--- title: "BC Employer Health Tax: $1M Exemption, Rates, Who Pays" url: https://www.everstonecpa.com/blog/bc-employer-health-tax-guide description: "The BC employer health tax exemption threshold, how the rate applies to B.C. pay above it, who must register, and when instalments are due. Check yours." type: guide updated: 2026-10-12 summary: "BC employers with $1,000,000 or less of BC payroll in a calendar year pay no Employer Health Tax. Between $1,000,000 and $1,500,000, EHT is 5.85% of payroll above the $1M line. Above $1,500,000, it is 1.95% of the entire payroll. Associated employers share one exemption." faq_count: 7 publisher: EverStone CPA Inc., a Chartered Professional Accountant firm registered with CPA British Columbia and CPA Alberta service_area: British Columbia, Alberta, Ontario and Manitoba language: en-CA contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online --- [Home](https://www.everstonecpa.com/) [Blog](https://www.everstonecpa.com/blog) Employer Health Tax Payroll & hiring # BC Employer Health Tax: *the $1M exemption and the notch rate explained* By EverStone CPA · Reviewed July 2026 · 7 min read When BC replaced MSP premiums with the [Employer Health Tax](https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax), most small businesses saw they were under the threshold and stopped reading. Two features catch growing Fraser Valley companies: a steep *notch* above the exemption, and association rules that combine related payrolls. **Quick answer:** BC employers with $1,000,000 or less of BC payroll in a calendar year pay no Employer Health Tax. Between $1,000,000 and $1,500,000, EHT is 5.85% of payroll above the $1M line. Above $1,500,000, it is 1.95% of the entire payroll. Associated employers share one exemption. Registration is due December 31 of your first taxable year, the return and payment by March 31 following, with instalments (June 15 / September 15 / December 15) for larger payers. The 5.85% notch between $1M and $1.5M of payroll. BC Employer Health Tax rates by payroll band BC Employer Health Tax by payroll band, with the worked examples given below. Associated employers share one exemption. | BC payroll | Rate | Applied to | Worked example | | $1,000,000 or less | Nil | Exempt | — | | $1,000,000 – $1,500,000 | 5.85% | Payroll above the $1M line | $1.2M payroll → $11,700 | | Above $1,500,000 | 1.95% | Entire payroll, from the first dollar | $1.6M payroll → $31,200 | ## How the math works EHT is calculated on **BC remuneration** — broadly, the payroll amounts you report for employees at or reporting to a BC establishment: salary, wages, bonuses, most taxable benefits. - **$1,000,000 or less:** exempt. No tax, and no return required if you are under the threshold. - **$1,000,000 to $1,500,000:** tax is **5.85% × (payroll − $1,000,000)**. At $1.2M payroll that is 5.85% of $200,000 = $11,700. - **Above $1,500,000:** tax is **1.95% × total payroll**, from the first dollar. At $1.6M that is $31,200. The 5.85% notch makes the formulas meet at $1.5M (5.85% of $500,000 = 1.95% of $1.5M = $29,250). In it, **every additional payroll dollar costs an extra 5.85 cents of EHT** — triple the headline rate. Time raises, hires and bonuses on a $1.4M payroll with the [bonus-vs-dividend decision](https://www.everstonecpa.com/blog/bonus-vs-dividend-year-end-canada). ## The association trap Related employers, such as corporations under common control, **share a single $1,000,000 exemption**. As with the [associated-corporation rules for the small business deduction](https://www.everstonecpa.com/blog/associated-corporations-small-business-deduction), more companies do not mean more thresholds. Two related companies with $700,000 of payroll each are $400,000 over, and above $1.5M combined **no exemption is available to any of them**. Construction and farming families with two businesses should check this. **Payroll growing toward the EHT exemption?** We track BC payroll against it, register and file when you cross it, as part of payroll on a fixed monthly fee. [Get a payroll quote](https://www.everstonecpa.com/book-online?service=payroll#enquiry-form). [Get My Fixed Quote](https://www.everstonecpa.com/book-online?service=payroll#enquiry-form) ## Where EHT fits in your payroll stack EHT sits *alongside* other payroll obligations: **CRA [source deductions](https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/payroll/remitting-source-deductions.html)** (income tax, CPP, EI — via your [RP account](https://www.everstonecpa.com/blog/payroll-remittances-canada-rp-account)), **[WorkSafeBC](https://www.everstonecpa.com/glossary#worksafebc) premiums** (registration generally required when you hire), **T4 filing** by the end of February, and EHT only above the threshold. It is entirely employer-paid. Most small businesses just confirm they are under $1M; the mistake is not re-checking as payroll grows or a second company appears. ## Deadlines that matter - **Registration:** by December 31 of the first calendar year you owe EHT. - **Annual return and final payment:** March 31 of the following year. - **Instalments:** June 15, September 15 and December 15 for employers above the instalment threshold — missing them accrues interest just like CRA instalments. ## Planning around the threshold honestly Legitimate planning includes timing a discretionary bonus across calendar years, weighing salary against [dividends](https://www.everstonecpa.com/blog/bc-employer-health-tax-guide) (not remuneration for EHT) and properly structuring genuinely separate businesses. Calling employees contractors creates a [worker-classification problem](https://www.everstonecpa.com/blog/employee-vs-contractor-cra-worker-classification) costlier than the tax. Start planning when payroll passes