Employer Health Tax Information for BC
The new British Columbia Employer Health Tax took effect on January 1, 2019. If you are an employer in BC using Dynamics GP, then you’re going to be interested in the below information.
How to Set Up EHT in GP
A. Setup BC Health Tax
1. From the HR & Payroll page, go to Setup > Employer > Provincial Health button.
a. In the BC Health Tax section, enter the British Columbia EHT Percentage required for your payroll. Note: You will need to check the notes below, or the Government Website to determine the percentage your company is required to use.
b. Enter the British Columbia EHT Debit Account (Expense) and British Columbia EHT Credit Account (Payable) accounts.
c. Select ‘Yes’ to Distribute Health Tax Expense if you are distributing these expenses to your Departments, or other segments, pre-defined in Payroll Department setups. Select ‘No’ to post all transactions to the accounts selected. Note: Ensure all accounts are valid in GP.
B. Setup Income, Benefit and Deduction Codes
1. Open each applicable Income/Benefit code.
a. From the HR & Payroll Page, go to Cards > Income Code or Benefit Code. Enter or select the applicable code.
b. Select ‘Yes’ for Prov Health Tax Applicable. Note: The Benefit window looks different, but still has a field for Prov. Health Tax Applicable.
2. Open each deduction code. If the deduction code is used to reduce taxable income, you should see the field Before Tax Deduction set to ‘Yes’. If this is the case, Deduct Before Health Tax should also be set to ‘Yes’.
C. Setup Employee Card
1. Assign the various Income Codes to employees if this has not already been done. From the HR & Payroll Page go to Cards > Employee Paycodes and insert the required codes. Note: All payments that are normally considered taxable (including benefits) should be considered for tax calculations. Note: If there are applicable tax benefits that do not go through payroll, these will have to be created as benefit and deduction codes to assist with payroll calculations.
a. From the HR & Payroll page go to Cards > Employee. Enter or select the Employee ID.
b. Ensure the province selected is BC.
c. Ensure the correct Employer Number is selected. Note: GP uses these fields to determine which Provincial Health Tax to calculate.
d. Select the TD1 button
e. Select ‘Yes’ for Accrue Provincial Health Tax. Note: If for some reason this employee is exempt from your calculations, this field will be set to ‘No’.
Run Payroll as Normal
1. Payroll can now be run as usual. The liability will be calculated expensed and accrued, as per your Employer Provincial Health Tax setups. Note: Remember, GP does not calculate how large your payroll is. It is up to you to determine which threshold your payroll falls into and setup these windows accordingly.
A. EHT Payment Reports
1. Once you have calculated the payroll run, the EHT Payment report is ready.
a. From the HR & Payroll page go to Reports > Transactions > Summary Range reports.
b. Select the Perform Selection button and print the EHT Report.
2. Once you have posted the batch, you can run a report for past or multiple periods.
a. Print the report from Reports > Cards > Summary Range Reports.
b. Select a batch and/or date range.
Note: This report is not working as of January 4h. However, they are expecting to include it in their January Hotfix. OR you can modify the current report. Note: This report can also be run using Employee and Department Ranges. Note: Remember to populate both the Low Range and High Range fields.
c. Select the Perform Selection button and print the EHT Report.
3. Acquire individual Health Tax calculations
a. From the HR & Payroll page go to Cards > Employee.
b. Select the Calculated button > Employer Amounts button.
Note: This data reflects amounts after Masters have been updated.
GP does not calculate how large your payroll is. It is up to you to determine which threshold your payroll falls into and set up these windows accordingly.
A. Employer Health Tax Additional Information
This tax is effective January 1, 2019. The Employer Health Tax (EHT) is a tax the employer pays based on their employees’ earnings. All payments that are normally considered taxable (including benefits) should be considered for tax calculations.
Employers with a Payroll in BC:
- Equal to or Less than $500,000 will not pay EHT
- Greater than $500,000 and less than or equal to $1,500,000 will pay tax at 2.915% x (Payroll less $500,000). Note: The initial $500,000 is exempt from tax.
- Greater than $1,500,000 will pay 1.95% x payroll. Note: Tax is calculated on the entire payroll – nothing is exempt.
Please check this website for additional information.
B. Medical Services Plan (MSP) Additional Information
Currently the new Employer Health Tax does not affect the BC Medical Services Plan. It is expected that the new Employer Health Tax will eventually eliminate the Medical Services Plan premiums in 2020.
Please check this website for additional information. If you have questions about setting this up in Dynamics GP, please contact us.
Get 8 premium pieces of content that will help you plan a Dynamics GP upgrade!