Employer Health Tax
In 2018 the BC government passed Bill 44, the Employer Health Tax Act (EHTA) effective as of January 1, 2019. The tax is based on wage costs reported on the annual T4 summary. Below is a summary of the requirements for employers under the act.
The tax applies to companies with total wages and benefits paid to or on behalf of employees over $500,000 during a calendar year.
Wages and benefits include all payments, benefits and allowances by an employee that would be included in Box 14 of their T4; including without limitation;
Salaries, and wages including tips and gratuities paid through an employer
Employer-paid contributions to an employee’s registered retirement savings plan
Commissions and other similar amounts fixed by reference to the volume of sales made or contracts negotiated
Any amount paid to a trustee or custodian for the benefit of the employee under an employee’s profit-sharing plan, employee benefit plan, employee trust or salary deferral arrangement.
If an employer has a location outside of British Columbia, the remuneration paid to or on behalf of an employee for work at an establishment in British Columbia at any time during the calendar year includes all remuneration paid during the calendar year unless the employee reported to a location of the employer outside of British Columbia for all or substantially all of the calendar year.
Companies that are associated for corporate tax purposes are also associated under the EHTA and the $500,000 limit includes all remuneration for the associated group. This does not apply to businesses associated with a charity or non-profit employer.
If instalments are required, businesses are required to register by May 15, 2019.
If there are no instalment requirements, employers must apply on or before December 31st of the first calendar year in which they are liable to pay tax.
Instalments are required if the EHTA amount to be paid is greater than $2,925.
Instalments are required for 2019 and are based on the lesser of:
25% of the tax that would have been owed for 2018 if the EHTA was in force January 1, 2018 or
25% of the current year’s estimated tax
The instalment due dates are June 15, September 15, and December 15, with the final balance due by March 31 of the following year
Employers must file their first annual return for the 2019 calendar year on or before March 31, 2020.
For companies with total wage costs over $500,000 but equal to or under $1,500,000 the tax payable is 2.925% of the amount by which the total wage costs paid exceeds $500,000. For example, a company with total wage costs of $735,500 would owe $6,888.38; ($735,500-$500,000) x 2.925%.
For companies with total wage costs over $1,500,000 the rate is 1.95% of the total wage costs.
Charities and Non-profit organizations
For employers of a charity or non-profit, the wage exception limit is $1,500,000.
For wage costs over $1,500,000 but equal to or under $4,500,000 the tax payable is 2.925% of the amount by which the total wage costs exceeds $1,500,000. For example, an agency with total wage costs of $1,735,500 would owe $6,888.38 ($1,735,500- $1,500,000) x 2.925%.
For employers with total wage costs over $4,500,000, the rate is 1.95% of the total wage costs.
If a charity or non-profit has more than one qualifying location, they maybe able to claim more than one $1,500,000 exemption; details on qualifying locations can be found on the government website.
For more detailed information please visit the Employer Heath Tax Overview online @