Employer health tax frequently asked questions

The following information will help answer your questions about the employer health tax:

• Registration
• Instalment payments
• Partnerships, joint ventures and cost-sharing arrangements
• Remuneration
• Reporting for work in more than one province
• Exemption amount
• Charitable or non-profit employers
• Associated employers
• B.C. employer health tax income tax deduction
• First Nations employers and employees 

Registration

If I’m an employer, who is not a charitable or non-profit employer, am I required to register for the employer health tax?

You are required to register if your B.C. remuneration reaches a certain amount for a calendar year.

Generally, if your B.C. remuneration is greater than $1,000,000 in a calendar year, you must register. If you are part of an associated group of employers or if you are a part-year employer, you may still have to register for and pay the employer health tax even if your B.C. remuneration is $1,000,000 or less.

When am I required to register for the employer health tax?

You must register by December 31 of the first calendar year you’re required to pay the employer health tax. Learn when instalment payments are due.

How do I register for the employer health tax?

You will first need to register for an employer health tax account using eTaxBC. The registration process will take approximately 10 to 20 minutes. Once your registration is processed, you will receive an employer health tax account number. An employer health tax account number is 11-characters long and will be in the following format: EHT-1234-5678.

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. You can learn more about adding your employer health tax account to eTaxBC by reviewing our eTaxBC help guide. For more information on employer health tax registration see Register for the employer health tax. 

Instalment payments

Do I need to pay my employer health tax in instalments?

You’re required to pay instalments in a calendar year if the employer health tax amount you must pay was greater than $2,925 for the previous calendar year. If the employer health tax amount you must pay is less than $2,925 you can choose to pay in instalments or make one payment when you file your employer health tax return for March 31.

How do I calculate my employer health tax instalments?

If an employer is required to make instalments for a calendar year, instalments are calculated as 25 percent of the lesser of:

• The employer’s employer health tax payable for the previous calendar year, and
• The employer’s estimated employer health tax payable for the current calendar year

How are instalments calculated if an employer starts to have a permanent establishment in B.C. after 2019?

An employer is not required to make instalments for the calendar year in which the employer starts to have a permanent establishment in B.C.

For example, if an employer starts to have a permanent establishment in B.C. in 2025, the employer will not be required to make instalments for the 2025 year. The employer may be required to make instalments for the 2026 year if the employer’s employer health tax amount is greater than $2,925 for the 2025 calendar year.

For additional information on calculating instalments, refer to the question above.

For more information on employer health tax instalments, see File and pay your employer health tax.  

Partnerships, joint ventures and cost-sharing arrangements

Is B.C. remuneration allocated to the partners of a partnership?

No. For the purpose of the employer health tax, a partnership calculates and pays its employer health tax as the employer. The employer health tax is not similar to the Income Tax Act (Canada), which calculates taxable income at the partnership level and then allocates that taxable income to be taxed at the partner level.

How is B.C. remuneration allocated in a joint venture?

A joint venture is not considered to be an employer for purposes of the employer health tax. Rather, it is the venturers individually that are considered to be the employers. The remuneration paid through the joint venture must be allocated to the individual venturers on the same basis otherwise used to allocate their revenues and expenses and is considered remuneration paid directly by the individual venturers. Each venturer is subject to the employer health tax on the venturer’s total remuneration paid in the year (including the remuneration allocated from a joint venture).

How is B.C. remuneration allocated in a cost-sharing arrangement?

A cost-sharing arrangement is an arrangement between two or more participants to share specific common operating costs, such as capital or lease costs for business furniture and equipment, rent, or utilities. A cost-sharing arrangement is common in medical practices or professional services.

A cost-sharing arrangement is not an employer for purposes of the employer health tax. Rather, it is the participants individually that are considered to be the employers. A participant includes a sole proprietor, a partnership or an incorporated professional practice.

All B.C. remuneration paid in a calendar year must be allocated to the participants according to the cost-sharing arrangement. Any participant allocated some or all of the B.C. remuneration is responsible for paying the employer health tax on that B.C. remuneration.

Remuneration

What is included in remuneration?

For the purpose of the employer health tax, remuneration includes all payments, benefits or allowances that must be included in the income of an employee under sections 5, 6, or 7 of the Income Tax Act (Canada). 

