Since the beginning of 2019, BC has been under a transition to phase out Medical Services Plan premiums. While MSP premiums were reduced by 50%, the Employer’s Health Tax (EHT) was introduced, and employers with annual payroll over $500,000 have been paying both EHT and MSP premiums. As of January 1, 2020, British Columbians will no longer pay Medical Services Plan premiums.
Taxable employers must register for the EHT by December 31, 2019 and file and pay their first return by March 31, 2020.
How the tax affects businesses:
| Annual Payroll | Tax Rate |
| $500,000 or less | 0% |
| $500,000.01 – $1,500,000 | 2.925% x (payroll – $500,000) |
| $1,500,000 + | 1.95% |
Non-profit organizations:
Charity and non-profit organizations operating in BC are assessed on payroll per location, not overall annual payroll across BC.
| Annual Payroll | Tax Rate |
| $1,500,000 or less | 0% |
| $1,500,000.01 – $4,500,000 | 2.925% x (payroll – $1,500,000) |
| $4,500,000 + | 1.95% |
The definition of “payroll” includes the following forms of compensation:
- Salary and wages
- Advances of salary and wages
- Payments for casual labour
- Bonuses, commissions and other similar payments
- Vacation payments
- Gratuities or tips paid through an employer
- Taxable allowances and benefits
- Directors’ fees paid to directors of corporations
- Amounts paid by an employer to top up benefits, such as maternity and parental leave
- Stock option benefits
- Employer-paid contributions to an employee’s RRSP
- Employer-paid group life insurance premiums
Employer paid contributions and premiums not subject to EHT include:
- Registered pension plan contributions
- Private health services plan contributions and extended health and dental premiums
- Supplementary unemployment benefit plan contributions
- Deferred profit sharing plan contributions
- Retirement compensation arrangement contributions
For employers with payroll in BC and in other provinces, payroll in other provinces is not subject to EHT.
More details about the EHT can be found here.
To estimate your employer health tax (EHT) amount, try the EHT Calculator.
Your Acera Benefits team is here to help with short and long-term strategies around the structure of your employee benefits and retirement programs. Contact an Acera Benefits Advisor for more information.