Your Ontario Payroll Compliance Checklist

Ontario payroll compliance comes with its own rules, from provincial Employer Health Tax to daily overtime and statutory holiday eligibility. This checklist keeps your business compliant and your team paid accurately.

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Step 1: Obtain a Payroll Account Number (BN)

Registering for a payroll account with the Canada Revenue Agency (CRA) is a crucial step for Canadian small business owners who hire employees. The process ensures you can properly deduct and remit source deductions like Canada Pension Plan (CPP), Employment Insurance (EI), and income tax

• Register for a Business Account Number (BN) if you have not already
• Gather the required documentation for your payroll account setup
• Register for a payroll account online:
• After you register
  • If eligible, you will receive a remittance form.
  • New employers are generally considered regular remitters. Your remitter schedule will default to monthly unless the CRA tells otherwise. 
• Recommended Read: How to Contact the CRA Without Losing Your Mind | Wagepoint 

Step 2: Register For Applicable Employer Tax Accounts

Employer Health Tax (EHT)

Some provinces charge a payroll tax to help fund their health services. The threshold for when a business must register and pay this tax varies across Canada, so it’s important to check the requirements for your province.

• Determine if you are required to pay EHT 
  • If yes, and your payroll for the year is expected to exceed the yearly exemption amount, you will need to apply here. 
    • 2025 exemption is $1M 
  • If you are associated with another employer/business, there are special conditions to follow here
• Review rates and calculations to determine how much EHT is due

Workers Compensation (WSIB)

All provinces and territories have a workers’ compensation board or commission that provides no-fault insurance for employees who are injured on the job. 

• Use this checklist to determine if you are required to register for a WSIB account
• Gather your business information required for signing up for WSIB online services
•  Sign up for a WSIB online services account
  • Once signed up, use the registration service to register for WSIB coverage
  • You have 10 calendar days to register from the day you hire your first employee
• Recommended Read: What You Need to Know About Employees vs. Contractors

Step 3: Set Up Your Payroll System

• Choose a payroll system to meet your needs (and keep you compliant.)
• Gather the required information to start processing payroll 
• Choose the frequency to pay your employees (weekly, biweekly, semi-monthly, or monthly)
• Sign necessary authorizations required (eg. banking/billing, ROE SAT)
• Distribute and collect TD1 and TD1ON forms from every employee
• Recommended Read: 8 Must-Ask Questions When Assessing Your Current Payroll Solution 

Step 4: Calculate Payroll Taxes

Ensure that your payroll system of choice can calculate, deduct (and remit) the following: 

• Federal Income Tax
• Canada Pension Plan (CPP/CPP2) contributions
• Employment Insurance (EI) premiums
• Provincial Employer Taxes (ex. WSIB/EHT)
• Manage additional deductions (e.g. RRSPs, 3rd party benefits) 
• Recommended Read: Payroll Remittance Schedules and Deadlines: A Complete Guide for Employers 

Step 5: Manage Important Payroll Requirements

Statutory Holidays

• Determine applicable Statutory Public Holidays for Ontario
• Review Statutory holiday entitlement requirements for your employees
• Understand Statutory holiday calculations for your employees
• Recommended Read: Statutory Holidays Pay in Canada (2025 Update) 

Overtime Rules

• Determine how overtime is calculated 
  • Note: Unless a contract of employment or a collective agreement states otherwise, an employee does not earn overtime pay on a daily basis
• Understand the 50% rule when an employee has more than one kind of work
• Understand job and industry exceptions for overtime pay
• Recommended Read: Understanding overtime pay in Canada  

Minimum Wage

• Minimum wage rates in Ontario are as follows:
  • As of September 2025
    • Students wage = $16.20 per hour
    • General wage = $17.20 per hour
  • Starting October 1, 2025 they are being increased to:
    • Students wage = $16.60 per hour
    • General wage = $17.60 per hour
• Understand the roles and industries with ESA exemptions and/or special rules
• Recommended Read: Minimum Wage by Province 2025

Vacation Pay

• Understand the different definitions of vacation pay and vacation time
  • Examples:
    •  An employee who does not complete either the full vacation entitlement year or the stub period (if any) does not qualify for vacation time under the ESA. However, employees earn vacation pay as they earn wages
  • Employees have the right to forgo vacation time. See here for more information
• Determine which wages to include in vacationable earnings 
• Determine how to calculate vacation pay based on length of employment
• Make special note of the following vacation pay rules:
  • The vacation time earned for a vacation entitlement year or a stub period must be taken within 10 months after completing that year or stub period. 
  • The employer has the right to schedule vacation as well as an obligation to ensure the vacation time is scheduled and taken before the end of that 10-month period.
• Recommended Read: Managing Vacation Pay in Canada (2025 Update) 

Termination Notice

• Determine eligibility for termination notice or pay in lieu.
  • Note: Severance pay is not the same as termination pay, which is given in place of the required notice of termination of employment.
• Determine how to calculate termination pay
• Understand your deadline for paying final wages.
  • Termination pay must be paid to an employee either seven days after the employee’s employment is terminated or on the employee’s next regular pay date, whichever is later.
• For group terminations of 50 or more employees, please see here.
• Recommended Read: What is a Record of Employment (ROE)?

Final Tips

• Use the Ontario Employment Standards Self-Service Tool to check the various types of compliance rules like minimum wage and other employment standards entitlements.
• Stay subscribed to CRA payroll updates and check here for Ontario ESA updates
• Work with a bookkeeper or accountant who is certified in Canadian Payroll
• Use payroll software to automate compliance

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Written by Bianca Mueller, CPB, PCP

Bianca is a fintech socialite, award-winning Certified Professional Bookkeeper and Wagepoint’s Community Manager. When she’s not nurturing Wagepoint’s bookkeeping and accounting partner relationships, you might find her nursing a glass of wine in her vegetable garden.

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