Generally, all payments, benefits or allowances that must be included in the income of an employee under sections 5, 6 or 7 of the Income Tax Act (Canada) are the same amounts that an employer is required to report on an employee’s T4 or T4A slip.

Does the employer health tax apply to remuneration paid to a former employee?

Yes, the employer health tax applies to remuneration paid to a former employee in the calendar year that the former employee was paid.

For more information on remuneration, see Employer health tax B.C. remuneration.

Reporting for work in more than one province

If an employee reports for work at their employer’s permanent establishment in B.C. for some time in a year and then at their employer’s permanent establishment that is outside of B.C. for the rest of the year, is the employee’s remuneration subject to the employer health tax?

The general rule is that if an employee reports for work at the employer’s permanent establishment that is in B.C. at any time in a year, all of that employee’s remuneration for that year should be included in the employer’s B.C. remuneration and be subject to the employer health tax.

An exception to this general rule is that if an employee reports for work at the employer’s permanent establishment that is outside of B.C. for 90 percent or more of a year, the employee’s remuneration is not considered B.C. remuneration and is not subject to the employer health tax.

Some of my employees are not B.C. residents and they regularly report for work at a permanent establishment of mine that is outside of B.C., but they come to work in B.C. for a short period of time every year. Is their remuneration subject to the employer health tax?

It depends. If the time the employees work at the permanent establishment that is outside of B.C. is 90 percent or more of a calendar year, their remuneration is not considered B.C. remuneration. In other words, if the time the employees work at the permanent establishment that is in B.C. is more than 10 percent of a year, their remuneration is considered B.C. remuneration.

For example, an employee regularly works at a permanent establishment that is outside of B.C., but in 2025, the employee works at a permanent establishment that is in B.C. from January to March. The employee’s remuneration is considered B.C. remuneration because the employee works at a permanent establishment that is in B.C. for 25 percent of the year (in other words, the employee did not work at a permanent establishment that is outside of B.C. for 90 percent or more of the year).

Exemption amount

Am I exempt from the employer health tax?

The Employer Health Tax Act does not exempt any employers. However, there is an “exemption amount” available to all employers.

Employer exemption amount

Employers with B.C. remuneration of $1,000,000 or less generally do not have to pay employer health tax. However, the exemption amount of $1,000,000 may be lower or nil where an employer is a part-year employer (began or ceased to have a permanent establishment in B.C. in the calendar year) or where an employer is part of a group of associated employers.

For more information on the employer exemption amount, see Employer health tax overview.

Charitable or non-profit employer exemption amount

For charitable or non-profit employers, the exemption amount is $1,500,000 and may be available for each qualifying location for a charitable or non-profit employer that has two or more qualifying locations.

For more information on the charitable or non-profit employer exemption amount, see Employer health tax for charitable or non-profit employers. 

Charitable or non-profit employers

If I’m a charitable or non-profit employer with two or more qualifying locations, am I required to register for the employer health tax?

Unlike other employers, the requirement of a charitable or non-profit employer to register for the employer health tax is not dependent on whether that employer must pay employer health tax.

If you’re a charitable or non-profit employer, you must register for the employer health tax if you have a total B.C. remuneration greater than $1,500,000 (in other words, the total B.C. remuneration of all qualifying locations). The $1,500,000 may be reduced for part-year employers.

For example, Charity ABC has three locations. Each location has a B.C. remuneration of $1,000,000. Since each location’s remuneration is less than the exemption amount of $1,500,000, Charity ABC does not pay employer health tax. However, all charitable or non-profit employers with a total B.C. remuneration greater than $1,500,000 must still register for the employer health tax, even if each location is exempt. Therefore, Charity ABC must register for the employer health tax.

What is a qualifying location?

A charitable or non-profit employer has a qualifying location where:

• The land or premises is or is part of a permanent establishment of the charitable or non-profit employer in B.C.
• The charitable or non-profit employer has the exclusive right to occupy the land or premises
• The land or premises is used and occupied only by the charitable or non-profit employer

A charitable or non-profit employer with two or more qualifying locations is eligible for an exemption amount of $1,500,000 million for each qualifying location.

What if a charitable or non-profit employer does not have a qualifying location or has less than two qualifying locations?

If a charitable or non-profit employer does not have a qualifying location, the charitable or non-profit employer may still be eligible for an exemption amount of $1,500,000.

