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Unlike the provincial motto, “Gloriosus et liber” meaning “glorious and free,” there are very few things that are free when you own and/or operate a business in Manitoba. Enter the Health and Post-Secondary Education Tax Levy (HE Levy or HAPSET).
What is the HE Levy?
According to Information Bulletin HE 002, the HE Levy is a tax imposed on remuneration, which includes employee salaries and wages, bonuses, honorariums, gratuities/tips and taxable benefits/allowances. In other words, it’s a payroll tax.
Who pays the HE Levy?
The HE Levy is a tax paid by employers who have employees who report to a permanent establishment (fixed place of business) in Manitoba or whose employees are not required to report to a permanent establishment (whether in Manitoba or not) but are paid from the permanent establishment in Manitoba.
In terms of employers, this includes any entity with employees, such as:
- The federal and provincial government
- Proprietorships, corporations, municipalities, universities, school boards, hospitals, non-profits or charities.
The HE Levy is an employer tax only. No amounts are withheld from employee paycheques.
Who or what is excluded from the HE Levy?
Self-employed and contractor earnings are excluded from the HE Levy as are pensions and annuities.
Is there a threshold and are there any exemptions?
If your company pays over $1.25 million in earnings, you are required to register for the HE Levy. There is a $1.25 million exemption on the total earnings an employer pays in a calendar year. If you pay less than that amount, you don’t have to pay the HE Levy.
Note: If an employer only has a permanent establishment in Manitoba for part of the year, the exemption must be pro-rated. If the total remuneration for the year exceeds the pro-rated amount, the employer must register for the HE Levy.
What’s the tax rate?
If your annual earnings are over $1.25 million you pay 4.3% (less any exemptions). Once you go over $2.5 million the rate is 2.15% (less the exemption).
When is it due?
Payments are due by the 15th day of the month following the month in which the earnings were paid. Payments can be made online, in-person or at certain financial institutions. Failure to pay on time may result in a 10% penalty of the unpaid balance.