As you probably know, beginning in January 2019, B.C.’s Medical Service Plan premiums are being transferred to businesses through a new payroll tax called the Employer Health Tax. It applies to regular employers with payroll above $500,000 and charitable and not-for-profit employers with payroll over $1,500,000.

Pinnacle Professional Accounting has compiled the most relevant information from the provincial government’s website related to this new tax. Please read the information carefully to determine if your company will be affected in 2019. Registration begins on January 7, and businesses that had payroll over $500,000 in 2018 must be registered by May 15 and may need to pay installments.

If you have any questions about this new tax, don’t hesitate to give us a call at (250) 365-3631.

BC Employer Health Tax Information

Source: https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax/employer-health-tax-overview

For regular employers:

Companies with remuneration less than $500,000 pay nothing
Companies with remuneration between $500,000.01 and $1,500,000 pay a reduced amount

     (BC Remuneration – $500,000) X 2.925%

Companies with remuneration greater than 1,500,000.01 pay a calculated amount

       BC Remuneration X 1.95%

If you are associated with other employers, you must share the $500,000 exemption
If you begin or cease to have a permanent establishment in BC, the exemption amount is prorated.

For charitable and non-profit employers:

Companies with remuneration less than $1,500,000 pay nothing
Companies with remuneration between $1,500,000.01 and $4,500,000 pay a reduced amount

     (BC Remuneration – $1,500,000) X 2.925%

Companies with remuneration greater than 4,500,000.01 pay a calculated amount

   BC Remuneration X 1.95%

Employers who are associated with a charitable or non-profit employer aren’t required to share the exemption with the charitable or non-profit employer.

If you begin or cease to have a permanent establishment in BC, the exemption amount is prorated.

Instalments

To know if you need to pay by installments in the 2019 calendar year, you need to calculate your employer health tax as if the program were in place on January 1, 2018.

If your employer health tax in the previous calendar year exceeded $2,925, you must make quarterly instalment payments based on the lesser of:

– 25% of the previous year’s tax, or
– 25% of the current year’s estimated tax

Installments are due on the following dates:

– June 15
– September 15
– December 15

The remaining tax payable is due with the employer health tax return by March 31 of the following calendar year.

If you must pay installments in the 2019 calendar year, you must register by May 15, 2019.

Registration

Registration begins January 7, 2019

Employers with B.C. remuneration above the exemption amount in a calendar year must register for the employer health tax.

Employers who are taxable will first need to register for an employer health tax account using eTaxBC. The registration process will take approximately 10 to 20 minutes. Once you have registered for an employer health tax account you can enrol for access to eTaxBC, or if you already have an eTaxBC account, you can log on to add access to your employer health tax account.

If you must pay an instalment for employer health tax in the 2019 calendar year, you must register by May 15, 2019. All other employers that are required to register must register by December 31, 2019.

eTax BC Website: https://www.etax.gov.bc.ca/btp/eservices/_/

Filing

You must file your first return by March 31, 2020. If you are not required to pay by installments in 2019, your first payment will be due on this date as well.

Employer Health Tax Calculator: https://forms.gov.bc.ca/taxes/employer-health-tax-calculator/