Let’s Break It Down: BC’s Employer Health Tax

Employer Health Tax (EHT) and How It Impacts You

Beginning January 1, 2019, the Employer Health Tax (EHT) will be applied to many BC employers.  This new annual payroll tax will help to replace B.C.’s Medical Service Plan (MSP) premiums by January 1, 2020.

On October 16, 2018, British Columbia released draft legislation for this new employer tax. Facet Advisors exists to simplify tax law implications for our clients. Let’s break down what you need to know if you are an employer in B.C.:

 

The EHT Legislation Details

Who Pays
 Employers who:
    A) Have employees who work within a B.C. business OR have employees who are paid from a B.C. business.
    B) AND have $500K+ of B.C. remuneration (salaries, wages, variable pay, taxable benefits, and stock options)

Calculation Thresholds

  • Less than $500K:  EHT Not Applicable
  • $500K – $1.5MM:  2.925% x (B.C. remuneration less $500K)
    Ie. Salaries, wages, variable pay, taxable benefits, stock options = $750K
    2.925% x ($750K – $500K)
    2.925% x $250K = $7,312 EHT
  • More than $1.5MM: 1.95% of B.C. remuneration
    Ie. Salaries, wages, taxable benefits, stock options = $2.9M
    1.95% x $2.9M = $56,550 EHT

How & When

  • January 7, 2019: Businesses can start registering via eTaxBC
  • May 15, 2019: Businesses with remuneration of over $600K MUST register.
  • June 15, 2019: First quarterly installment DUE for businesses with remuneration over $600K  
  • September 15, 2019: Second quarterly installment due for businesses with remuneration over $600K
  • December 15, 2019: Third quarterly installment due for businesses with remuneration over $600K
  • December 31, 2019: All other taxable employers MUST be registered
  • March 31, 2020: All other taxable employers MUST file their first EHT and pay any remaining EHT electronically through eTaxBC.

 

Special Circumstances

Associated Employers

Employers must calculate their total combined BC remuneration if two or more employers are associated at the end of the calendar year. For example, if there is a merger or acquisition, EHT will be calculated based on the total BC remuneration of both employers within that calendar year.   

Charities and Not-For-Profits

Charities and Not-For-Profit EHT will be calculated per location as opposed to as an entire entity, with a threshold of $1.5MM in B.C. remuneration per location.

How Facet Advisors Can Help

As Canadian and US Tax Advisors, we can help you understand how your business is impacted and help you understand the financial implications of the EHT. Contact us today if you are currently or contemplating selling into the US so we can help set you up for success.