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Starting on January 1, 2019, B.C. employers with annual payroll of more than $500,000 will be subject to an additional tax, called the Employer Health Tax (EHT). The purpose of this additional tax is to transfer the Medical Service Plan tax burden from individual taxpayers to employers.

There are three tiers to the EHT, as follows:

Payroll <$500,000 (small payroll)

Employers with a small payroll of less than $500,000 will not be required to pay any EHT.

Payroll between $500,000 to $1,500,000 (mid-size payroll)

If the company’s total payroll falls within the range of $500,000 to $1,500,000 it will have to calculate the total EHT payable as: (Total B.C. payroll – $500,000 exemption) x 2.925%

Payroll of more than $1,500,000 (large payroll)

Companies with a large payroll will not be eligible for the initial $500,000 exemption, but will instead pay a tax rate of 1.95% on their entire B.C. payroll.

Large corporate groups will have to share the $500,000 exemption between all the associated corporate entities on a combined basis (i.e. each company will not get its own $500,000 limit).

Paying the EHT

Employers with payroll over $500,000 will have to register with the province through eTaxBC before May 15, 2019.

Employers will be required to remit EHT via quarterly instalments on June 15, September 15 and December 15. EHT instalments for 2019 must be calculated based on 2018’s total B.C. payroll. Each of those instalments should consist of 25% of the total EHT calculated.

Filing the EHT return

Qualifying employers must file their EHT return electronically through eTaxBC before March 31, 2020 and also pay any outstanding EHT at that time.

For an EHT calculator and additional details regarding the EHT please visit: https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax/employer-health-tax-overview

 

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The information contained in this article is for general use only and should not be viewed as professional advice. Accounting and tax rules and regulations regularly change and individuals should contact a competent professional to obtain accounting and tax advice based on their specific situation.

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