BC Employer Health Tax

Definition

The BC Employer Health Tax (EHT) is a provincial payroll tax imposed on employers under the Employer Health Tax Act (BC). EHT began on January 1, 2019. Individual Medical Services Plan (MSP) premiums were eliminated on January 1, 2020. EHT is calculated on BC remuneration paid in the calendar year and is filed annually through eTaxBC, with instalments required for larger employers.

Key rules

2026 EHT thresholds and rates for regular (non-charitable) employers:

Key operational rules:

• The $1,000,000 exemption threshold was raised from $500,000 effective January 1, 2024. Charitable and non-profit employers have a different structure with a higher exemption applied per qualifying location.
• BC remuneration includes salaries, wages, bonuses, commissions, taxable benefits, and directors' fees paid to employees who report for work at a BC permanent establishment, or who do not report to an employer establishment and are paid from or through a BC permanent establishment. Apply the province's specific remuneration rules for remote and cross-border work.
• Associated employers must share the $1,000,000 exemption. The allocation is made on the EHT return.
• Dividends are not employment remuneration and are not subject to EHT. Salary below an available exemption also produces no EHT; compensation decisions require the other tax and benefit consequences to be considered.
• Annual EHT return is due March 31 of the year following the calendar year. Employers with prior-year EHT over $2,925 must make three instalments (June 15, September 15 and December 15), each based on 25% of the lesser of prior-year tax or estimated current-year tax. The remaining balance is due March 31. BC filing and payment rules.

Example

A BC corporation has 2026 BC payroll of $1,250,000 (and is not associated with any other employer).

• Amount above the $1,000,000 exemption: $1,250,000 - $1,000,000 = $250,000.
• EHT at the notch rate: $250,000 × 5.85% = $14,625.

Assume prior-year EHT exceeded $2,925 and was at least the estimated 2026 liability of $14,625. Using the current-year estimate, the corporation makes three instalments of $3,656.25 each (June 15, September 15, December 15, 2026) and pay the balance on March 31, 2027. Penalty and interest apply to missed instalments.

For a second example at $2,000,000 BC payroll:

• EHT at the flat rate: $2,000,000 × 1.95% = $39,000. No exemption applies because payroll exceeds $1.5 million.

Common mistakes

• Confusing EHT with WorkSafeBC. They are separate taxes administered by separate agencies with different bases and rates.
• Forgetting that associated corporations share a single $1,000,000 exemption. Two $800,000 associated payrolls do not both qualify for the full exemption.
• Missing the March 31 annual return deadline. Late filing triggers penalty of 5% of unpaid EHT plus 1% per month, maximum 12 months.
• Including dividends in the EHT base. Dividends paid to shareholder-employees are not employment remuneration.

Related concepts

• WorkSafeBC Registration
• Payroll Account (RP)
• Salary vs. Dividends
• Ontario Employer Health Tax