Employer Health Tax – EHT
Effective January 1, 2019 – The Ministry of Finance has seen through the implementation of a new annual employer health tax for qualifying companies on B.C. payroll remuneration.
The employer health tax marks a new era for B.C. and is part of a series of steps undertaken by the province towards the elimination of MSP premiums after having been a part of B.C. for over a decade. MSP is currently set to be eliminated January 1st, 2020.
Qualifying Businesses
It is mandatory for all businesses that qualify for the employer health tax to both register and to make instalments for 2019 on a prospective basis. The conditions to which a business qualifies is outlined below.
1 – For Regular Business entities – Total B.C. payroll of over $500,000 per calendar year.
2 – For Registered Charities & Non-profit entities – Total B.C. payroll of over $1,500,000 per calendar year.
Please note that if your company is associated with other employers with B.C. payroll – You will be considered to share the above exemption amount. Any associated entities that have a B.C. payroll exceeding the exemption amount allocated to them will be deemed to qualify for EHT.
For entities that do not qualify – You will not be required to remit until such time that your B.C. payroll is expected to exceed the exemption amounts above.
What you need to pay
If you meet the criteria of the employer health tax, the amount you will be required to remit towards EHT will be based on a set rate contingent on total B.C. payroll remuneration.
1 – For the first $500,000 of B.C. payroll you are exempt from any payments;
2 – For B.C. payroll between $500,000 and $1,500,000 you will be taxed at a rate of 2.925% on amounts exceeding $500,000. (maximum tax of $29,250);
3 – If your B.C. payroll exceeds $1,500,000 – You will be taxed on total B.C. payroll at a rate of 1.95%.
If you would like an EHT estimate – You can use this calculator to determine a projected figure.
Note that for 2019, companies that qualify for EHT will be required to make quarterly instalments.
In the future – Quarterly instalments are required only if your previous year EHT remittance exceeds $2,925.
Important Dates
Registration is available January 7th, 2019 – Entities that qualify must register by May 15th, 2019.
If you are deemed a quarterly remitter for EHT – Instalments are due on June 15th, September 15th, & December 15th.
If you have any questions regarding the above or whether your business is required to take action – Please contact your Horizon CPA contact.
