Lilly Tax

10/06/2026

BC Employer Health Tax: Rates and Filing Guide
The Employer Health Tax (EHT) is a payroll tax that BC employers pay, calculated on the total wages they pay their employees.
The Employer Health Tax (EHT) is a payroll tax that BC employers pay, based on the total wages they pay their employees. The EHT helps fund healthcare in the province. In 2018, it replaced Medical Services Plan (MSP) premiums, shifting responsibility for payroll healthcare premiums from employees to employers. All companies in BC must follow EHT rules, which means understanding how to calculate payroll and file taxes correctly.
This guide explains the EHT and shows you how to calculate and pay it correctly. It will also cover, in simple terms, how to file and keep EHT records.
The Employer Health Tax (EHT) is a payroll tax that employers in British Columbia pay based on the total wages they provide to employees working in the province.
Introduced on January 1, 2019, the EHT replaced the Medical Services Plan (MSP) premiums. Instead of individuals paying healthcare premiums, employers now contribute based on their payroll expenses. This shift helps create a more stable, fairer system to fund public healthcare.
The tax applies to most:
Businesses
Non-profit organizations
Charities
…as long as their payroll exceeds certain thresholds.
BC Employer Health Tax Rate
Before you calculate your BC employer health tax liability, understand how the BC employer health tax rate works. The tax you pay is based on your total BC payroll for the year. Smaller employers may qualify for a full or partial exemption, while larger employers pay the full rate.
Current BC employer health tax rate structure
Employers whose payroll exceeds the top threshold for the year must pay 1.95% of their total BC remuneration. Employers in the middle range will pay a gradually increasing rate on the amount of payroll above their exemption limit.
Annual payroll thresholds
Payroll for an employer with less than $500,000 is exempt from tax; employers with payroll between $500,000 and $1.5 million will receive partial relief; employers with more than $1.5 million in payroll must pay 1.95% of total payroll.
Source: Link
How rates apply to different payroll levels
If your payroll falls between two payroll thresholds, only the amount above $500,000 is subject to the sliding-scale formula for tax purposes. If your payroll is above $1.5 million, you will be subject to 1.95% on the total payroll amount.
How to Calculate Employment Health Tax BC
You can calculate the tax easily once you understand how payroll and rates work together. The province also provides online tools to help employers estimate their liabilities accurately and avoid mistakes.
Using the BC Employer Health Tax Calculator
The BC employer health tax calculator lets employers estimate tax liability by entering their total BC remuneration. This determines any exemptions and / or rates that apply.
Taxable remuneration explained
Taxable remuneration includes pay, salary, bonuses, commissions, tax benefits, etc. for employees working in British Columbia during the calendar year.
Example calculation scenarios
A payroll of $2 million incurs a tax of 1.95%, or $39,000; or, a payroll of $1 million calculates tax only on amounts above $500,000 (use the partial relief formula).
BC Employer Health Tax Instalments
Employers should be making instalment payments of their BC Employer Health Tax during the year. This helps pay off their total liability rather than paying a large amount at the end of the year.
When instalments are required
If your total annual tax will exceed $2,925, you must remit quarterly instalments each quarter during the next year based on your estimated payroll amount for that quarter.
Quarterly vs annual filing
Most smaller employers file and pay annually. Larger employers that make estimated quarterly instalments must still file their annual return to reconcile their total tax liability.
Penalties for late instalments
Employers that remit instalments late may also incur penalty charges and interest, and if a late filing is established, you may incur additional penalties from the provincial tax authorities.
How to Register and File
File and register through eTaxBC, which gives the government a single point of reference for tax compliance for employers, employees, etc., through an online account.
Lilly Tax Maria Facundo-Lilly 778-388-2751 [email protected]

09/23/2026

If you still need to file your 2025 tax return electronically, call us at 778-388-2751.
EFILE services for the 2025 tax season are available until January 29, 2027. You can file initial personal income tax returns for 2018 to 2025 electronically during this period.
Key Dates for EFILE Services
Service Type Availability Period
EFILE for Initial Returns: February 23, 2026 - January 29, 2027
This schedule lets both tax professionals and individuals file their tax returns electronically and stay in line with Canada Revenue Agency requirements.

