Employer Health Tax Overview

The employer health tax is an annual tax on B.C. 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

Employers with B.C. 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 B.C. remuneration:

  • Of $500,000 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 (B.C. remuneration - $500,000)
       
  • Greater than $1,500,000 pay the tax on their total B.C. remuneration as calculated:
    • 1.95% x total B.C. Remuneration

Use the employer health tax calculator to help you estimate the tax.

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 B.C. during the calendar year, the exemption amount is prorated.

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

The employer health tax applies differently to registered charitable and non-profit employers. See Employer Health Tax for Charitable and Non-Profit Employers for information.

Part-Year Employers

Employers that either begin or cease to have a permanent establishment in B.C. in a calendar year are required to pro-rate the exemption amount and the notch rate amount  as follows:

  • To pro-rate the exemption amount:
    • $500,000 x number of days with a permanent establishment in B.C. / 365 days
       
  • To prorate the notch rate amount:
    • $1,500,000 x number of days with a permanent establishment in B.C. / 365 days

Example 

Corporation A begins to have a permanent establishment in B.C. on September 1, 2021.

Corporation A has a permanent establishment in B.C. 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 B.C. 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 B.C. 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 B.C. remuneration for the 2021 calendar year that is equal to or less than $167,123, corporation A won’t pay the employer health tax.