Tax on Legal Services
HST General Transitional Rules has been updated to add the tax policies about the Transitional period around July 1, 2010 when the HST comes into effect.
In 2003, Vancouver lawyer Dugald Christie started a court action to challenge the constitutional validity of provincial sales tax (PST) on legal services. There were three court decisions from 2005 to 2007 (see History of Christie case).
While the issue was before the courts, the province instructed lawyers not to collect the tax from low-income clients. The ministry developed guidelines to assist lawyers in determining when not to charge the tax.
After two lower court rulings, the Supreme Court of Canada ruled in May 2007 that the Province of British Columbia has a right to impose PST on legal services [British Columbia (Attorney General) v. Christie, 2007 SCC 21].
To ensure that individuals who were not charged tax under the guidelines would not now have to pay the tax, the province passed a remission order. This means if you were not charged tax during the court challenge as a low-income individual, you do not have to pay the tax now. It also allows a refund for
low-income individuals who paid the tax during the court challenge but met the guidelines.
If you did pay the tax on legal services billed after February 7, 2005 and before May 25, 2007, but qualified as a low-income individual under the guidelines, you can apply for a refund. Please see the Notice to Taxpayers – Provincial Sales Tax (PST) on Legal Services and our Frequently Asked Questions for more information.
To apply for a refund, please use the Application for Refund of Tax on Legal Services form (FIN 197). If you have already applied for a refund, please do not re-apply. We will be in contact with you.
Lawyers should consult the Notice to Lawyers for information on remitting PST held in trust and claiming commissions.
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