Lilly Tax Maria Facundo-Lilly [email protected]

09/20/2026

09/20/2026

Mistakes that will trigger a CRA audit

Most Canadians file their taxes honestly, but the Canada Revenue Agency can still notice them. This usually happens because certain patterns in their returns stand out. The CRA uses advanced data-matching tools to spot returns that look different from others in the same income group or job.
Here are ten legal actions that could still get your tax return reviewed by an auditor.
1. Claiming a home office deduction every single year
Salaried employees need a signed T2200 from their employer to qualify, and the CRA checks these forms. Keep a floor plan, a lease or mortgage statement, and a clear calculation of your workspace percentage. Vague estimates are not enough if the CRA asks for proof.

2. Reporting round numbers throughout your return
Filing a return where every figure ends in zero. If every number on your return ends in zero, it suggests you are estimating instead of reporting exact amounts. The CRA notices returns with too many round numbers because real financial transactions are rarely that neat. Actual receipts give specific figures. From self-employment
If you report losses year after year but keep running your business, the CRA might decide it is a hobby, not a real business, and could deny your deductions. They want to see a reasonable chance of making a profit. If your numbers never improve, they will ask questions.

4. Claiming 100% business use of your vehicle
Claiming 100% or even 90% business use for a personal vehicle suggests you never use it for personal errands or trips, which is unlikely. Auditors are trained to question these claims. The CRA prefers you keep a mileage logbook that records every business trip, including the date, destination, purpose, and kilometres driven.
Trying to remember your trips months later is hard and not convincing. Even if your 70% business-use claim is accurate, it is tough to prove without a logbook.

5. Deducting meals and entertainment at high rates
Canada lets you deduct 50% of eligible meal and entertainment expenses, but the CRA checks if these claims are high compared to your revenue.

6. Failing to report foreign income or foreign accounts
Canada taxes residents on all their income, not just what they earn in Canada. You must declare income from foreign rental properties, investment accounts, or freelance work paid by foreign clients. The CRA often gets information from foreign tax authorities through international agreements.
If you own foreign property worth more than $100,000 CAD at any time during the year, you must file a T1135 Foreign Income Verification Statement. The basic penalty for missing this form is $25 per day, up to $2,500 per year. For gross negligence, penalties can reach $12,000, and if you ignore a CRA demand to file, they can reach $24,000. You can face these penalties even if you do not owe any tax.

7. Claiming charitable donations that seem too large for your income

8. Showing income that doesn't match your lifestyle

The CRA may use a net worth assessment if your reported income does not match your visible financial activity. Buying a new property, making large cash purchases, or depositing large sums can raise questions if your tax return doesn't show you can afford them.
This method is most often used when auditing cash-based businesses like restaurants and contractors. Gifts, inheritances, and loans can explain the difference, but you need documents to prove it.

9. Making errors or omissions across multiple tax years

10. Consistent and Habitual Late Filing

09/13/2026

Common mistakes Canadians make when choosing between RRSPs and TFSAs
Every tax season, Canadians ask themselves the same question: Should I put money in my RRSP or my TFSA? News stories often promote one over the other, but these accounts work differently, even though both offer tax benefits. Picking the wrong one can slow down your goals or limit your options later, while the right choice can help you build wealth over time. You do not need to be a financial expert to decide. What matters is understanding your income, when you will need the money, and how you plan to take it out. Many people overthink this decision or just follow general advice. Here are some common mistakes to watch out for.

1. Assuming RRSP Is Always Better Because of the Tax Refund
2. Believing TFSA Is Only for Short-Term Savings
3. Ignoring Current Income Level When Choosing
4. Forgetting About Government Benefits in Retirement
5. Using RRSP for Emergency Savings
6. Thinking the Home Buyers’ Plan Makes RRSP Risk-Free
7. Overlooking Contribution Room Limits
8. Choosing Based on Friends’ Advice
9. Ignoring Employer Pension Plans
10. Withdrawing RRSP Funds Too Early
11. Treating TFSA as Completely Risk-Free
12. Contributing to RRSP During Low-Income Years
13. Forgetting About Tax on RRSP Withdrawals
14. Using TFSA Only After RRSP Is Maxed
15. Ignoring Debt Before Investing
16. Not Planning for Retirement Timing
17. Overcomplicating the Decision

