BC Employer Health Tax: Thresholds, Rates, Instalments and Exemptions

On this page

• Do You Have to Pay BC Employer Health Tax? The Threshold Test
• 2026 Rates and Exemption Thresholds
• How to Calculate Your BC Remuneration
• Worked Examples at $1M, $2M and $4M of Payroll
• Registration: When and How to Open an EHT Account
• Instalments: Who Pays Quarterly and How Each One Is Calculated
• Filing the Annual EHT Return and Payment Deadlines
• Associated Employers Sharing One Exemption
• Charities and Non Profits: The Separate Rules
• Penalties and Interest for Late Registration or Filing
• FAQ: BC Employer Health Tax
• Let Us Calculate, File and Remit Your EHT With Your Payroll

Do You Have to Pay BC Employer Health Tax? The Threshold Test

The BC Employer Health Tax is a payroll tax on employers, and the first thing to establish is whether it applies to you at all.

Above that, here is the structure:

BC remuneration	EHT
$1,000,000 or less	Nil
$1,000,001 to $1,500,000	5.85% of the amount above $1,000,000
Over $1,500,000	1.95% of your entire BC remuneration, with no exemption

 

Three other things worth knowing up front:

• Associated employers share one exemption. If you have two or three corporations with common control, you do not each get $1 million. This is where most unexpected EHT bills come from.
• Quarterly instalments are required if your prior year EHT was more than $2,925, which corresponds to payroll of just $1,050,000.
• The annual return is due March 31, filed through eTaxBC.

Now the detail.

Work through these in order.

1. Do you have a permanent establishment in BC? If not, EHT does not apply.
2. Add up your total BC remuneration for the calendar year, across all associated employers.
3. Compare to $1,000,000 (or $1,500,000 if you are a registered charity or non profit, per qualifying location).
4. Above the threshold, you register and you pay.

Note that the test is on BC remuneration, not total payroll. A company with staff in three provinces counts only the remuneration attributable to employees who report to, or are paid from, a BC permanent establishment.

 

2026 Rates and Exemption Thresholds

Regular employers

BC remuneration	Calculation
$0 to $1,000,000	Exempt
$1,000,000.01 to $1,500,000	5.85% × (BC remuneration − $1,000,000)
Over $1,500,000	1.95% × BC remuneration

The $1,000,000 exemption was raised from $500,000 effective January 1, 2024, which took a large number of mid sized BC employers out of the tax entirely.

Charitable and non profit employers

BC remuneration per qualifying location	Calculation
$0 to $1,500,000	Exempt
$1,500,000.01 to $4,500,000	5.85% × (remuneration − $1,500,000)
Over $4,500,000	1.95% × remuneration

Note the difference in structure: charities and non profits apply the exemption per qualifying location, and they do not share a single exemption among associated employers the way regular employers do.

A note on the 5.85% band. That rate looks alarming, and it is. It is deliberately set so that the tax phases in smoothly: at exactly $1,500,000 of payroll, 5.85% of the $500,000 excess equals $29,250, and 1.95% of $1,500,000 also equals $29,250. There is no cliff at the top of the band. But inside the band, every additional dollar of payroll costs you almost six cents, which is worth knowing before you approve a hiring plan that takes you from $980,000 to $1,100,000.

 

How to Calculate Your BC Remuneration

Include:

• Salaries, wages, advances and bonuses
• Commissions and gratuities paid through the employer
• Vacation pay and statutory holiday pay
• Taxable benefits and allowances that appear on the T4
• Employer contributions to an employee’s RRSP
• Stock option benefits
• Directors’ fees
• Payments to employees on leave
• Amounts paid by a related party on your behalf

Exclude:

• Employer contributions to a registered pension plan
• Employer contributions to a private health services plan
• Retiring allowances and severance that is not employment income
• Amounts paid to genuine independent contractors (but be certain they are genuine)
• Remuneration for employees who do not report to a BC permanent establishment
• Amounts paid to employees who are exempt under an Indigenous tax exemption

The practical shortcut: BC remuneration is broadly the total of boxes 14 and 71 on your T4 slips, plus certain T4A amounts, adjusted for the exclusions above. It is not the same as your accounting wage expense, which usually includes CPP and EI employer portions that are not remuneration.

