How to Register for BC Employer Health Tax

If you're a newcomer to Canada who has started a business in British Columbia — or if you're planning to hire employees — you need to understand the BC Employer Health Tax (EHT). This payroll tax replaced the former Medical Services Plan (MSP) premiums and is paid by employers, not employees. Understanding your obligations, registration requirements, and payment deadlines is essential to staying compliant and avoiding penalties.

This guide walks you through everything you need to know about the BC Employer Health Tax, from determining whether you need to register to filing your annual return.

What Is the BC Employer Health Tax?

The Employer Health Tax (EHT) is a payroll tax that came into effect on January 1, 2019, as part of British Columbia's transition away from individual MSP premiums. The tax is levied on employers based on their total BC payroll — the remuneration paid to employees who report for work at a permanent establishment in BC, or who are paid from a permanent establishment in BC.

See also: Canadian Healthcare System Guide

The EHT is administered by the BC Ministry of Finance and is separate from federal payroll deductions like Canada Pension Plan (CPP) contributions and Employment Insurance (EI) premiums, which are administered by the Canada Revenue Agency. You can find official information at gov.bc.ca/employerhealthtax.

See also: Employment Insurance (EI) Benefits Guide

Who Needs to Register?

Not every employer needs to register for the EHT. Your obligation depends on your total BC remuneration (payroll):

• Employers with BC remuneration of $500,000 or less: You are exempt from the EHT and do not need to register (unless you are part of an associated group — see below).
• Employers with BC remuneration between $500,000.01 and $1,500,000: You must register and pay a reduced rate of EHT.
• Employers with BC remuneration over $1,500,000: You must register and pay the full EHT rate of 1.95% on your total BC remuneration.

Important: If your business is associated with other employers (for example, through common ownership or control), the $500,000 exemption threshold applies to the combined payroll of all associated employers. This prevents businesses from splitting into multiple entities to avoid the tax.

Understanding BC Remuneration

BC remuneration includes most forms of compensation paid to employees who work in British Columbia. This includes:

• Salaries and wages
• Bonuses and commissions
• Taxable benefits (as reported on T4 slips)
• Director's fees
• Stock option benefits
• Retirement allowances
• Tips and gratuities paid by the employer

Certain payments are excluded from BC remuneration, such as severance pay (in some cases), employer pension contributions, and payments to independent contractors. Independent contractors are not employees, so payments to them do not count toward your BC remuneration for EHT purposes. However, the CRA's rules on determining employee vs. contractor status apply — simply calling someone a contractor doesn't make them one.

See also: T4 Slip Explained for Newcomers

EHT Rates Explained

The EHT uses a graduated rate structure:

For Employers Not Associated with Charities or Non-Profits

• $500,000 or less: 0% (exempt)
• $500,000.01 to $1,500,000: 2.925% × (remuneration − $500,000). This is a notional rate that effectively phases in the tax between the exemption and full-rate thresholds.
• Over $1,500,000: 1.95% × total remuneration

For Charities and Non-Profit Employers

Registered charities and qualifying non-profit organizations have a higher exemption threshold of $1,500,000 and a reduced rate structure. The full rate of 1.95% applies only when their BC remuneration exceeds $4,500,000.

How to Register: Step-by-Step

If your BC remuneration exceeds $500,000 (or your share of the exemption if you're an associated employer), follow these steps to register:

Step 1: Set Up a BC eTaxBC Account

Registration and filing for the EHT is done through eTaxBC, the BC government's online tax portal. Visit etax.gov.bc.ca to create an account. You'll need your business number and other identifying information.

Step 2: Register for Employer Health Tax

Once you have an eTaxBC account, log in and select the option to register for the Employer Health Tax. You'll need to provide:

• Your business legal name and BC business number
• Your federal business number (from the CRA)
• Your estimated annual BC remuneration
• Your business address and contact information
• Information about associated employers, if applicable

Step 3: Determine Your Payment Schedule

Your payment schedule depends on your estimated annual EHT:

• Annual filers: If your estimated EHT is less than a prescribed threshold, you can pay annually with your return.
• Quarterly instalments: If your estimated EHT exceeds the annual threshold, you must make quarterly instalment payments on the 15th of the month following each quarter.

Step 4: File Your Annual Return

All registered employers must file an annual EHT return by March 31 of the following year. For the 2026 tax year, the return is due by March 31, 2027. The return reports your actual BC remuneration for the year and calculates the EHT owing. Any difference between your instalment payments and the actual tax is either paid or refunded.

See also: First-Year Tax Filing Guide

Important Deadlines

Penalties and Interest

Failure to register, file, or pay on time can result in penalties:

• Late filing penalty: 5% of the unpaid tax, plus 1% for each complete month the return is late (up to a maximum of 17% total).
• Late payment interest: Compound interest is charged on unpaid amounts at prescribed rates.
• Failure to register: If you are required to register but don't, you may face penalties in addition to the tax owing.

Common Questions from Newcomer Business Owners

I'm a sole proprietor with no employees. Do I need to pay EHT?

No. The EHT applies to employer remuneration paid to employees. Sole proprietors who draw income from their business (but don't pay themselves a salary through payroll) are not subject to EHT. However, if you incorporate and pay yourself a salary, that counts as BC remuneration.

I hire independent contractors, not employees. Am I exempt?

Payments to genuine independent contractors are not included in your BC remuneration. However, be careful — if the CRA determines that your contractors are actually employees (based on factors like control, tools, financial risk, and integration), you could be liable for EHT on those payments retroactively.

My business operates in multiple provinces. How do I calculate BC remuneration?

You include only the remuneration paid to employees who work in BC or are paid from a permanent establishment in BC. Employees who work exclusively in another province are excluded from your BC remuneration calculation.

Tips for Staying Compliant

1. Track your payroll monthly: Monitor your cumulative BC remuneration so you know when you're approaching the $500,000 threshold.
2. Register early: Don't wait until the end of the year. If you know your payroll will exceed $500,000, register as soon as possible.
3. Keep good records: Maintain detailed payroll records that clearly show which employees work in BC and what they were paid.
4. Consider associated employers: If you own or control multiple businesses, review the association rules carefully.
5. Use a payroll service: Many payroll service providers can automatically calculate and remit your EHT along with federal payroll taxes.
6. Consult a professional: An accountant familiar with BC tax obligations can help you set up systems to stay compliant.

Resources

• BC Employer Health Tax — Official Page
• eTaxBC — Online Registration and Filing
• CRA Payroll Information
• Small Business BC — Free advisory services for new businesses

Understanding and complying with the BC Employer Health Tax is an important part of running a business in British Columbia. By registering on time, making your instalment payments, and filing your annual return by March 31, you'll avoid costly penalties and keep your business in good standing with the provincial government.