PST guidelines awaited after partial stay in Christie v. British Columbia (Attorney General)

The order for a partial stay

court buildingAs most lawyers know, the BC Court of Appeal on March 10 ordered a partial stay of the Court’s earlier decision in Christie v. British Columbia respecting PST on legal services, pending appeal to the Supreme Court of Canada: see 2006 BCCA 120. The Hon. Mr. Justice Smith ordered that the Court’s December 20, 2005 declaration of invalidity concerning PST in Christie “is stayed to the limited extent of maintaining the statutory obligation of the lawyers of this province to collect the taxes on legal services and to hold them in trust pending the appeal.”

As a result of this order, BC lawyers must bill and collect the provincial sales tax on all legal fees in accordance with the Social Service Tax Act. As far as remittance of the tax is concerned, lawyers are not required to remit the tax on legal services that are “related to the determination of rights and obligations by courts of law or independent administrative tribunals,” as set out in the December 20, 2005 judgment. Instead, lawyers should hold these funds in trust pending the outcome of the appeal to the Supreme Court of Canada.

The Law Society has received legal advice that the partial stay does not affect those portions of the Social Services Tax Act that have not been declared invalid by the Court of Appeal. As a result, lawyers have a continuing obligation to remit tax on services outside the scope of the December 20, 2005 decision. If you are uncertain about whether a legal service falls within the scope of the judgment, the prudent course is to hold the tax in trust. In other words, if in doubt about remittance, you should bill and collect the tax, but hold it in trust rather than remit it.

Guidelines pending

Law firms will wish to monitor the Consumer Taxation Branch website at for interpretation guidelines, expected soon. Pending the guidelines, the government has stated that it will not charge lawyers penalties or interest for non-remittance of the amounts that they are holding in trust.

What if I don’t have a trust account?

Not surprisingly, the Law Society practice advisors have been swamped with PST calls in recent months. A frequent question is “How should I handle PST if I don’t have a trust account?”

Given that the December 20 stay order requires lawyers to hold unremitted PST in trust, the recommended course for lawyers without a trust account is to either 1) open a trust account for this purpose or 2) arrange with another lawyer who has a trust account to hold PST in trust.

These are the same options that lawyers have to consider when they do not usually handle trust funds but may have occasion to do so in a particular transaction. If, however, you do open a trust account strictly for the purpose of holding PST, the Law Society will waive the requirement to retain an outside accountant to review your books and accounts. Also, if you must hold PST in a matter that would not otherwise require you to receive funds in trust, the Law Society will waive payment of the trust administration fee (TAF).

Lawyers who require further information or would like to flag new issues should contact Practice Advisors Dave Bilinsky (604 605-5331 or or Barbara Buchanan (604 697-5816 or