Robert Kreklewetz’s articles from Millar Kreklewetz are most popular:
with Senior Company Executives, HR and Finance and Tax Executives
in Canada
with readers working within the Accounting & Consultancy, Healthcare and Property industries
PROVINCE ANNOUNCES EXPANSION OF SALES TAX TO PROFESSIONAL
SERVICES
British Columbia has recently announced a further expansion of
its Provincial Sales Tax (“PST”) base – a move that
will not surprise those who have watched the province’s
post-HST trajectory.
BC briefly participated in Canada’s Harmonized Sales Tax
(“HST”) system in 2010, only to exit following a 2011
referendum and revert to its standalone PST system in April 2013.
Since returning to a traditional retail sales tax model, the
defining feature of PST policy has been base expansion –
likely to help address recent provincial fiscal commitments and
infrastructure projects.
We review the latest plan below.
Expansion of the PST
Among a suite of provincial tax measures are proposed changes to
the Provincial Sales Tax Act (“PSTA”). According
to the released Fiscal Plan, effective October 1, 2026, the PST
will be expanded to the following professional services:
Accounting and bookkeeping
Architectural, engineering, and geoscience services (PST
applying to only 30% of the purchase price of these services)
Rental property and strata management services
Commissions related to buying and selling non-residential real
estate
Security and private investigation services
Effective the same date, the PST exemption for the following
goods and services will also be eliminated:
Clothing patterns, yarn, natural fibres, synthetic thread and
fabrics commonly used to make or repair clothing
Services related to clothing and footwear, basic cable
television services, toll-free telephone services and residential
landline telephone services
The PSTA and regulations will also be amended to enable sellers
of goods to provide point-of-sale exemption or refunds to
businesses purchasing goods for use outside of BC. To qualify,
purchasers will need to provide evidence that the goods are being
shipped outside of BC for business use.
Why Do I Care?
The announcement appears to continue BC’s recent expansion
of PST into services, following the extension of PST to cloud-based
services as part of the 2024 Budget (see our prior blog here).
Businesses that provide the newly listed services will need to
register to collect and remit PST. BC has indicated that more
information will be made available before the taxes come into
effect.
The removal of exemptions for clothing and footwear related
goods and services will align their tax treatment more closely with
comparable goods and services in other provinces. Meanwhile, the
removal of exemptions for basic cable and telephone services is
framed as a fairness measure, given that alternatives to these
services are currently taxable in BC.
Takeaways
BC’s continued expansion of its PST base to varied
professional services and goods commonly sold into the province
through Internet-based supply chains will undoubtedly create
registration and compliance issues for those outside the province
selling into it.
Experienced Indirect Tax Counsel can help unpack these issues
and get onside with new (and old) BC compliance problems.
Download a PDF copy of this Blog here.
The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.