours a year, on payroll compliance (rule following) than larger businesses with more than a hundred employees. 

The main culprit, kidnapping your time: payroll taxes. While you’re probably aware of headliners like income tax, Canada Pension Plan (CPP)/Québec Pension Plan (QPP), and Employment Insurance (EI), there are also provincial payroll taxes that often get overlooked. 

Don’t get me wrong. Hospitals and schools are good things. The issue is simply that if you’re not aware, the longer the mistakes and the consequences add up. No one slips this in while you’re learning how to calculate the slope of a graph, yet it’s one of the biggest time drains for small business owners.

What are provincial payroll taxes? 

Often called employer health or post-secondary education taxes, these taxes are collected to fund health and education programs. Again, this makes sense. 

The challenge: Each tax is different, and the burden falls to the employer to know whether or not they need to pay the tax. In some cases, such as with Ontario’s tax, you still have to register even if you meet the exemption. Then there’s Québec, where pretty much all small business employers will have to pay the tax.

And you’re supposed to have time to know all these things, all while paying attention to the pressing day-to-day issues of running your business. Ok, so which provinces have these taxes? The answer is below. 

Which provinces have employer health and post-secondary education taxes?

As of the 2025 tax year, five provinces require employers to pay a payroll tax in addition to the standard federal payroll tax withholdings:
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• British Columbia’s Employer Health Tax (EHT): Applies only to employers who’ve paid $100,000 or more in total pay to employees in the province. As part of this tax, you must also register for an employer health tax account and access to eTaxBC. Payments are made in installments throughout the current calendar year, with the final payment and reporting due by the last business day of March the following calendar year.
  
  
• Manitoba’s Health and Post-Secondary Education Tax (HE Levy): This one has a pretty high threshold. Businesses are only required to start paying this tax once they’ve paid $2.25 million in total pay or more. Qualifying businesses must also register for a tax account. Payments for the HE Levy are based on company size. Smaller employers file once a year, within 30 days of year-end. Larger employers file monthly by the 15th of the following month.
  
  
• Newfoundland and Labrador’s Health and Post-Secondary Education Tax (HAPSET): Employers start paying this provincial tax once their total annual pay reaches $2 million or more. Businesses must register for a HAPSET account, make quarterly payments, and complete a final return by March 31 of the following calendar year.
  
  
• Ontario’s Employer Health Tax (EHT): Currently, the EHT exemption threshold remains at $1 million for eligible employers. But, even if you meet the exemption, you still need to register and file to claim the exemption. If you have to pay the EHT, it’s paid in installments throughout the year, with annual reporting due by March 15 the following calendar year. 
  
  
• Québec’s Health Services Fund (HSF): In Québec, all employers contribute to the HSF. Rate reductions don’t kick in until you reach the $7.8 million mark. Because it’s required, HSF is the only one of these provincial payroll taxes that functions like all the standard payroll taxes, following your existing remittance and reporting schedule, meaning your annual reporting is due the last business day of February the following year. However, like the other taxes, you need to register and create an account with Revenu Québec (RQ) for your reporting and remitting. 

Is there a way to make provincial payroll taxes easier?

Yes. Payroll taxes, including provincial payroll taxes, are one of the main reasons small business payroll software was created. When you use these tools, you’ll be prompted to identify the taxes you need to pay during set-up. As this is their industry, your software provider will have the latest information on the taxes. Applicable rates are also built into the system and updated accordingly.

Because our founders have a background in payroll, this is one of the first tools we’ve added to our dashboard. We’re letting you use Huumans Payroll to automate payroll for up to five employees for a full year. Why five employees? That’s the average number of employees most Canadian small businesses have. Why are we making it so inexpensive? Because we want you to have this solution so you can focus on running and growing your business, not registering for taxes in five different provinces. ‍

Sick of payroll pain? Get relief. 

Resources 

While we’ve linked to the resources throughout the piece, here’s a quick recap of top links for more information on federal and provincial payroll taxes. 

Huumans blog

• What are payroll taxes and how do they work?
• What’s the difference between income taxes and payroll taxes?
• How does automated payroll help?

Provincial payroll tax information 

• British Columbia’s Employer Health Tax
• Manitoba’s Health and Post-Secondary Education Tax
• Newfoundland and Labrador’s Health and Post-Secondary Education Tax
• Ontario’s Employer Health Tax
• Québec’s Health Services Fund 

FAQs

Do all provinces charge employer health or post-secondary education taxes?

No. Only British Columbia, Manitoba, Newfoundland and Labrador, Ontario, and Québec charge them.

Do employees pay these taxes?

No. These are employer obligations, meaning the employer foots the costs. Nothing is withheld from employee earnings. 

How can I make sure I’m following the right rules?

Do your best to stay informed, partner with an accountant or bookkeeper (or both), and use payroll software.  

Fine print changes all the time. We do our best to keep things accurate and helpful, but this blog doesn’t replace your accountant, bookkeeper, or lawyer.

If you catch something off, let us know and we’ll fix it. And if we link to other sites, that’s just us sharing resources — what they say is on them, not us.