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New Employer Health Tax comes into force

Employer Health Tax

British Columbia’s new Employer Health Tax came into force on January 1, 2019. The Employer Health Tax is an annual payroll tax payable by British Columbia employers. As previously reported here, the tax will offset the loss in revenue from medical service plan (MSP) premiums which are being phased out on January 1, 2020.

The Employer Health Tax applies incrementally to companies with payrolls over $500,000, increasing at $250,000 intervals. The below chart summarizes the impact of the new tax on businesses.

Annual BC PayrollAnnual TaxTax as a percent of Payroll
  $500,000 or less$0     0.00%
  $750,000$7,313     0.98%
  $1,000,000$14,625     1.46%
  $1,250,000$21,938     1.76%
  $1,500,000$29,950     1.95%
  over $1,500,000$29,250 plus 1.95% of payroll over $1.5 million     1.95%

Charitable and non-profit employers are subject to a higher exemption amount and pay the Employer Health Tax at a reduced rate.

Employers required to pay the new tax must register for an Employer Health Tax account using eTaxBC. Below is a list of important dates employers will want to keep in mind to ensure that they meet their new obligations.

DateAction
January 7, 2019Registration to pay the Employer Health Tax opens
May 15, 2019Registration deadline for employers required to pay instalments in the 2019 calendar year
June 15, 2019First instalment payment due date
December 31, 2019Deadline to register for all other taxable employers
March 31, 2020Deadline for employers to file and pay their first return

Although the tax came into force on January 1st, MSP premiums will not be eliminated until next year. Instead, MSP premiums are reduced by 50% for the 2019 calendar year. As such, employers who pay a portion of their employees’ MSP premiums remain responsible for paying their share of MSP premiums in addition to the new Employer Health Tax.

By Colin Edstrom, Pushor Mitchell LLP

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