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New employer health tax in British Columbia

Employer Health TaxBritish Columbia’s government recently announced that the revenues from Medical Services Plan (MSP) premiums, which are to be eliminated effective January 1, 2020, will largely be replaced with an “employer health tax.” The employer health tax will be effective January 1, 2019.

The proposed rate structure for the new tax is as follows:

Size of Annual BC Payroll Annual Tax ($) Tax Rate as % of Payroll
Under $500,000 or less $0 0%
$750,000 $7,313 0.98%
$1,000,000 $14,625 1.46%
$1,250,000 $21,938 1.76%
$1,500,000 $29,250 1.95%
Over $1,500,000 $29,250 + 1.95% of payroll over $1.5 million 1.95%

The government estimates that the new tax will raise $1.9 billion in revenue per year in 2019-20 and 2020-21, in comparison to the $2.6 billion raised by MSP premiums in 2016-17.

Rules regarding the frequency of installment payments and how payroll amounts are to be aggregated among associated businesses are to be included in the tax legislation.

The tax will represent a new expense for companies with payrolls over $500,000 that did not pay MSP premiums for their employees.

By Laura DeVries

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Employer Advisor, McCarthy Tétrault LLP

Employment and labour lawyers at McCarthy Tétrault LLP
McCarthy Tétrault through their Employer Advisor blogs offers their perspectives on the latest legal developments applicable to the workplace. It provides their insights on legislative and regulatory developments, as well as new case law, while providing practical tips for employers and their human resources professionals when managing the workforce. McCarthy Tétrault is a Canadian law firm that delivers integrated business law, litigation services, tax law, real property law, labour and employment law nationally and globally. Several of their blog posts will be republished with permission on First Reference Talks. Read more
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