That last point causes real errors. Using the payroll expense line from your income statement will overstate BC remuneration and can push you over a threshold you never actually crossed.

 

Worked Examples at $1M, $2M and $4M of Payroll

BC remuneration	Calculation	EHT
$900,000	Under the exemption	$0
$1,000,000	At the exemption	$0
$1,200,000	5.85% × $200,000	$11,700
$1,500,000	5.85% × $500,000	$29,250
$2,000,000	1.95% × $2,000,000	$39,000
$4,000,000	1.95% × $4,000,000	$78,000

The associated employer version of the same story. Suppose you run three corporations, each with $600,000 of BC payroll, all controlled by you.

Assumption	Result
Each company gets its own exemption (wrong)	$0
Associated group shares one $1,000,000 exemption (correct)	Group payroll $1,800,000, so 1.95% × $1,800,000 = $35,100

That $35,100 is the single most common EHT surprise in BC, and it usually arrives as a reassessment covering several years.

 

Registration: When and How to Open an EHT Account

You must register if:

• Your BC remuneration exceeds $1,000,000 in the calendar year (or $1,500,000 per location for charities and non profits), or
• You are required to pay instalments

Deadline: register by December 31 of the first calendar year in which you exceed the threshold. Employers required to pay instalments should register much earlier, because instalments start in June.

How:

1. Set up or sign in to an eTaxBC account.
2. Select Employer Health Tax and enrol.
3. Provide your business number, incorporation details and estimated BC remuneration.
4. Record the EHT account number, which is separate from every other account you have.

Do not wait until you are certain you will cross the threshold. If you are budgeting payroll near $1,000,000, register and file a nil return rather than risk missing the registration date.

 

Instalments: Who Pays Quarterly and How Each One Is Calculated

You must pay quarterly instalments if your EHT for the previous calendar year exceeded $2,925. That threshold corresponds to $1,050,000 of BC remuneration, so it catches employers only just over the line.

Instalment	Due
First	June 15
Second	September 15
Third	December 15
Final balance with the return	March 31 of the following year

Each instalment is 25% of the lesser of:

• Your EHT for the previous calendar year, and
• Your estimated EHT for the current calendar year

Using the prior year figure is the safe choice because it is a known number and protects you from instalment interest. Using an estimate is sensible if payroll has genuinely dropped, but if you underestimate, interest applies on the shortfall.

A practical pattern worth adopting: set aside the EHT monthly alongside your CRA source deduction remittance, even though it is only payable quarterly. Employers who wait until June 15 to think about it tend to find the June and September instalments land in the same quarter as their corporate tax instalments.

 

Filing the Annual EHT Return and Payment Deadlines

The annual EHT return is due March 31 for the preceding calendar year, filed through eTaxBC. Any remaining balance is due the same day.

On the return you report:

• Total BC remuneration for the year
• The exemption claimed, after any allocation among associated employers
• Instalments already paid
• The balance owing or the refund

Reconcile to your T4 Summary before filing. The figures should tie out. A mismatch between what you reported to CRA on T4s and what you reported to BC on the EHT return is straightforward for the province to spot, and it is a common trigger for a review.

 

Associated Employers Sharing One Exemption

If two or more employers are associated at any time in the calendar year, they share one $1,000,000 exemption between them. Association follows the associated corporation rules in the Income Tax Act, which capture common control, related persons, and certain share ownership arrangements.

How it works in practice:

• The associated group determines its total BC remuneration.
• If that total is $1,000,000 or less, no tax is payable by anyone.
• If it is between $1,000,000 and $1,500,000, the group allocates the exemption among members by agreement and files an exemption allocation.
• If the group total exceeds $1,500,000, no exemption is available to anyone, and each member pays 1.95% on its own BC remuneration.

