Finance Minister Carole James has been under fire for the payroll tax being imposed to replace Medical Services Plan premiums. (Hansard TV)

Non-profits, schools get break on B.C. health payroll tax

Exemption for charities $1.5 million, three times for-profit businesses

Non-profit organizations will get a break on the B.C. government’s new health care payroll tax when it takes effect next year.

Finance Minister Carole James released the details of the new tax Wednesday, so businesses, local governments and other agencies can prepare. The official notice to employers reveals a $1.5 million exemption for charities and qualifying non-profit organizations, three times the exemption offered to businesses when the tax was announced in the B.C. budget in February.

In an interview with Black Press, James clarified that while school districts, health authorities and universities will pay the tax, their budgets from the province will be adjusted to cover the additional costs in the transition period.

“We will be providing resources to school boards, to health authorities, social services, community organizations, universities and colleges,” James said. “Unlike the previous government, we’re not downloading the costs.”

Reimbursing provincial agencies for the cost of the payroll tax is estimated to cost the province $90 million a year.

The tax is to replace revenue collected from Medical Services Plan premiums, paid by individuals and employers. The rate was cut by half last year and is to be eliminated by 2020.

The tax applies to “any entity with a payroll,” says the memo to employers. That includes municipalities, which are preparing to raise property taxes to cover costs they expect to double in 2019. James said.

RELATED: No break from health tax for municipalities

RELATED: Payroll tax a big bill for greenhouse growers

As of January 2019, employers pay 1.95 per cent of their payroll for businesses and organizations with payrolls of more than $1.5 million. A lower rate applies for payrolls between $500,000 and $1.5 million, and those below $500,000 are exempt.

Non-profits that are not registered charities but get the higher exemption are defined as being operated “solely for social welfare, civic improvement, pleasure or recreation” and “any other purpose other than profit.” The higher exemption will also apply to each location of a large non-profit, allowing most to escape additional costs, James said.

The payroll tax applies whether employers pay their employees’ MSP premiums or not. James emphasized that while property taxes may go up, individuals stand to save $800 a year if they have been paying their own MSP premiums.

The finance ministry calculates that with the exemptions, 85 per cent of B.C. businesses will not pay the employer health tax, and fewer than five per cent will pay the full rate of 1.95 per cent a year. Those top five per cent will be responsible for paying 96 per cent of the tax.

Just Posted

Cyclists and drivers take to the streets Wednesday morning in first official Bike to Work Week celebration

The 25th annual Greater Victoria Bike to Work Week kicks off the followingMonday, May 27

Police arrest jewellery thieves in same building they allegedly stole from

More than $6,000 worth of jewellery was recovered

Coastline serves up a feast of fiddlers in Oak Bay

Local Juno Award winner musical director for ensemble

High of 21 C for Wednesday

Plus your weekend forecast

Rickter Scale: Testing that time of our lives

Rick Stiebel is a semi-retired local journalist

Greater Victoria wanted list for the week of May 21

Greater Victoria Crime Stoppers is seeking the public’s help in locating the… Continue reading

POLL: Were you satisfied with the Game of Thrones series finale?

Millions gathered in front of their televisions Sunday night to watch the… Continue reading

Ottawa spending $24.5M to research on health benefits, risks of pot use

$390,000 will fund two cannabis public awareness

Crackdown on money laundering does not include federal public inquiry: minister

An independent report commissioned concluded $7.4 billion was laundered in B.C. last year

Trudeau’s action plan on climate change brings B.C. politician out of retirement

Terry Lake, a former B.C. health minister, is running for federal office in Kamloops-Thompson-Cariboo

Survey finds minimal progress in Canadian military’s fight against sexual misconduct

1.6 per cent of regular-force members — 900 military personnel — reported having been victims of sexual assaults over past year

Thetis housing project clouded by confusion

View Royal mayor clarifies details about Capital Region Housing Corporation project

Raptors beat Bucks 120-102 to even series at 2-2

Lowry pours in 25 as Toronto moves within two games of NBA Finals

Most Read