British Columbia's new health tax regime to cost employers C$2bn British Columbia's new health tax regime to cost employers C$2bn

British Columbia's new health tax regime to cost employers C$2bn
31 Jan 2019

Canada’s British Columbia (BC) has introduced a controversial new health tax regime that is intended to reduce the financial burden on employees but is expected to cost employers C$2 billion (US$1.52 billion).

The Employer Heath Tax (EHT) was introduced at the start of this year to replace the Medical Service Plan (MSP) by 2020. MSP premiums, which were usually paid by staff, although employers had the option to cover the cost as an employee perk, have now been cut in half and are due to be eliminated by the end of 2019.

But with the introduction of the EHT, employers with payrolls of more than US$500,000 will be expected to pick up the entire tab for the EHT via payroll in a bid to make life more affordable for staff.

This means employers that pay the MSP on behalf of their employees now have a choice to either pay both levies or pass MSP costs onto staff. Smaller businesses will be exempt, according to TMF Group.

EHT premiums amount to 3% of the total payroll figure, although employers with payrolls of between US$500,000.01 and US$1,500,000 will pay 1.95%. The payroll tax applies to both employer-paid benefits as well as employee wages.

Ken Peacock, vice president of the BC Business Council warned that the tax would act as a disincentive to employers to take on full-time workers, reported Coast Mountain News.

Companies must register to pay it by 15 May this year, and payment can be made monthly or annually. How quickly organisations need to do so will vary based on their size.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

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Canada’s British Columbia (BC) has introduced a controversial new health tax regime that is intended to reduce the financial burden on employees but is expected to cost employers C$2 billion (US$1.52 billion).

The Employer Heath Tax (EHT) was introduced at the start of this year to replace the Medical Service Plan (MSP) by 2020. MSP premiums, which were usually paid by staff, although employers had the option to cover the cost as an employee perk, have now been cut in half and are due to be eliminated by the end of 2019.

But with the introduction of the EHT, employers with payrolls of more than US$500,000 will be expected to pick up the entire tab for the EHT via payroll in a bid to make life more affordable for staff.

This means employers that pay the MSP on behalf of their employees now have a choice to either pay both levies or pass MSP costs onto staff. Smaller businesses will be exempt, according to TMF Group.

EHT premiums amount to 3% of the total payroll figure, although employers with payrolls of between US$500,000.01 and US$1,500,000 will pay 1.95%. The payroll tax applies to both employer-paid benefits as well as employee wages.

Ken Peacock, vice president of the BC Business Council warned that the tax would act as a disincentive to employers to take on full-time workers, reported Coast Mountain News.

Companies must register to pay it by 15 May this year, and payment can be made monthly or annually. How quickly organisations need to do so will vary based on their size.

Emma Woollacott

Emma Woollacott is a freelance business journalist. Her work has appeared in a wide range of publications, including the Guardian, the Times, Forbes and the BBC.

OTHER STORIES THAT MAY INTEREST YOU

British Columbia's largest 5% of companies to pay 96% of new payroll tax

BC business groups call for government to drop "job killer" payroll tax

BC government tax plans to 'disproportionately hit' SMEs  

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