Provincial sales tax update

December 23, 2005

The Consumer Taxation Branch of the Ministry of Small Business and Revenue has advised the Law Society that it intends to issue guidelines respecting the application of PST to bills for legal services, in light of the BC Court of Appeal decision in Christie v. British Columbia. The Law Society expects the Branch to issue guidelines in January, hopefully prior to the next PST remittance date. We will provide a further update.The Branch published the following notice on its website on December 22:

Extract from the Ministry of Small Business and Revenue (Consumer Taxation Branch) website(

"On December 20, 2005, the British Columbia Court of Appeal released its decision with respect to the Province of British Columbia’s appeal of the February 8, 2005, Christie decision1. The BC Court of Appeal held that "to the extent that the [Social Service Tax Act] Act purports to tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals, it is unconstitutional as offending the principle of access to justice, one of the elements of the rule of law."

This decision changes, but does not completely eliminate, the tax on legal services.

Effective December 20, 2005, tax under the Social Service Tax Act (the Act) applies to legal services on the basis of the Court of Appeal decision. Until government has completed its review and provided guidelines, lawyers should refer to the judgment for guidance, and collect tax as instructed by the BC Court of Appeal.

At this time, there is no decision whether the Government of British Columbia will appeal this decision to the Supreme Court of Canada.

1 The Supreme Court of BC ruled on a constitutional challenge to the Social Service Tax Act regarding the 7% tax on legal services. The court ruled people with an annual household net income and assets below a threshold established for the Family Duty Counsel Program under the Legal Services Society Act do not have to pay the province's 7% tax on legal services (the Christie decision)."

In follow-up to our most recent email to the profession on this issue, the Law Society confirms that it may be prudent at present for BC lawyers to continue to bill for and hold PST in trust. This is particularly so pending the entry of an order in Christie v. British Columbia and pending the issuance of interpretation guidelines from the Consumer Taxation Branch.

Please continue to check the Law Society website at for updates. Lawyers can also contact Barbara Buchanan, Practice Advisor, at 604 697-5816 or by email to