Beginning January 1st, 2019, the proposed Employer Health Tax (“EHT”) took effect in BC. The implementation of this tax is aligned with the elimination of Medical Services Plan (MSP) premiums by January 1, 2020.
The EHT only applies to employers with annual B.C. payroll in excess of $500,000. B.C. payroll includes a) Any payment to employees who report to work at an employer’s permanent establishment in B.C., and b) Any payment to employees who do not report to work at an employer’s permanent establishment, but are paid from or through a permanent establishment in B.C.
Employers with B.C. payroll:
- Of $500,000 or less are not subject to EHT
- Between $500,000.01 and $1,500,000 pay tax at
- 2.925% x (Payroll -$500,000)
- Greater than $1,500,000 pay 1.95% on their total payroll
- 1.95% x Payroll
Special rules apply to charitable and non-profit organizations.
EHT for these organizations is calculated on a by-location basis, rather than total B.C. payroll. For organizations such as these with total payroll
- Of $1,500,000 or less, the EHT for the location is zero
- Between $1,500,000.01 and $4,500,000, the EHT for the location is calculated as
- 2.925% x (Payroll for the location – $1,500,000)
- Greater than $4,500,000, the EHT is 1.95% for each location
- 1.95% x Payroll for the location
Payroll amounts subject to the EHT include taxable employment income such as (amongst others):
- Salary and wages
- Payments for casual labour
- Bonuses, commissions and other similar payments
- Vacation payments
- Taxable allowances and benefits
- Directors’ fees paid to directors of corporations
- Amounts paid by an employer to top up benefits (e.g. top up for maternity or paternity leave)
- Stock option benefits
- Employer-paid contributions to an employee’s Registered Retirement Savings Plan
- Employer-paid group life insurance premiums
However, certain employer-paid items are not subject to the EHT, including:
- Registered pension plan contributions
- Private health services plan contributions
- Supplementary unemployment benefit plan contributions
- Deferred profit-sharing plan contributions
- Retirement compensation arrangement contributions
How to Register, File & Pay
Employers must register for ETH account using eTaxBC (enrollment is now active). Registration must be completed by May 15, 2019, if you are required to pay any installments in 2019. The first tax return will be due on March 31, 2020 (and each March 31 subsequently) and it must be filed electronically using the eTaxBC system.
Registration is now open. Please click here to enroll.
If, based on the prior fiscal year, your EHT would have exceeded $2,925 you must make quarterly installment payments based on the lesser of a) 25% of the previous year’s tax, and b) 25% of the current year’s estimated tax
Installment payments are due during the calendar year on June 15th, September 15th and December 15th. Any remaining amount will be paid upon filing of the EHT tax return due by March 31 of the following calendar year.
Payment to be done Online through eTaxBC or through electronic transfer funds, bill payment service and wire service through a bank or financial institution.
Talk to us
Of course, if you have any questions with respect to the implementation of this new tax, applicability to your business, or if you need further guidance on what to include and exclude in your remuneration calculations make sure to contact Rise! Our team’s knowledge covers all bases you will need covered.