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BC EXTENDS PST TO NEW SERVICES

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:

1. Accounting and bookkeeping
2. Architectural, engineering, and geoscience services (PST applying to only 30% of the purchase price of these services)
3. Rental property and strata management services
4. Commissions related to buying and selling non-residential real estate
5. Security and private investigation services

Effective the same date, the PST exemption for the following goods and services will also be eliminated:

1. Clothing patterns, yarn, natural fibres, synthetic thread and fabrics commonly used to make or repair clothing
2. 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.

For help with an Indirect Tax matter, please click here.

Download a PDF copy of this Blog here.