A charitable or non-profit employer only has to have a qualifying location in order to claim the exemption amount for two or more qualifying locations. If a charitable or non-profit employer does not have two or more qualifying locations, the charitable or non-profit employer can still claim one exemption amount of $1,500,000 as long as the charitable or non-profit employer does not have B.C. remuneration that exceeds $4,500,000.

What if a charitable or non-profit employer operates at five locations but only has two qualifying locations?

A charitable or non-profit employer with two or more qualifying locations can only claim an exemption amount of $1,500,000 for each qualifying location, regardless of how many locations the employer may have.

The B.C. remuneration paid to the employees at the other three locations must be allocated to the two qualifying locations.

If I’m a charitable or non-profit employer with only one Canada Revenue Agency (CRA) payroll reporting number, does this affect whether an organization has multiple qualifying locations?

No, an organization does not need to have more than one payroll reporting number or other organization-related reporting number to claim an exemption amount for multiple qualifying locations.

If an employer is an organization within the government reporting entity as defined in the Budget Transparency and Accountability Act, does that mean that the organization isn’t a charitable or non-profit employer and isn’t eligible for the exemption of $1,500,000?

Yes, an employer that is a government reporting entity as defined in the Budget Transparency and Accountability Act is not considered a charitable or non-profit employer for the employer health tax and is eligible for the employer exemption of $1,000,000, if B.C. remuneration does not exceed $1,500,000.

Do charitable or non-profit employers with multiple qualifying locations have to file a separate tax return for each qualifying location?

If you’re a charitable or non-profit employer with multiple qualifying locations you must file and pay your employer health tax on one tax return, calculate one tax amount and submit one payment, if applicable, for all your qualifying locations.

If a charitable or non-profit employer has multiple qualifying locations with B.C. remuneration below $1,500,000 for each of those qualifying locations, does the charitable or non-profit employer have to file a tax return?

Maybe. If you’re a charitable or non-profit employer with a total B.C. remuneration (in other words, the total B.C. remuneration of all qualifying locations) greater than $1,500,000, you’re required to file a tax return, even if you do not pay the employer health tax.

For more information on the requirement of a charitable or non-profit employer with two or more qualifying locations to register for the employer health tax, see the registration question above.

For more information on charitable or non-profit employers, see Employer health tax for charitable or non-profit employers. 

Associated employers

Is the combined B.C. remuneration for all the employers in an associated group of employers used to determine the exemption amount?

Yes, the combined B.C. remuneration for the associated group of employers for a calendar year includes the B.C. remuneration of all the employers that are within that associated group of employers.

How is the exemption amount determined for an employer that is associated with other employers?

If an employer is associated with other employers, the exemption amount is based on the group of associated employers’ combined B.C. remuneration. If the group’s combined B.C. remuneration is between $1,000,000.01 and $1,500,000, the group of associated employers is eligible for one exemption amount as a group.

If the group’s combined B.C. remuneration exceeds $1,500,000, the group is not eligible for an exemption. Each employer’s employer health tax is 1.95 percent of each employer’s B.C. remuneration.

The association rules do not apply to a charitable or non-profit employer.

For more information on associated employers, see Employer health tax for associated employers.

Employer health tax income tax deduction

Is the employer health tax deductible for income tax purposes?

Yes, the employer health tax is deductible from business income for income tax purposes.

First Nations employers and employees

I have a few employees who are First Nations individuals. Do I exclude their remuneration when I calculate my employer health tax liability?

An employer can exclude the remuneration of a First Nations employee from the employer health tax liability if the employee:

• Does not pay tax under section 5, 6, or 7 of the Income Tax Act (Canada) because they’re a status Indian under the Indian Act, and
• Earned their income on a reserve  

Any remuneration paid to that employee that’s exempt from the employer health tax does not need to be included in the remuneration used to determine:

• An employer’s exemption amount
• An employer’s obligation to register for the employer health tax
• An employer’s obligation to file a tax return

I’m a First Nations individual or band and have my own business on a reserve. Do I pay the employer health tax?

If a First Nations individual or band is an employer doing business on a reserve, the individual or band is exempt from the employer health tax. This applies regardless of whether their employees are status or non-status Indians under the Indian Act.