British Columbia’s Employer Health Tax is a provincial payroll tax paid by employers with a permanent establishment in the province. For 2026, employers with B.C. remuneration of $1,000,000 or less owe nothing. Between $1,000,000.01 and $1,500,000, tax is charged at 5.85% on the amount above $1,000,000. Above $1,500,000, the rate is a flat 1.95% on total B.C. remuneration.1Government of British Columbia. Employer Health Tax Overview
Who Owes the Tax
Any employer with a permanent establishment in British Columbia that pays remuneration above the exemption threshold is liable. That includes corporations, sole proprietors, partnerships, non-profits, and registered charities.2BC Laws. Employer Health Tax Act
A permanent establishment is a fixed place of business such as an office, branch, factory, or warehouse. An employer can also be deemed to have one if it carries on business through an employee or agent in the province who has general authority to sign contracts on the employer’s behalf, or who fills orders from a local stock of merchandise.3Government of British Columbia. Defining Permanent Establishment for Employer Health Tax
Remote workers complicate the picture. If an employee works from home in another province but reports to a manager or payroll office in B.C., those wages may still count toward B.C. remuneration. The province ties liability to where the employee reports for work or, if there is no fixed reporting location, to the establishment from which the employee’s pay is administered.
What Counts as Remuneration
The tax applies to all remuneration that must be included in an employee’s income under the federal Income Tax Act. That covers salaries, hourly wages, bonuses, commissions, vacation pay, severance pay, and taxable benefits such as employer-paid life insurance or personal vehicle allowances.2BC Laws. Employer Health Tax Act If it appears on a T4 as taxable income, it almost certainly counts.
Some payments fall outside the base because they are not included in the employee’s federal taxable income. Common exclusions are pension or annuity payments to a retired former employee, employer contributions to a private health services plan, supplementary unemployment benefit plan contributions, and deferred profit-sharing plan contributions.
Remuneration includes amounts paid to both current and former employees during the calendar year. One-time payments like retiring allowances or accumulated vacation payouts are easy to overlook when estimating annual totals, and they can push an employer past a threshold unexpectedly.
2026 Rates and Exemption Thresholds
The general exemption threshold has been $1,000,000 since 2024. For for-profit employers, the tiers work like this:1Government of British Columbia. Employer Health Tax Overview
- B.C. remuneration of $1,000,000 or less: no tax.
- $1,000,000.01 to $1,500,000: 5.85% of the amount over $1,000,000. An employer with $1,200,000 in payroll pays 5.85% × $200,000 = $11,700.
- Over $1,500,000: 1.95% of total B.C. remuneration. At exactly $1,500,000 that is $29,250.
The band between $1,000,000 and $1,500,000 is a phase-in. Employers in that range pay a higher marginal rate on the excess, but the total effective rate stays below 1.95% until payroll crosses $1,500,000, at which point the flat rate applies to every dollar.
Charities and Non-Profits
Registered charities and qualifying non-profits get a higher exemption and a wider phase-in:4Government of British Columbia. Employer Health Tax for Charitable or Non-Profit Employers
- $1,500,000 or less: no tax.
- $1,500,000.01 to $4,500,000: 2.925% of the amount over $1,500,000.
- Over $4,500,000: 1.95% of total B.C. remuneration.
A charity with $2,500,000 in B.C. remuneration pays 2.925% × $1,000,000 = $29,250. A for-profit employer with the same payroll would owe 1.95% × $2,500,000 = $48,750.
Associated Employers Share One Exemption
Employers connected through common ownership or control are treated as an associated group and share a single exemption. The province uses a modified version of section 256 of the federal Income Tax Act, extending the association rules beyond corporations to individuals, partnerships, and trusts.5Government of British Columbia. Employer Health Tax for Associated Employers
If the group’s combined B.C. remuneration is between $1,000,000.01 and $1,500,000, members share the $1,000,000 exemption through a written allocation agreement. No member can claim more exemption than it would qualify for on its own. If combined remuneration exceeds $1,500,000, no exemption is available to any member, and each pays 1.95% on its own total B.C. remuneration.1Government of British Columbia. Employer Health Tax Overview
Each employer in the group registers separately, files its own return, and makes its own payments. Owners who run multiple entities sometimes assume each gets its own $1,000,000 exemption, then face reassessments with interest when the association is flagged.
Registering
Employers who expect their B.C. remuneration to exceed the applicable threshold during a calendar year register through the eTaxBC online portal. You need your federal business number, a mailing address, a business location address if different, and, for incorporated businesses, the incorporation number and date. You also need the date your permanent establishment in B.C. started.6Province of British Columbia. Register for the Employer Health Tax
If 2026 is your first year owing the tax, the registration deadline is December 31, 2026.1Government of British Columbia. Employer Health Tax Overview Employers who already use eTaxBC for other provincial taxes can add the EHT account to the same profile.
Filing and Instalments
The annual return is due by March 31 of the year after the calendar year being reported. If March 31 falls on a weekend or B.C. statutory holiday, the deadline moves to the next business day.7Province of British Columbia. File and Pay Your Employer Health Tax
Employers whose tax in the previous calendar year exceeded $2,925 must also make quarterly instalments during the current year. Instalments are due June 15, September 15, and December 15, with the balance settled when the annual return is filed by March 31.7Province of British Columbia. File and Pay Your Employer Health Tax Divide your estimated current-year liability into roughly equal quarterly amounts. Payments go through online banking, wire transfer, or the eTaxBC portal, which issues a confirmation number for each submission.
Penalties and Interest for Late Filing
Missing the March 31 filing deadline triggers an automatic penalty of 5% of the unpaid balance, plus 1% of the balance for each complete month the return remains outstanding, up to 12 months. For an employer that has been penalized for late filing in any of the three previous calendar years and again fails to meet a written demand, the penalty doubles to 10% of the balance plus 2% per month for up to 20 months.8Government of British Columbia. Penalties and Interest for Employer Health Tax
Interest accrues at the prime rate plus 3% on any late or deficient instalment and on any unpaid balance after the filing deadline.8Government of British Columbia. Penalties and Interest for Employer Health Tax Because interest compounds on top of penalties, a small underpayment left alone can grow quickly. Filing on time even when you cannot pay the full balance avoids the penalty portion, though interest on the unpaid tax still runs.
Buying a Business: Ask for a Clearance Certificate
Outstanding EHT obligations can transfer to a buyer when a business changes hands. Before closing, request a tax clearance certificate through the eTaxBC portal under “Application for Clearance,” which does not require an existing eTaxBC login.9Government of British Columbia. Employer Health Tax Forms and Legislation Without a clearance certificate, the buyer can become personally liable for unpaid EHT amounts the seller left behind.