BC Employer Health Tax for restaurants: the exemption, the payroll bands and what to file

Employer Health Tax (EHT) in British Columbia is a payroll tax that helps pay for health care. For many restaurant owners, the issue is whether their payroll is under the exemption. Most small and mid-sized independent restaurants are, and owe nothing. But a restaurant group, a hotel dining operation or a successful business that adds staff and locations can cross the line, and the cost can be a surprise. This guide explains how the tax works in general terms. It is not tax advice. The Province's official EHT pages and your accountant are the authority.

What is the BC Employer Health Tax?

EHT is charged on the remuneration an employer pays to employees in British Columbia, including wages, salaries, bonuses, taxable benefits and similar payments. Employers report and pay it to the Province, and eligible employers can exclude part of their payroll through an exemption.

What is the exemption in 2026?

Guides for 2026 say the exemption for eligible private-sector employers is one million dollars of annual BC payroll, doubled from five hundred thousand dollars from 2024. If your payroll is under the exemption, you generally pay no EHT. Some online guides still show the old amount, so confirm the current figure on the Province's website before you rely on it.

What happens if your payroll is higher?

The guides describe a banded system. Between the exemption and a higher threshold, the exemption is phased out through a higher rate on the amount above the exemption. Above the higher threshold, the exemption is lost entirely, and the tax applies to the whole payroll. The details, including rates, are on the Province's website and change from time to time, so use the official calculator or ask your accountant. What matters for planning is that the cost can step up as payroll grows, not rise smoothly.

How do you know if you are over?

Add up your expected annual BC remuneration across all your employees, including bonuses and benefits, and compare it with the exemption. A restaurant with fifteen to twenty staff will often be under the line, but a business with many employees across several kitchens may not be. Seasonal businesses should check how the exemption works for part-year payroll.

Do you need to register or file?

Employers whose payroll is under the exemption may still have obligations. Ask your accountant or the Province whether you need to register, and when to file returns, even if you owe nothing. Missing a required filing can lead to penalties.

What about groups of businesses?

Associated employers share one exemption. If you own several corporations that are linked, for example one for each restaurant, you cannot generally claim the full exemption for each. The Province's rules require businesses in a group to allocate the exemption among themselves and may treat the combined payroll as a single total when working out the bands. This is a common trap for owners of multiple locations. Ask your accountant before you open a second location, set up a new company or restructure.

Is there a different rule for charities and non-profits?

Yes. The guides describe a separate threshold for charities and non-profits. If you run a social enterprise or a charitable café, ask the Province which rules apply.

What counts as remuneration?

Wages, salaries, vacation pay, bonuses, commissions and taxable benefits for employees who work in BC or report to a BC base. How tips and service charges are treated depends on how they are paid and recorded, so ask your accountant. Do not assume.

How is BC different from Ontario?

Ontario also has an Employer Health Tax, with its own exemption, filing date and rules. If you operate in both provinces, treat them separately. See the guide to the Ontario Employer Health Tax.

What should you do now?

1. Estimate your annual BC payroll for this year and next.
2. Check it against the Province's current exemption and bands.
3. Ask your accountant if you need to register or file.
4. Review again whenever you add staff, open a location or change the legal structure.
5. Keep payroll records in an order your accountant can use.

What if you are close to the line?

A business near the threshold should ask an adviser about the effect of a hire, a bonus or a new location before the decision, not after. The cost of crossing may exceed the benefit of an extra week of hours.

More guides for your business:

• The Accessible BC Act and your restaurant website: what applies today and what to do anyway
• Statutory holiday pay for BC restaurant staff: who qualifies and how to work out the pay
• How to open a restaurant in BC: permits, licences and the order to get them (2026)

More in the Canadian guides for food businesses.