If your British Columbia company paid employer health tax (EHT) last year, here is a question worth a few minutes of your time this month: will you owe anything at all in 2024? For a large share of BC employers, the answer has quietly changed. Budget 2024 doubled the EHT exemption threshold from $500,000 to $1 million of BC remuneration, effective for the 2024 tax year. The Province estimates that roughly 90% of businesses now fall below the threshold and owe no EHT. If your payroll sits between half a million and a million dollars, you may have just moved from paying the tax to paying nothing.
The change is real money, and it deserves more than a shrug. It alters your payroll-tax accrual, your monthly cost run-rate, and in some cases your instalment obligations. This post walks through what changed, who actually benefits, and the practical adjustments an established BC employer should make now.
What is the employer health tax, briefly?
The EHT is a payroll tax levied by the Province of British Columbia on an employer's total annual BC remuneration. It replaced Medical Services Plan premiums and is administered separately from your federal payroll source deductions (CPP, EI, income tax) and from BC PST or GST. It is calculated on remuneration paid in a calendar year, and it is the employer's cost alone, not a deduction from employees.
Before 2024, an employer with BC remuneration of $500,000 or less paid no EHT. Above that, a graduated formula applied until the tax reached its full rate of 1.95% on remuneration over $1.5 million. Budget 2024 lifted the floor.
What exactly changed for 2024?
Three numbers capture the change:
- The exemption threshold doubled from $500,000 to $1,000,000 of BC remuneration. Employers at or below $1 million pay no EHT for 2024.
- The notch (phase-in) band shifted. For employers with BC remuneration between $1,000,000.01 and $1,500,000, the tax is calculated at a rate of 5.85% on the portion of remuneration above the $1 million exemption. This higher notch rate replaces the previous 2.925% applied above $500,000, so that the full tax of 1.95% is still reached at $1.5 million.
- Above $1.5 million, the tax remains 1.95% on total BC remuneration, with no exemption. That part is unchanged.
The shift is meaningful. The Province has described the move as removing tens of thousands of employers from the tax and forgoing roughly $100 million a year in revenue to do it.
Who actually benefits, and who does not?
It helps to think in three bands.
Band 1 — Under $1 million in BC remuneration. You are now fully exempt. If you paid EHT in 2023 because your payroll was, say, $700,000, your EHT cost for 2024 drops to zero. This is the largest group and the clearest win.
Band 2 — Between $1 million and $1.5 million. You still pay, but only on the slice above $1 million, and at the 5.85% notch rate. Your absolute dollars owed fall compared with the old regime because the first $1 million is now sheltered rather than only the first $500,000.
Band 3 — Over $1.5 million. You see no change. The 1.95% rate applies to your full remuneration as before. Larger BC employers do not benefit from this measure at all, which is worth saying plainly so nobody over-budgets a saving that will not arrive.
A worked example: three BC employers
Consider three incorporated BC companies, each with a calendar-year payroll, comparing their 2023 EHT cost under the old $500,000 exemption against their 2024 cost under the new $1,000,000 exemption.
Riverside Millwork Ltd. — BC remuneration of $720,000.
- 2023 (old rules): tax on the band above $500,000 at 2.925% → $220,000 × 2.925% = $6,435.
- 2024 (new rules): below the $1,000,000 threshold → $0.
- Annual saving: $6,435.
Coastline Logistics Inc. — BC remuneration of $1,300,000.
- 2023 (old rules): 2.925% × ($1,300,000 − $500,000) = 2.925% × $800,000 = $23,400.
- 2024 (new rules): tax on $300,000 above $1,000,000 at 5.85% → $17,550.
- Annual saving: $5,850.
Summit Foods Corp. — BC remuneration of $2,100,000.
- 2023 (old rules): 1.95% on $2,100,000 → $40,950.
- 2024 (new rules): 1.95% on $2,100,000 → $40,950.
- Annual saving: nil.
The pattern is clear. The relief is concentrated in the small and lower-mid payroll bands. Riverside moves from a real annual cost to zero; Coastline keeps a few thousand dollars; Summit sees nothing. When you build your 2024 budget, place your own firm in the right band before you book a saving.
Do you still need to register, file, or pay instalments?
A lower or eliminated liability does not automatically eliminate your filing and instalment obligations, and this is where employers trip up.
- Registration. If your BC remuneration exceeds the exemption, you must be registered for EHT and file an annual return. Falling below the new threshold for 2024 may change your filing position, but confirm your status rather than assuming the account simply lapses.
- Instalments. EHT instalments are generally required when the prior year's tax exceeded a set amount. If your 2023 EHT was above that instalment trigger, you may have been remitting quarterly instalments based on last year's higher liability. With a 2024 liability that is lower or zero, those instalments may be reduced or unnecessary. Recalculate before you remit so you are not pre-paying a tax you no longer owe.
- The annual return is still due even when the calculation lands at zero in the notch band.
Always confirm current thresholds, instalment triggers, and filing dates against the Province of British Columbia's EHT pages, because administrative details can shift between budgets.
Practical steps for BC employers this month
For an established BC company, here is a short action list:
- Pull your projected 2024 BC remuneration, including salaries, wages, bonuses, taxable benefits, and other amounts that count as remuneration for EHT purposes.
- Place yourself in the right band (under $1M, $1M–$1.5M, or over $1.5M) and compute your expected 2024 liability.
- Adjust your payroll-tax accrual in your monthly management accounts. If you were accruing EHT each month and now expect zero, that accrual should come out so your margins are not understated.
- Revisit instalments if you remitted based on 2023. Reduce or stop them where the new exemption removes the liability.
- Mind associated employers. If your company is part of an associated group, the $1 million exemption is shared across the group, not multiplied per entity. Groups should allocate the single exemption deliberately.
- Document the change in your year-end working papers so your accountant reconciles the lower expense cleanly.
Key takeaways
- For 2024, BC's EHT exemption doubled from $500,000 to $1,000,000 of BC remuneration; roughly 90% of businesses are now exempt.
- The notch band between $1M and $1.5M is taxed at 5.85% on the portion above $1 million, so the full 1.95% rate is still reached at $1.5 million.
- Employers over $1.5 million see no change at all — budget accordingly.
- Recalculate instalments and update your monthly payroll-tax accrual so your margins reflect the lower or eliminated cost.
- Associated employers share a single $1 million exemption; allocate it deliberately.
A tax cut only reaches your cash flow if your numbers are updated to receive it.
Wondering which EHT band your company lands in for 2024, or whether your instalments and accruals need resetting? RN Canada provides fractional CFO and advisory support to established BC businesses — reach out and we will model it with your actual payroll.