Update from B.C. Government on its Unconstitutional Tax on Legal Fees

The Consumer Taxation Branch, of the Ministry of Small Business and Revenue has issued an information update on January 12, 2006, on the B.C. Court of Appeal's decision holding that the Social Services Tax is unconstitutional as applied to at least some legal services:

Information Update January 12, 2006

The next PST remittance date is January 16, 2006.

The Government is waiting for clarification from the Court of Appeal regarding its decision in Christie v. British Columbia, 2005 BCCA 631. Submissions are being made to the Court relating to the Form of the Order, with the final submission scheduled to be made on or before January 17, 2006. After clarification is obtained, the Government will provide Guidelines, based on the Court of Appeal decision, regarding the circumstances in which tax should and should not be collected. The Guidelines will be developed in consultation with the legal community.

In the meantime, lawyers are advised that they will not be charged penalties or interest for the failure to remit amounts that they are holding in trust pending publication of the Guidelines.

The Information Update is here.

I discussed the decision in Christie here.

The Law Society of British Columbia has issued some very general guidance to lawyers on collecting the tax here.

I have an idea for the Government of British Columbia that would be simple, constitutional and bring some basic fairness back into our sales tax system: Abolish the Social Services Tax on all legal services.

[Since I wrote this post, the Supreme Court of Canada has released its decision holding that the sales tax on legal fees is constitutional. You can read about it here. In retrospect, I wish I had chosen a different title for this post.]