The Government of BC has proposed a change in how our provincial healthcare coverage is funded beginning January 1, 2019. The Employer Health Tax (EHT), structured as a payroll tax effective January 1, 2019, will eventually replace Medical Services Plan (MSP) premiums that are set to expire January 1, 2020. Employers who currently pay employee MSP premiums, and have an annual payroll of over $500,000, will be faced with not only this new tax, but maintain the existing commitment to pay MSP premiums in 2019.
Registration for the employer health tax is now open. If you are required to 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 and file and pay their first return by March 31, 2020.
How the tax impacts your business:
| 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 will be 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:
- 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.
For more information, details of the legislation 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 and mitigate the strain of imposed budget decisions on B.C. businesses. This could be an opportune time to revisit your current benefits arrangement. Contact an Acera Benefits advisor for more information.