By Jeff Brocklebank.
On October 16th, 2018, Bill 44 regarding Employer Health Tax (“EHT”) was introduced in the British Columbia legislature. The purpose of EHT is to help offset lost revenues by BC’s elimination of the Medical Services premiums paid by BC individuals. Bill 44, when enacted, will introduce an employer “payroll tax” starting in calendar 2019. EHT will be imposed by the Employer Health Tax Act.
The Walsh King team works with businesses in a range of industries throughout British Columbia. Our team understands how Bill 44 will affect employers. This post provides an overview of what these changes may mean to your organization.
CALCULATING EHT
EHT will apply to salaries, wages and other remuneration – the same amounts currently being used to calculate payroll source deductions – paid to employees working at and/or paid by a BC permanent establishment. For the purpose of calculating EHT, employers include individual entities and/or associated groups.
BC business employers:
EHT will be payable by employers with BC payroll of $500,000 or greater. Employers with BC payroll of $500,000 to $1,500,000 will pay an EHT rate of 2.925% on BC payroll over $500,000. Employers with BC payroll over $1,500,000 will pay an EHT rate of 1.95% on their total payroll.
BC charities and other not-for-profit organizations (collectively, “NPO”s):
EHT will be payable by NPO employers with BC payroll of $1,500,000 or greater. NPO employers with BC payroll of $1,500,000 to $4,500,000 will pay an EHT rate of 2.925% on BC payroll over $1,500,000. NPO employers with BC payroll over $4,500,000 will pay an EHT rate of 1.95% on their total payroll.
ACTION REQUIRED FOR EMPLOYERS
- Payroll amounts that will be subject to EHT should be determined.
- EHT registration begins on January 7, 2019.
- Employers are required to pay calendar 2019 instalments if they will owe greater than $2,925 annually. These employers must:
- register by May 15, 2019, and
- pay the first instalment by June 15, 2019.
- The first EHT return has a filing and tax payment deadline of March 31, 2020.
The EHT Act imposes penalties for late or missed filings and interest on outstanding instalments or other balances payable.
ADDITIONAL GUIDANCE AND INFORMATION
The BC government has provided an EHT overview at https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax. This includes EHT calculators to help estimate the required tax payments, additional guidance on what constitutes a permanent establishment, association rules, and other useful information.
If you have questions or concerns about how EHT will affect your business, please contact us. The Walsh King team can help.
Posted in Tax Legislation
