EMPLOYER HEALTH TAX OVERVIEW

The employer health tax is an annual tax on an employer's BC remuneration paid to employees and former employees in a calendar year beginning on January 1, 2019.

Find out how the employer health tax applies to:

Employers

in BC

Charitable or non-profit employers

in BC

Note: The employer health tax is separate and distinct from remitting source deductions or MSP premiums.

EMPLOYERS

Employers with BC 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 BC remuneration:

Of $500,000 (exemption amount) 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 (BC remuneration - $500,000)

Greater than $1,500,000 pay the tax on their total BC remuneration as calculated: 1.95% x total BC remuneration

Use the employer health tax calculator to help you estimate the tax. You must register for the employer health tax if you must pay the tax.

If you are associated with other employers and the combined BC remuneration of the associated employers is between $500,000.01 and $1,500,000, you must share the $500,000 exemption. If the combined BC remuneration of the associated employers is greater than $1,500,000, there is no exemption available to any of the employers.

Note: The BC employer health tax is deductible from business income for income tax purposes.

The employer health tax applies differently to charitable or non-profit employers. See Employer Health Tax for Charitable or Non-Profit Employers for information.

Part-year Employers

Employers that either begin or cease to have a permanent establishment in BC in a calendar year are required to pro-rate the exemption amount and the notch rate amount as follows:

To prorate the exemption amount: $500,000 x number of days with a permanent establishment in BC/365 days

To prorate the notch rate amount: $1,500,000 x number of days with a permanent establishment in BC/365 days

EXAMPLE

Corporation A begins to have a permanent establishment in BC on September 1, 2021.
Corporation A has a permanent establishment in BC 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 BC 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 BC 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 BC remuneration for the 2021 calendar year that is equal to or less than $167,123, corporation A won’t pay the employer health tax.