BC Employer Health Tax: Rates, Installments & Penalties

British Columbia’s Employer Health Tax (EHT) is a provincial payroll tax owed by employers whose annual B.C. remuneration exceeds the exemption threshold: $1,000,000 for private-sector employers and $1,500,000 for registered charities and non-profits. Above those lines, rates climb through a transitional “notch” band and settle at 1.95 percent of total B.C. payroll once the upper threshold is crossed. Returns and final payments are due March 31 of the following year through the eTaxBC portal, with quarterly installments required when the prior year’s tax exceeded $2,925.

What You Owe

Private-Sector Employers

From the 2024 tax year onward, private employers with B.C. remuneration of $1,000,000 or less owe nothing. Payroll between $1,000,000.01 and $1,500,000 is taxed at a notch rate of 5.85 percent on the amount above $1,000,000. Once remuneration exceeds $1,500,000, the notch stops applying and 1.95 percent is charged on the entire payroll, not just the portion above the threshold.¹

Two worked examples make the structure clear. An employer with $1,200,000 in B.C. remuneration pays 5.85% × ($1,200,000 − $1,000,000) = $11,700. An employer with $2,000,000 pays 1.95% × $2,000,000 = $39,000.

Charities and Non-Profits

Registered charities and qualifying non-profits are exempt up to $1,500,000. From $1,500,000.01 to $4,500,000, the notch rate is 2.925 percent on the amount above $1,500,000. Above $4,500,000, the rate is 1.95 percent on the full payroll.²

What Counts as B.C. Remuneration

The tax is calculated on total B.C. remuneration, which runs wider than base salary. Include salaries and wages, bonuses and commissions, vacation pay, and employer-paid group life insurance premiums. Employer contributions to an employee’s Registered Retirement Savings Plan (RRSP) also count.³

Mobile and remote workers who don’t report to a permanent office can still be part of your B.C. payroll if their compensation is paid from a B.C. location. If you operate across provinces, keep detailed records of where each employee reports and how pay is sourced.

The following are excluded from the calculation:

Employer contributions to registered pension plans, private health services plans, supplementary unemployment benefit plans, deferred profit sharing plans, and retirement compensation arrangements
Pensions or annuities paid to retired employees, retiring allowances and severances, and death benefits
Dividends paid to an employee-shareholder
Reimbursements for business expenses supported by receipts
The principal of a loan to an employee
Tips paid directly by customers to the employee
Employer-paid tuition for courses taken primarily for the employer’s benefit
Remuneration paid by or to status First Nations individuals for a business situated on a reserve, and remuneration connected to diplomatic and consular posts

Watch the RRSP line. Employer contributions to a registered pension plan are excluded, but employer contributions to an employee’s RRSP are included and can push your total over an exemption threshold.³

Registering

Every employer whose B.C. remuneration exceeds the applicable exemption in a calendar year must register through eTaxBC by December 31 of that first year. To register, you’ll need your nine-digit federal business number, a mailing and business location address, the date your permanent establishment started in B.C. (if after December 31, 2017), and your incorporation number and date if applicable. The online registration takes roughly 10 to 20 minutes.⁴

Associated Employers Share One Exemption

Businesses linked by common ownership or control are treated as associated employers and must share a single exemption amount across the group. A group of related private-sector corporations splits the $1,000,000 exemption rather than each claiming it in full. The group has to agree in writing on how the exemption is allocated, and each member reports its allocated share on filing. Document the allocation before the filing deadline; getting it wrong invites reassessment.⁵

Filing and Paying

Registered employers file an annual return through eTaxBC. The return and final payment are due March 31 of the year following the tax year. For the 2026 tax year, that date is March 31, 2027.¹

Charities and non-profits with B.C. remuneration above $1,500,000 must file even if no tax is owed that year. If your payroll bounces around the exemption line and your registration is still active, don’t assume you can skip filing in a quiet year.⁶

Quarterly Installments

If your EHT liability for the previous calendar year was more than $2,925, you owe quarterly installments during the current year. The 2026 installment dates are June 15, September 15, and December 15. Each installment is 25 percent of the lesser of the prior year’s tax or your estimated current-year liability. If last year was $20,000 and this year looks like $16,000, each installment is $4,000. Any remaining balance is paid with the annual return by March 31.⁶

Employers whose prior-year tax was $2,925 or less can pay in installments voluntarily or settle the full amount when they file.

Penalties and Interest

Missing the March 31 deadline with a balance owing triggers a penalty of 5 percent of the balance on the due date, plus 1 percent of that balance for each complete month the return remains outstanding, to a maximum of 12 months. An employer owing $50,000 who files six months late pays $2,500 (the initial 5 percent) plus $3,000 (1 percent per month for six months), for $5,500 in penalties.⁷

The penalty is steeper for repeat offenders. If you were assessed a late filing penalty in any of the three preceding calendar years and the province issues a written demand you still don’t meet, the penalty jumps to 10 percent of the balance plus 2 percent per complete month, up to 20 months. Intent doesn’t matter; an honest oversight is penalized the same way.⁷

Missed or deficient installments draw interest at prime plus 3 percent, compounded daily.⁷

If You Close or Sell the Business

If your business stops having a permanent establishment in B.C. or goes bankrupt, you must file a final EHT return within 90 days of that date. The usual March 31 deadline doesn’t apply to this final taxation year. For amalgamations or sales during the calendar year, contact the provincial tax office at 1-877-387-3332 or ITBTaxQuestions@gov.bc.ca for instructions on closing the account.⁸

Appealing an Assessment

You can appeal an EHT assessment or decision to the B.C. Minister of Finance within 90 days of the date on the notice. There is no filing fee, though some deadline exceptions exist depending on the decision being appealed. File using the Appeal to Minister form (FIN 298) or a letter, attach a copy of the assessment and any supporting documents, and include an authorization form (FIN 87) if a representative is acting for you. Submit by mail, fax, or courier to the Tax Appeals and Litigation Branch of the Ministry of Finance in Victoria. If the minister’s decision goes against you, a further right of appeal may be available.⁹

1
Government of British Columbia. Employer Health Tax Overview
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Government of British Columbia. Employer Health Tax for Charitable and Non-Profit Employers
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Government of British Columbia. Employer Health Tax – Determining Remuneration
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Government of British Columbia. Register for the Employer Health Tax
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Government of British Columbia. Employer Health Tax – Associated Employers
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Government of British Columbia. Employer Health Tax Frequently Asked Questions
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Government of British Columbia. Penalties and Interest for Employer Health Tax
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Government of British Columbia. File and Pay Your Employer Health Tax
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Government of British Columbia. Appeal to the Minister of Finance