In 2026, the BC restaurant industry is facing a strange paradox. The government raised the Employer Health Tax (EHT) exemption to $1,000,000 — on paper, a win. But the new WorkSafeBC tip directive is quietly inflating your total payroll numbers, and for many mid-sized restaurants, those “added” earnings are about to push you straight over the cliff.
The 2026 EHT Trap
By requiring “verifiable tips” to be included in payroll reporting, the government has effectively inflated total remuneration figures — turning tax-exempt businesses into tax-paying ones overnight.
The Math That Should Keep You Up at Night
How to “Mind the Gap” in 2026
If you are hovering near the $1 million mark, you need a strategy — not just a bookkeeper. Here are three ways to protect your exemption.
Audit Your “Remuneration” Definition
Not everything paid to an employee is subject to EHT. Are you accidentally including non-taxable benefits or exempt reimbursements in your total? Removing just $10,000 of misclassified data could save you $5,000 in taxes.
The “Associated Employers” Trap
Do you own two locations under different numbered companies? The BC government is aggressive about “associating” these entities in 2026. If your combined payroll exceeds $1M, you must share one exemption — and the failure-to-associate penalties are significant.
Strategic Year-End Bonuses
If you’re at $995,000 in December, a holiday bonus might be the most expensive gift you ever give. A single payment could tip you over the threshold and trigger EHT on the entire $1,000,000.
The Bottom Line
The EHT isn’t just a “big business” problem anymore. Because of the new tip reporting rules, it is a restaurant industry problem — and the owners who don’t model their total remuneration before year-end will be the ones writing unexpected cheques in January.