How the new health tax will affect employers

The B.C. government has released the fine print on its new employer health tax as it diverts the cost of Medical Services Plan premiums away from individuals.

The tax notice says the annual payroll tax will apply to employers starting in January 2019 and will, among other things, cover salaries, bonuses, vacation pay, tips paid through an employer, and employer contributions to registered retirement savings plans.

The NDP government has already said employers with a B.C. payroll of more than $1.5 million will pay 1.95 per cent of their total payroll, while businesses with a payroll of between $500,000 and $1.5 million will pay 2.95 per cent.

Firms with a payroll at $500,000 and below won’t pay the employer health tax, which the Finance Ministry said in a news release ensures that 85 per cent of businesses will be exempt.

Employers with a B.C. payroll over $600,000 and charities with a payroll over $1.6 million will be required to make quarterly instalments.

Finance Minister Carole James says the government is eliminating regressive Medical Services Plan premiums and returning about $1,800 each year to families.

“While other provinces scrapped MSP premiums, the former government doubled and downloaded these unfair fees into middle-class individuals, families and seniors.”