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