Lilly Tax

07/31/2026

Self-employed Canadians fill out Form T2125 as part of their T1 personal tax return.
The costs that are deductible cover the home office, the vehicle (at a business rate), meals (at 50%), professional fees, advertising, the capital cost allowance on equipment, payments to subcontractors, and other similar items.
Personal expenses, fines, penalties, and subscriptions to clubs are never deductible.
You should retain all your receipts for six years since the CRA has the right to audit any return during that time.
The amount of expenses that are deducted for business purposes is limited by the net business income—these expenses cannot result in a loss.
The Full List of Deductible Self-Employment Expenses
1. Advertising and Marketing (Line 8520)
2. Meals and Entertainment (Line 8523)
The limit set by the CRA for meal and entertainment expenses is 50 per cent of the actual cost.
3. Insurance (Line 8690)
All the types of insurance mentioned—business liability insurance, errors and omissions (E&O) insurance, professional indemnity insurance, commercial property insurance, and business interruption insurance—are payable in full, whereas the premiums for personal life insurance are generally not. Insurance on a vehicle that is used for business should be included in the vehicle expenses section.
4. Interest and Bank Charges (Line 8710)
The interest in business loans, the amounts drawn on business lines of credit, and the balances on business credit cards are deductible. So are the monthly fees charged by your bank, the fees for wire transfers, and the merchant processing fees (if you accept credit cards). However, interest in money borrowed to invest in personal assets is not deductible.

5. Office Expenses (Line 8810)
Things such as paper, pens, toner, stamps, and file folders, together with software subscriptions used in business (like Adobe Creative Cloud, QuickBooks, and project management tools), and small equipment items which are not capitalized, are included. Generally the boundary between 'office expenses' and items that require Capital Cost Allowance (CCA) is about $500: anything that costs more is generally capitalized while cheaper items are expensed right away.
6. Fees of professionals (item 8860)
The costs of accounting for the preparation of your business tax return, the legal fees connected with your business, bookkeeping fees, and business consulting expenses are all deductible. Fees for your personal tax return are not deductible—although the part of those fees that relates to your T2125 generally is. The fee for becoming a member of a professional association that is required for your licence is deductible; however, the cost of a golf club membership is not.
7. Rent (Line 8910)
When you rent an office, a studio, retail space, or a workshop solely for business purposes, the entire rent can be deducted. However, if you work from home, you should not use this provision and instead should use the section on the business use of your home (Part 7 of T2125).
8. Salaries, wages and subcontractor fees (Line 9060 / Line 8860)
The amounts you pay your employees—such as salaries, employer contributions to the CPP, and EI premiums—are deductible. Similarly, payments made to independent subcontractors for services are also fully deductible. However, remember that if you pay a subcontractor more than $500 in a year, you must provide them with a T4A slip and submit the T4A Summary to the CRA by the last day of February in the following year.
9. Telephone and Internet (item 9220)
The business-use portion of your cell phone plan that is used for business purposes, along with home internet and separate business lines, can be deducted. When 65% of your phone use is for business, you should deduct 65% of the monthly bill. To back up your claim regarding the percentage, keep a record of your usage for at least one typical month. A business line that is used exclusively for business purposes is 100% deductible’s 9281–9283)
10. Vehicle Expenses (Lines 9281–9283)
Gas, insurance, repairs, maintenance, parking, registration, and the CCA on a business vehicle are all deductible — but only in proportion to business use. If you drove 25,000 km during the year and 15,000 km was for business, your business-use percentage is 60%. You must maintain a mileage logbook to claim vehicle expenses.
11. Capital Cost Allowance – CCA (section 9 of T2125)
Assets used in a business which have a long life—such as computers, cameras, machinery and furniture—are not deducted in the year that they are purchased. Instead, you claim CCA each year according to the asset class:
Asset Type CCA Class Rate
Computers & tablets Class 50 55%
Passenger vehicles (over $38,000) Class 10.1, 30%
Other vehicles & equipment Class 10 30%
Furniture & fixtures Class 8 20%
Buildings (non-residential) Class 1 4%
Software (not Class 12) Class 12 100%
Zero-emission vehicles Class 54 30%
The half-year rule (also known as the '50% rule') causes your CCA claim to be reduced to half of the normal rate in the year that you get an asset. You are not obliged to claim the full amount of CCA, since claiming less may be advantageous if you want to save your deductions for a year when your income is higher.

