Estimated Contribution Rate
At the time you make your periodic remittances of the contribution to the health services fund for the year, you will not know your actual contribution rate for the year because the rate depends on your total payroll, which cannot be determined until the end of the year. Consequently, in order to calculate your periodic remittances for the year, you must use an estimated contribution rate. If you are a new employer, you must use a special method to calculate the rate.
If you are a public-sector employer, the contribution rate to calculate your periodic remittances is 4.26%.
The contribution rate for each periodic remittance made during the first two consecutive calendar years in which you are subject to the contribution to the health services fund will correspond to the rate that would apply if your total payroll for the calendar year were equal to the portion of your total payroll paid from the beginning of the year to the end of the period covered by the remittance. The contribution rate must therefore be adjusted for each remittance period on the basis of the cumulative total payroll for the preceding periods.
|Month||Total payroll for the month||Cumulative total payroll||Contribution rate1||Date of remittance|
- In this example, the employer is not entitled to the reduced rate of the contribution to the health services fund for small and medium-sized businesses in the primary and manufacturing sectors.
As long as the total payroll since the beginning of the year is not more than $1 million, the contribution rate remains 2.30%. Once the total payroll is more than $1 million (but is still less than $5 million), the contribution rate is determined according to the following formula:
For example, if your total payroll is $1,500,000, the value of S is 1.5. The contribution rate is therefore 2.55%.
- Contribution rates must be rounded off to the second decimal place. For example, if the result is:
- 2.934%, the contribution rate is 2.93%;
- 3.285%, the rate is 3.29%;
- 2.899%, the rate is 2.9%.
- Once the total payroll reaches $5 million, the contribution rate will be 4.26% until the end of the year.
Starting with the third calendar year, your contribution rate will be the rate that would apply if your total payroll for 2018 were the same as your total payroll for 2017. For example, if your total payroll for 2017 was not more than $1 million, your periodic remittances of the contribution to the health services fund for 2018 must be based on a rate of 2.30%. This is the rate that would apply for 2018 if your total payroll for 2018 were the same as your total payroll for 2017.
|Corporation's taxation year||January 1 to December 31, 2018|
|Corporation's remittance frequency for 2018||Monthly|
|Total payroll for 2017||$950,000|
|Applicable contribution rate for 2018 if the total payroll for 2018 were the same as the total payroll for 2017||2.30%|
|Salaries or wages paid in January 2018||$35,000|
Contribution to the health services fund to be paid when filing form TPZ-1015.R.14.1-V for the period from January 1 to 31, 2018: $35,000 × 2.30% = $805