BC Employer Health Tax Overview
In the last provincial election, John Horgan and his NDP caucus, had the vision to fully eliminate Medical Services Plan (MSP) premiums by January 1, 2020. To help fund the elimination of MSP premiums, the Ministry of Finance is introducing an employer health tax (EHT).
The BC Employer Health Tax is an annual tax on B.C. remuneration paid to employees and former employees in a calendar year beginning on January 1, 2019.
If you are a small business with annual payroll of $500,000 or less, you are exempt from registering for an EHT account and are not required to pay the EHT. Please note that the $500,000 exemption amount is shared by a group of associated employers.
Generally, the remuneration subject to the employer health tax are the same amounts you would include when calculating your payroll deductions. Wages, benefits, and allowances are included in the payroll amount and non-taxable employee benefits are excluded.
For employers that are not exempt from EHT, the registration process will begin on January 7, 2019 through the eTaxBC portal. Employers that would have an amount payable in excess of $2,925 must pay instalment payments beginning in 2019. In other words, employers with payroll in excess of $600,000 will have to make instalment payments. Those required to pay instalments must register by May 15, 2019. All other employers must register by December 31, 2019. More information on filing and payments requirements, including instalment payments, can be found here.
The following graph depicts how EHT is calculated. You can also use the employer health tax calculator to help you estimate the tax.
Registered charities and non-profit organizations can find more about EHT here.
This post has been prepared for general information purposes only and does not constitute advice nor opinion. The information presented may not be applicable in all circumstances. As such, please consult one of our trusted business advisors at RHN CPA for further clarification.