A Vancouver employer was about to cross the BC EHT threshold on bonus timing alone. Restructuring the schedule saved roughly $14,000.
British Columbia levies an Employer Health Tax once BC remuneration passes an annual threshold, and this client was about to cross it because of bonus timing rather than real payroll growth. We modelled the EHT cost against the bonus schedule, shifted discretionary compensation across the year end where it was commercially sensible, and confirmed the associated-employer position. The result was roughly $14,000 less EHT with no change to what staff were actually paid.
Employers withhold CPP, EI and income tax and remit on a schedule set by their average monthly withholding. Late remittance carries a penalty of 3% to 10%, rising to 20% for a repeat failure with gross negligence in the same year.
Why it bites: Payroll penalties compound quietly. An employer that drifts one cycle late each quarter can owe more in penalties than in the tax it was late paying.
Planning has to be in place before the transaction. The salary-versus-dividend mix, the timing of a capital purchase and the choice of year-end all change the outcome, but only prospectively.
Why it bites: Almost every planning opportunity we see missed was available and simply not taken in time; very few are recoverable after year-end.
Every engagement above was priced as a fixed fee agreed before the work started, and paid only once the client had reviewed the result. If any of this looks like your situation, the first step is a free 15-minute call — we will tell you plainly whether there is anything worth doing.
Reviewed by Udit Gupta, Founder and Tax Accountant for the 2025 tax year. This case study is based on a real client engagement handled by Tax Filings Canada; the client's name and identifying details have been changed. Outcomes depend on your own facts.
Sources. CRA — Businesses · Income Tax Act (Justice Laws Website)
