Employer Health Tax Introduced

Beginning in January 2019, the provincial government will introduce a new Employer Health Tax (EHT).

The EHT will replace the Medical Services Plan, which will be eliminated by January 1, 2020.

Businesses who have payroll costs of less than $500,000 will not have to pay any of the new EHT. Employers who have payroll costs of over $1.5 million will have to pay EHT of 1.95% of these payroll costs. Employers with payroll costs between $500,000 and $1.5 million will pay EHT of 2.925% on payroll between $500,000 and $1,500,000.

Many employer paid benefits will be included in the calculation of the total payroll costs. For example, taxable allowances, employer paid group life insurance premiums, and contributions to an employee’s RRSP will be included in the calculation.On the other hand, employer paid payments to registered pension and deferred profit-sharing plans, as well as extended health benefits and retirement compensation arrangements, will not be included.

Charities and non-profits will have different thresholds than other entities. They will pay no EHT if their payroll is less than $1.5 million, and their top threshold at which they would pay the full 1.95% rate is $4.5 million.

Employers with payroll costs over $600,000 will have to make quarterly installments, and they will have to file and pay online. The first installment payment will be due on June 15th , 2019, and the final return will be due with payment on March 31, 2020.

Employers can begin signing up for EHT in January, 2019. The provincial government has indicated that they will provide greater detail when draft legislation is introduced this fall.

Small Businesses Untouched

Pie charts and percent

In the recent provincial budget, the provincial corporate tax rate increased from 10% to 11%. This rate applies to all companies which earn over $500,000.

For small companies who earn less than $500,000, their provincial corporate tax rate has not changed from 2.5%. Combined with the federal corporate taxes, small companies pay a total income tax rate of 13.5%.

Did You Know… BC Early Childhood Tax Benefit

Young families received attention this spring when the British Columbia Early Childhood Tax Benefit was introduced in the provincial budget. Starting April of 2015, this benefit will be paid out as a monthly credit, similar to other child tax benefits.

Parents will receive $55 per month for each of their children who are younger than six years old.

Reflecting other child tax benefit programs, the new benefit will be income-based. Once a British Columbia family’s net income exceeds $100,000, the amount of the early childhood benefit will be reduced incrementally.

HST or PST/GST? Make an informed decision.

British Columbians will be asked to make a decision this summer on whether to keep the HST or to go back to the PST/GST. The following independent report details the positive and negative of HST and is meant to help you make an informed decision.

Your decision may be further influenced by the Provincial government’s news release today to reduce the HST rate to 10%.