12. Business-Use-of-Home (Part 7 of T2125)
So long as your home is your main place of business or if you have a separate area that is used entirely for business purposes, you are allowed to deduct your share of the various home expenses such as rent or mortgage interest (but not the principal), property taxes, utilities (including heat, hydro and water), home insurance, and maintenance. The proportion is generally worked out by dividing the square feet of the area used for business by the total square feet of the home. It should be noted that these expenses cannot result in or increase a business loss; any amount by which a loss exceeds the deductible expenses will be carried forward to the following year.

13. Other Expenses, Line 9270
The general provision on T2125 includes genuine business expenses which are not covered by the categories mentioned above. Examples include professional development courses and books, subscriptions to trade magazines, business-related parking that has not already been claimed in relation to the vehicle, licensing fees, and safety equipment necessary for your job. You should list each item separately together with the amounts.

04/02/2026

Self-Employment Expenses You Can Claim
Self-employed individuals in Canada can claim various expenses to reduce their taxable income. Below is a list of common deductible expenses:
Common Deductible Expenses
Expense Category Description
Business-Use-of-Home Expenses: Costs related to maintaining a home office, such as rent or utilities.
Advertising Costs: Expenses for promoting your business, including online and print ads.
Meals and Entertainment: 50% of costs incurred for business-related meals and entertainment.
Professional Fees: Fees paid for services from accountants, lawyers, or consultants.
Motor Vehicle Expenses: Costs for fuel, insurance, repairs, and depreciation related to business use.
Supplies: Items used in the course of business, such as office supplies.
Utilities: Costs for electricity, heating, and water for your business premises.
Insurance Business-related insurance premiums.
Travel Expenses: Costs for transportation, accommodation, and meals while travelling for business.
Bank Charges: Fees associated with your business bank account.
Important Considerations
•Keep detailed records and receipts for all claimed expenses.
•Ensure that expenses are reasonable and directly related to earning business income.
•Personal expenses cannot be claimed.
By understanding and utilizing these deductions, self-employed individuals can effectively lower their taxable income and retain more of their earnings.

Maria Facundo-Lilly
Certified Tax E-filer since 2006
[email protected] 778-388-2751

03/19/2026

Taking CPP at 60 can help when you need immediate income, have a lower life expectancy, or lack savings. But taking it early means a permanent reduction in monthly benefits.



Reasons to Take CPP at Age 60

Immediate Financial Needs

If you need income for living expenses, unemployment, or health issues, taking CPP at 60 can provide relief and bridge an income gap.

If you are unemployed or have health issues that prevent you from working, early CPP can bridge your income gap.

Life Expectancy Considerations

If you have health concerns, a family history of shorter lifespans, or expect reduced life expectancy, taking CPP early may offer financial benefit.

If you expect a shorter lifespan, taking CPP at 60 can yield more benefits than waiting. If you haven't contributed from 55 to 60, benefits are based on fewer years, making early CPP more attractive. Really, CPP can help pay off debts or cover essential expenses, letting you manage your finances better.

If you qualify for GIS at 65, early CPP can supplement income.

Personal Circumstances

If you have limited savings or income, early CPP can be crucial for financial stability.

If you want to retire early and enjoy life, CPP at 60 can help you do so.

Inflation Considerations

CPP payments are indexed to inflation, so starting early helps manage rising costs.

Flexibility in Retirement Planning

Trial Retirement: Taking CPP early lets you test retirement life while still receiving income, helping you adjust your plans as needed.

Lifestyle Choices

Travel or Hobbies: If you want to pursue travel or hobbies during early retirement, early CPP can provide the funds you need.

Financial Security

A guaranteed income stream can reduce financial stress and provide peace of mind in retirement.


Maria Facundo-Lilly

Certified Tax E-Filer

778.388.2751 [email protected]