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BC budget 2018 introduces a new payroll tax

As a result of MSP premiums being phased out, the province has introduced a new payroll tax to recover lost revenues. Businesses with less than $500,000 in payroll costs will be exempted.


The new BC Budget for 2018 was announced on February 20. The possibility of a new payroll tax was one of our major concerns, and something we adamantly opposed within our submission to the MSP consultation and in person with the Finance Minister.

Thanks to your response on recent surveys, we were able to show the Minister last month the severe consequences of a new payroll tax. Unfortunately the province steamrolled ahead with the tax, despite our warnings.

We also strongly recommended an exemption for small businesses on any new taxes. As only seventeen per cent of BC small businesses pay MSP for their employees, this is a brand new taxation on small businesses. 
Fortunately, some exemptions to the payroll tax have been made:

  • Businesses with more than $1.5 million in payroll will be levied the full 1.95 per cent tax,
  • Business with payrolls between $500,000 and $1.5 million will pay reduced rates, and 
  • Businesses with less than $500,000 in payroll will be exempted from paying the tax.

Unfortunately, the exemption threshold is far too low. While the $500,000 threshold will exempt business owners who have very few staff members, many businesses will fall above the exempted threshold. This will be a brand new cost for many, and should be reevaluated through the lens of small business. Going forward we will continue to put pressure on this $500,000 arbitrary level to ensure costly new policy doesn’t fall on your back.

We will continue to update you on the provincial budget; in the meantime, if you have any questions comments on the new payroll tax, please email us at [email protected] or call into our Business Resources!