PST Update: Court of Appeal provides relief for low-income people in need of legal services

May 18, 2006

The BC Court of Appeal has varied its order for a partial stay in Christie v. British Columbia 2006 BCCA 120 by granting an exemption for low-income persons, such that those persons need not pay provincial sales tax (PST) on legal services: see Christie v. British Columbia 2006 BCCA 241. As a result of this decision, BC lawyers should no longer collect PST on the legal services they deliver to low-income persons, at least insofar as those legal services relate to a determination of rights and obligations by courts and administrative tribunals.

In ordering the exemption, the Hon. Chief Justice Finch stated the following on behalf of the Court: "I am satisfied that the partial stay does not strike a proper balance between government on the one hand, and those who, because of their means, are denied access by requiring them to pay the tax. In my view, there is a compelling public interest in varying the partial stay to the extent that is applies to low income persons."

The provincial Consumer Taxation Branch has just issued an update respecting PST on legal services: see Consumer Taxation Branch: Legal Services Provided to British Columbians. The Branch interprets the Court of Appeal's variation of its stay order as meaning that "lawyers are not required to collect tax from low income persons in respect of legal services related to the determination of rights and obligations by courts of law or independent legal tribunals." The Branch interprets "low income" as meaning within the Legal Services Society eligibility guidelines as they existed on February 8, 2005, when the BC Supreme Court gave its decision in Christie 2005 BCSC 122. Those financial guidelines and a statutory declaration to establish a client's net income are available on the Consumer Taxation Branch website for reference.

Lawyers should note that there is, as yet, no entered court order. A couple of issues need clarification:

  • whether the exemption applies to all legal services delivered to low-income persons, or whether it is in fact limited to legal services relating to a determination of rights by courts and administrative tribunals
  • what constitutes "low income" for the purpose of the exemption.

Lawyers are reminded that, unless the low-income exemption applies, they must continue to collect PST on legal services from clients and either hold the tax in trust or remit it, in accordance with the Court of Appeal decision in Christie 2006 BCCA 120. Accordingly, lawyers should collect but not remit tax on legal services that are "related to the determination of rights and obligations by courts of law or independent administrative tribunals."  In other cases, they should collect and remit the tax.

The Law Society has no further information at this time, but is awaiting clarification of the order and will post information on its website as soon as it is available. This would include such issues as whether lawyers can provide to low-income clients refunds of PST they are currently holding in trust and whether low-income clients can apply for a refund of PST previously remitted to government.

Please watch the Society's website at for further updates. 


A discipline hearing panel has found William Frederick McGuire of Maple Ridge guilty of professional misconduct and breach of the Law Society Rules, and ordered that he be disbarred. Mr. McGuire admitted to improper withdrawals from trust (which the panel found amounted to misappropriation of trust funds from clients), improper billings, failure to keep proper accounting records and failure to deposit cash received in trust from a client as soon as practicable. The hearing panel noted that no client ultimately lost money as a result of  Mr. McGuire's actions, due to repayments he made into trust.