BC Employer Health Tax: does your small business owe it?
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Most small employers pay nothing, because the first CAD 1 million of BC pay each year is exempt. Larger payrolls pay between 1.95% and 5.85%.
Short answer: the BC Employer Health Tax (EHT) is charged on the pay an employer gives to BC employees in a calendar year. An employer has the first CAD 1,000,000 exempt (CAD 1,500,000 for a registered charity or non-profit). Between CAD 1,000,000 and CAD 1,500,000 the tax is 5.85% of the amount over CAD 1,000,000. Above CAD 1,500,000 the rate is 1.95% of all BC pay. The return is due on March 31 of the next year.
What are the rates?
| BC remuneration in the year | EHT |
|---|---|
| CAD 1,000,000 or less | Nothing. Exempt, and no tax is due |
| CAD 1,000,000.01 to CAD 1,500,000 | 5.85% of the amount over CAD 1,000,000 |
| Over CAD 1,500,000 | 1.95% of all BC remuneration |
Two illustrations with made-up payrolls. CAD 1,200,000 of BC pay gives 5.85% of CAD 200,000, which is CAD 11,700. CAD 1,550,000 of BC pay gives 1.95% of the whole amount, which is CAD 30,225, as in the province’s own example.
What counts as pay?
The tax is on remuneration: salary and wages, bonuses and commissions, vacation pay, and taxable benefits, paid to employees who report to a BC permanent establishment or who are paid through one. Where an employee lives does not matter. Employer contributions to registered pension plans and private health plans are not included. The province’s remuneration page sets out the full list.
What if I have more than one company?
Employers that are associated share one exemption. If their combined BC pay is between CAD 1,000,000.01 and CAD 1,500,000, they split the CAD 1,000,000 between them. If it is over CAD 1,500,000, none of them has an exemption. Owner-managers who run several companies need to check this before assuming each company has its own CAD 1,000,000.
Do I have to register and file?
An employer must register if its BC pay is above the exemption, and registers through eTaxBC. The return and any tax are due on March 31 of the following year, moving to the next business day if that is a weekend or BC holiday. An employer that is under the exemption this year but could pass it later is encouraged to file a nil return to keep the account active. Employers with a larger tax bill pay quarterly instalments, so check the province’s file-and-pay page for the threshold and dates in your year.
What your books need to show
- Total gross pay by month, including bonuses and taxable benefits, since the exemption is tested on the whole year.
- A running total against CAD 1,000,000, so you see the threshold coming before it is reached.
- Which other companies are associated with yours, and their BC pay.
- Any EHT paid recorded as a payroll cost, with the instalment dates in your calendar.
Does a small BC business pay the Employer Health Tax?
Usually not. An employer with BC remuneration of CAD 1,000,000 or less in the year is exempt. Associated employers share one exemption.
What is the Employer Health Tax rate?
5.85% of the amount over CAD 1,000,000 when BC pay is between CAD 1,000,000 and CAD 1,500,000, and 1.95% of all BC pay above CAD 1,500,000.
When is the Employer Health Tax due?
March 31 of the following year, or the next business day if that falls on a weekend or BC holiday.
Does pay to a business owner count?
Salary and taxable benefits paid to an owner who is an employee count. Dividends are not remuneration for the tax. The province’s page lists what is included.
Payroll basics for BC employers →
BC small business tax calendar →
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