PST / GST / HST on contingency fee agreements

clarification from the Ministry of Finance

The Law Society contacted the provincial Consumer Taxation Programs Branch of the Ministry of Finance for clarification on the tax treatment of contingency files after January 1, 2011. Their reply should be read in conjunction with the tax flowchart (PDF) which sets forth the treatment of HST/GST, since we have to deal with both PST as well as GST/HST.

Here is their response:

From: CTBTaxQuestions FIN:EX []

Sent: Friday, February 11, 2011

Subject: PST/GST/HST

Thank you for your inquiry.

We understand the Law Society of British Columbia on December 9, 2010 provided information to its members regarding final PST returns and contingent fee agreements, available at The information provided in this response will repeat some of the information already available on the Law Society’s website.

Application of PST

The following transition rules apply for the purposes of applying PST to legal services, whether or not the legal services are provided under a contingent fee agreement:

1. When 90% or more of the service is performed before July 1, 2010, PST applies to the full purchase price of the service.

2. When less than 90% of the service is performed before July 1, 2010:

a. PST applies to any amount of! the purchase price that becomes due, or is paid without having become due, before May 2010, and

b. When an amount of the purchase price becomes due, or is paid without having become due, on or after May 1, 2010, PST applies to the part of that amount that relates to the portion of the service that is performed before July 2010.

For more information on the PST transitional rules for legal services, please see page 9 of HST Notice #8, General PST Transition Rules for Transitioning to British Columbia HST, available on our website at:

Filing Deadlines

As indicated on pages 23 and 24 of the HST Notice #8 available at the above link, “All PST, not otherwise payable on an earlier date under the Act, is payable and must be collected by December 31, 2010. Therefore, supplemental returns will be required to be filed on or before January 23, 2011. However, in limited circumstances, an extension is provided.”

An extension to the December 31, 2010 collection due date is provided for social service tax (PST) payable on legal services provided under a contingent fee agreement (as defined in section 64 of the Legal Profession Act) if:

  • you entered into the agreement before July 1, 2010, and
  • the event triggering payment of the fee has not occurred by December 31, 2010.

In these circumstances, PST is payable on the date that the purchase price of the legal services is paid or payable, whichever comes first. You must submit the PST on a supplemental return (FIN 400S) filed with the Ministry on, or before, the 23rd day of the following month.

The supplemental return is available on our website at:

For more information please see Notice 2010-13, Final Supplemental PST Returns and Applicable Extensions, available at our website at

On or before February 1, 2011, you were required to report the number of contingent fee agreements that your firm entered into before July 1, 2010 and on which the event triggering payment has not occurred by December 31, 2010. After February 1, 2011, if you have not yet notified the Ministry, please do so immediately.

Send the required information to the ministry by mail or fax at:

Consumer Taxation Programs Branch
Ministry of Finance
PO Box 9442 Stn Prov Govt
Victoria BC V8W 9V4
Fax: 250-356-2195

You may provide the information by letter simply stating the number of agreements. You are not required to provide any client information.


The HST is imposed under federal legislation, the Excise Tax Act (Canada) and is administered by the Canada Revenue Agency (CRA), not the province of British Columbia. For questions regarding how HST/GST applies to contingency fee agreements subsequent to January 1, 2011 please visit CRA's dedicated HST web pages at, or call the CRA's General Business inquiry telephone line at 1-800-959-5525.

This correspondence describes how the Ministry interprets the relevant tax provisions for information purposes only. This response may be impacted by variations in circumstance, subsequent changes to legislation or subsequent court decisions. This response is provided as an aid to understanding the legislation and is not intended to replace the legislation. The Ministry is not responsible for updating this response if there are any subsequent changes to the law.

Tax Inquiries
Ministry of Finance