Below is information from the BC Government website regarding the new BC Employer Health Tax. Registration begins January 7, 2019.
If you must pay instalments in the 2019 calendar year, you must register by May 15, 2019 and pay your first instalment by
June 15, 2019.
All other taxable employers must register by December 31, 2019.
You must file and pay your first return by March 31, 2020.
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.
Find out below how the employer health tax applies to:
- Employers in B.C.
- Charitable and non-profit employers in B.C.
Employers with B.C. remuneration greater than $500,000 (exemption amount) in a calendar year must register for the employer health tax.
Employers include an individual, a corporation, a partnership, a trust or a government.
Employers with B.C. remuneration:
- Of $500,000 or less don’t pay employer health tax
- Between $500,000.01 and $1,500,000 (notch rate amount) pay the reduced tax amount as calculated:
2.925% x (B.C. remuneration – $500,000)
- Greater than $1,500,000 pay the tax on their total B.C. remuneration as calculated:
1.95% x total B.C. Remuneration
Use the BC employer health tax calculator to help you estimate the tax.
If you are associated with other employers, you must share the $500,000 exemption. If you begin or cease to have a permanent establishment in B.C. during the calendar year, the exemption amount is prorated.
Note: The employer health tax is separate and distinct from remitting source deductions or MSP premiums.
The employer health tax applies differently to registered charitable and non-profit employers. See BC Employer Health Tax for Charitable and Non-Profit Employers for information.
Employers that either begin or cease to have a permanent establishment in B.C. in a calendar year are required to pro-rate the exemption amount and the notch rate amount as follows:
- To pro-rate the exemption amount:
$500,000 x number of days with a permanent establishment in B.C. / 365 days
- To prorate the notch rate amount:
$1,500,000 x number of days with a permanent establishment in B.C. / 365 days
Corporation A begins to have a permanent establishment in B.C. on September 1, 2021.
Corporation A has a permanent establishment in B.C. during the 2021 calendar year for 122 days.
Corporation A will be eligible for a maximum exemption for the 2021 calendar year of $500,000 x 122 / 365 = $167,123.
Corporation A calculates their notch rate amount at $1,500,000 x 122/365 = $501,370.
If corporation A has B.C. remuneration for the 2021 calendar year greater than $501,370, corporation A won’t be eligible for an exemption amount and will be taxed at the rate of 1.95%.
Any B.C. remuneration that is greater than $167,123 and less than or equal to $501,370 will be taxed at the notch rate of 2.925%.
If corporation A has B.C. remuneration for the 2021 calendar year that is equal to or less than $167,123, corporation A won’t pay the employer health tax.