That last bullet is the harsh one. An associated group at $1.6 million of total payroll loses the exemption entirely, even for the member with $150,000 of payroll.

Common structures that are associated and often not recognised as such: an operating company and a management company, two operating companies with the same shareholder, a holding company that employs the owner, and a professional corporation alongside a related services company. If you have more than one corporation with payroll, this needs checking properly rather than assuming.

Maxpro Financials handles EHT registration, instalments and annual returns alongside payroll for BC employers, and the associated group test is part of that review rather than an afterthought.

 

Charities and Non Profits: The Separate Rules

Registered charities and qualifying non profits get materially better treatment:

• The exemption is $1,500,000 rather than $1,000,000
• The exemption applies per qualifying location, not once across the organisation
• The tiers run to $4,500,000 before the flat 1.95% applies
• They are not subject to the associated employer rules in the same way

A “qualifying location” is a permanent establishment where the charity or non profit carries on activities. An organisation operating four separate locations across BC can therefore shelter substantially more payroll than a regular employer of the same size.

The catch is definitional. Whether each site is genuinely a qualifying location is a question of fact, and a group that allocates payroll across nominal locations to multiply the exemption is asking for a reassessment.

 

Penalties and Interest for Late Registration or Filing

Failure	Consequence
Late filing the annual return	Penalty based on unpaid tax, plus interest
Late payment or instalment shortfall	Interest at the prescribed rate, compounded
Failing to register when required	Assessment for the tax owing with interest, and the province can assess prior years
Failing to keep adequate records	Penalties apply, and the province can estimate your remuneration
Repeated or wilful failures	Higher penalties

Records must be kept for five years. That is longer than most employers assume, and it matters because the associated employer question is usually settled by looking at share registers and payroll records from several years back.

 

FAQ: BC Employer Health Tax

What is the EHT exemption in BC? $1,000,000 of BC remuneration for regular employers. $1,500,000 per qualifying location for charities and non profits.

Do I have to register if my payroll is under $1 million? No, unless you are required to pay instalments. If you are near the line, registering and filing nil is the safer route.

What counts as BC remuneration? Broadly, T4 employment income for employees connected to a BC permanent establishment, plus certain T4A amounts, employer RRSP contributions and directors’ fees. It excludes RPP contributions, private health plan contributions and payments to genuine contractors.

How is the tax calculated between $1 million and $1.5 million? 5.85% of the amount above $1,000,000 only, not of the whole payroll.

Do my two corporations each get an exemption? No, if they are associated. The group shares one, and the exemption disappears entirely above $1.5 million of group payroll.

When are instalments due? June 15, September 15 and December 15, with the balance due March 31. Instalments are required if last year’s EHT exceeded $2,925.

Is the EHT deductible for income tax purposes? Yes, as a business expense.

Do payments to independent contractors count? Not if they are genuinely independent. If the relationship is really employment, the amounts count and the misclassification is a separate problem.

What about employees who work remotely from another province? Remuneration is attributed to where the employee reports to a permanent establishment. Get this right if you have a distributed team, because it changes the number materially.

Where do I file? eTaxBC, by March 31 for the preceding calendar year.

 

Let Us Calculate, File and Remit Your EHT With Your Payroll

EHT is not a complicated tax, but it has two traps that cost real money: the associated employer rules, which remove the exemption from an entire group, and the definition of BC remuneration, which is not the payroll number on your income statement.

Maxpro Financials registers BC employers for EHT, calculates BC remuneration properly from the T4 data rather than the ledger, manages the quarterly instalments alongside CRA source deductions, and files the annual return by March 31. If you run more than one corporation with payroll, the associated group review is the first thing worth doing, ideally before the province does it.

Book a consultation or call BC +1 (778) 951 1269 / Alberta +1 (403) 437 6016.