MSP & EHT
In B.C., residents pay monthly Medical Service Plan(MSP) rates (premiums), which help meet a portion of the costs of B.C.’s health-care system. The rest of the cost of the health-care system is covered from income taxes. We will discuss the received benefits of MSP in the section "Government Resources". Employer's Health Tax (EHT) will take effect for employers Jan 1 2020, and MSP premiums to end for individuals. EHT will be paid by the employer, but NOT like federal tax/CPP/EI as it has nothing to do with the individual. The company is solely responsible and the employee does not need to report or reconcile any payments on their taxes at the end of the year.
What is the Employer Health Tax?
The employer health tax will be an annual payroll tax that will apply to employers beginning January 2020. An employer is an entity that has payroll. Payroll (also known as remuneration) is employment income and taxable benefits under the Income Tax Act.
Employers with B.C. payroll:
- Of $500,000 or less will not pay EHT
Between $500,000.01 and $1,500,000 will pay the tax as calculated:
- 2.925% x (Payroll - $500,000)
Greater than $1,500,000 will pay 1.95% on their total payroll:
- 1.95% x Payroll
Charitable and non-profit employers with B.C. payroll calculate the EHT for each of their locations and pay the total of each location’s EHT. For each location with B.C.payroll:
- Of $1,500,000 or less, the EHT for the location will be zero
- Between $1,500,000.01 and $4,500,000, the EHT for the location will be calculated as: 2.925% x (Payroll for the location - $1,500,000)
- Greater than $4,500,000, the EHT for the location will be calculated as 1.95% of the location’s payroll:1.95% x Payroll for the location