about $800,000 and is climbing, when the notch, association rules and compensation design begin to interact. Sources - [Government of BC — Employer Health Tax overview](https://www2.gov.bc.ca/gov/content/taxes/employer-health-tax/employer-health-tax-overview) This article is general information for Canadian business owners and is current as of July 2026. EHT thresholds, rates and filing rules are as published for 2024 onward and may change with provincial budgets. It is not tax advice; please [speak with a CPA](https://www.everstonecpa.com/book-online) before acting on anything here. About this article **EverStone CPA** Prepared and reviewed by a CPA at EverStone CPA, serving businesses in BC, Alberta, Ontario and Manitoba. [About the firm →](https://www.everstonecpa.com/about) · [Send an enquiry →](https://www.everstonecpa.com/book-online) The employer health tax applies once your BC payroll crosses the threshold. We manage it for employers in [Abbotsford](https://www.everstonecpa.com/accountant-abbotsford), [Chilliwack](https://www.everstonecpa.com/accountant-chilliwack), [Langley](https://www.everstonecpa.com/accountant-langley), [Mission](https://www.everstonecpa.com/accountant-mission), [CPA for Maple Ridge owners](https://www.everstonecpa.com/accountant-maple-ridge) and [Surrey](https://www.everstonecpa.com/accountant-surrey). The tax is calculated from the same payroll records as source deductions; [payroll services](https://www.everstonecpa.com/payroll-services-canada) track the threshold through the year. Common questions ## Frequently asked questions about employer Health Tax **Who pays BC Employer Health Tax?** Employers with BC remuneration (payroll) above $1,000,000 in a calendar year. At or below $1,000,000, regular employers are exempt and pay nothing. Between $1,000,000 and $1,500,000 the tax is 5.85% of the amount over $1M; above $1,500,000 it is 1.95% of total BC remuneration. **Is EHT the same as CPP and EI?** No. CPP and EI are federal source deductions shared between employer and employee and remitted to the CRA. EHT is a separate provincial payroll tax paid entirely by the employer to the BC government, with its own registration, return and instalment schedule. **What is the associated employer trap?** Related corporations share one $1,000,000 exemption. Two companies with $700,000 of payroll each are over the combined threshold though each looks exempt, and above $1.5M combined, none gets an exemption. **When do I have to register and file?** If you owe EHT for a year, registration is due by December 31 of that year, the annual return and final payment by March 31 following. Employers above the instalment threshold pay instalments on June 15, September 15 and December 15. **Do dividends paid to an owner count toward BC payroll for EHT?** No. Dividends are a return on shares, not remuneration, so EHT does not apply to them; salary, wages, bonuses and most taxable benefits count. So owner pay choices interact with EHT as payroll nears the threshold. **Do I have to file an EHT return if my payroll is below the exemption?** No. At $1,000,000 or less of BC payroll for the calendar year, you owe no Employer Health Tax and file no return; registration is due only in the first year you owe it. Re-check yearly as payroll grows or a related company appears. **Why does a small payroll increase cost so much just above the exemption?** The notch rate. Between $1,000,000 and $1,500,000 of BC payroll, EHT is 5.85% of the amount above $1,000,000, roughly triple the headline rate per extra dollar. Time raises, hires and bonuses that push payroll into the notch. The employer health tax is not the only BC-specific payroll obligation. Employers hiring workers or unregistered subcontractors also need coverage. See [WorkSafeBC registration for BC employers](https://www.everstonecpa.com/blog/workers-compensation-registration-bc). ### Keep reading [Payroll remittances & your RP account →](https://www.everstonecpa.com/blog/payroll-remittances-canada-rp-account) [Salary vs dividends →](https://www.everstonecpa.com/blog/bc-employer-health-tax-guide) [Associated corporations & the SBD →](https://www.everstonecpa.com/blog/associated-corporations-small-business-deduction) **Run your own numbers with the free calculators:** [Incorporation savings calculator](https://www.everstonecpa.com/incorporation-calculator) · [check a paycheque’s deductions](https://www.everstonecpa.com/payroll-deduction-calculator) · [check your GST/HST math](https://www.everstonecpa.com/gst-hst-calculator) [← Bare trusts in Canada: the arrangement and the filing question](https://www.everstonecpa.com/blog/bare-trust-reporting-canada) [BC PST: who registers, what is taxable, and what changes in October 2026 →](https://www.everstonecpa.com/blog/bc-pst-small-business-guide) ## Have a question about this? Ask free through [the quick-question form](https://www.everstonecpa.com/quick-question); a CPA replies within one business day. Need more? A 45-minute **Advice Call** is $225 plus GST, credited to your first invoice if you become a client within 60 days. Want us to take it on? [Send an enquiry](https://www.everstonecpa.com/book-online). [Ask a Free Question](https://www.everstonecpa.com/quick-question) [Book a Paid Advice Call](https://www.everstonecpa.com/advice-call) Email info@everstonecpa.com ★★★★★ “…He is very knowledgeable and has saved me tons in taxes by restructuring my group of companies — the best accountant I've worked with in the last 10 years, after switching from three different firms.” Matt Hildebrandt · Google review --- Source: https://www.everstonecpa.com/blog/bc-employer-health-tax-guide Prices: https://www.everstonecpa.com/pricing · Contact: info@everstonecpa.com · https://www.everstonecpa.com/book-online