British Columbia expands PST to new professional services

Authored by: Adrian Zee, Rosemary Anderson, and Zheting Su

The recent 2026 BC Budget announced amendments (the “Amendments”) to the Provincial Sales Tax Act (“PSTA”) to eliminate certain exemptions and expand the application of PST to five new categories of professional services starting October 1, 2026. The five categories are:

• accounting services;
• architectural services;
• engineering services;
• non-residential real estate services; and
• security services.

(collectively referred to as the “Services”).

Services provided by a person to the person’s employer in the course of employment are excluded from the tax base. There are also exclusions specific to each of the Services.

The proposed application of PST to services is not harmonized with other provincial sales taxes. As a result, businesses with operations in BC and other provinces may be required to pay PST in addition to HST or other provincial sales taxes on the same service.

As discussed below, service providers located in BC will be at a competitive disadvantage relative to service providers located outside of the province when providing services to clients who carry on business in BC in addition to other provinces. This is because, with the exception of non-residential real estate services, the BC PST is levied based on the location of the service provider as well as the location of the purchaser or recipient of the services. For example, accounting services provided in BC to a company in Calgary with one employee in BC will be subject to 7% PST. Pursuant to s. 5(c)(i) of the PSTA, a company with employees in BC is deemed to carry on business in BC. By contrast, the same services provided in Calgary are unlikely to be taxable under the PSTA assuming the services do not relate to BC.

This post reviews the draft legislative amendments that render the Services taxable as set out in the Budget Measures Implementation Act, 2026.

Accounting services

The Amendments add new definitions to the PSTA to render accounting services a taxable service.

Accounting service means any of the following:

• preparing accounting records, including

• • • financial statements and notes to financial statements;
    • a journal entry;
    • a journal of accounts;
    • a payroll;
    • a budget;
    • an invoice, bill, or statement of account;
    • a tax or information return;
    • any records related to a tax or information return; and
    • an application for a tax credit, rebate or refund;

• providing assurance services, including auditing or reviewing accounting records and accounting controls;
• bookkeeping;
• billing;
• cost, financial, forensic, management or tax accounting;
• account reconciliation; and
• prescribed services [none prescribed at this time].

Notably, the service does not have to be provided by a CPA to be taxable. Rather, the taxability is determined by the service that is being provided. Thus, services by bookkeepers and other recordkeepers may be captured by the accounting service definition.

Architectural and engineering services

The Amendments define architectural services and engineering services in relation to the statutes governing these respective professions. In other words, if the service falls under the authority of one of the two governing statutes, then the service is taxable.

Architectural services means advice or services within the practice of architecture, as defined in the Architects Regulation of the Professional Governance Act (the “PGA”). Similarly, engineering services means advice or services within the practice of professional engineering or professional geoscience, as defined in the Engineers and Geoscientists Regulation of the PGA. The person providing the service must be registered or required to register under the PGA with the Architectural Institute of British Columbia or the Association of Professional Engineers and Geoscientists of the Province of British Columbia in order for the service to attract PST.

Accordingly, in contrast to accounting services, whether a service is an architectural service or engineering service is dependent upon both the status of the service provider and what is being provided. As is the case with accounting services, the Amendments allow the Province to prescribe more services as taxable architectural services or engineering services by regulation.

Non-residential real estate services

The definition of non-residential real estate services in the Amendments relies on the definition of real estate services in the Real Estate Services Act (the “RESA”). The service provider must also be licensed or be required to be licensed under the RESA, or pursuant to equivalent legislation of a different jurisdiction, in order for the service to attract PST.

The services are only taxable if provided in relation to property classified only as class 1 or 3 in the Assessment Act – i.e., residential properties and supportive housing. If a property is partially classified as class 1 or 3, PST applies only on the portion of the purchase price attributable to the taxable part of the real estate. This exclusion effectively puts the “non-residential” in “non-residential real estate services”.

The RESA’s definition of real estate services refers to three categories of services:

1. rental property management services,
2. strata management services, and
3. trading service.

Each term is further defined in the RESA with a list of activities that they encompass. Rental property management services and strata management services are generally defined according to their commonly understood meaning. For example, rental property management services include the services of collecting rent or security deposits, making payments to third parties on behalf of the owner, and managing landlord and tenant matters.

Trading services encompass services that a real estate agent usually provides, such as advising on price, finding real estate to acquire, showing real estate, presenting offers to dispose of or acquire real estate, etc.

The Real Estate Services Regulations excludes certain activities from these definitions and also provides situations where someone providing real estate services would not be required to have a license to provide the service – for example, where the person provides these services in the context of a court order or as a bankruptcy trustee. If these exclusions apply, the service would not be subject to PST.

Finally, as is the case with the other services, the Amendments allow the Province to prescribe more services as taxable non-residential real estate services by regulation.

Security services

The Amendments define security services as a service provided by a person who holds or is required to hold a security business license for any of the following, within the meaning of the Security Services Act (the “SSA”):

• an armoured car guard service;
• a private investigator;
• a security alarm service;
• a security consultant; and
• a security guard service.

The SSA outlines the specific activities that each of the above encapsulates.

How PST is charged on the Services

Historically, the only professional service subject to PST has been legal services. The new rules regarding collection of PST imposed on the Services are substantially similar in form to the existing rules for legal services, with the exception of non-residential real estate services.

Purchasers of the Services will soon need to pay PST on the purchase price of the Services if taxable. Purchase price is defined to equal the value of consideration accepted by the seller or person from whom the Services are acquired from as or on account of the price for the service.

The purchase price may also include fees, charges, and disbursements that are billed or otherwise charged to the purchaser for or in relation to the services, unless there are prescribed exclusions. PST is only payable on 30% of the purchase price for architectural services and engineering services.

Non-residential real estate services are taxable if the service is in relation to real property located in BC. If the services are only partly related to real property in BC, the purchaser must make a reasonable estimate of the purchase price between the jurisdictions.

Purchasers of the Services, with the exception of non-residential real estate services, are taxable if:

• the purchaser or the recipient is in BC, or carries on business in BC, and the services are provided in BC;
• the services are provided in BC, the purchaser is not in BC, and the services relate to BC in one of the prescribed manners (which differ depending on the type of service);, or
• the service provider is not in BC, the purchaser is in BC, and the service relates to BC in one of the prescribed manners.

Section 5 of the PSTA deems a person to be carrying on business in BC if it has employees or representatives or a warehouse, office, or place of business in BC. Where the services relate to both BC and a jurisdiction outside BC and the service is not provided in BC, the Amendments generally provide rules that allow the purchase price to be allocated between the jurisdictions.

For example, an accounting firm in BC providing services to a client in BC must charge PST on all their fees and disbursements billed to that client. Services provided in BC to a client that is not resident in BC and does not carry on business in BC are not taxable. However, suppose the accounting firm has offices in both BC and Alberta and provides services to clients that also have offices in both provinces. In that case, the services will be taxable to the extent that they are provided in BC or relate to BC in one of the prescribed manners.

Taxing based on where the services are provided (even in part) and what the service relates to creates complexities where the service provider carries on business in multiple jurisdictions. Professional service firms will no doubt need to implement detailed taxation checklists to ensure they accurately charge PST.

In addition, taxing based on service provider location puts professionals in BC at a competitive disadvantage. Unlike the federal GST/HST, businesses who pay PST cannot claim a credit or refund even if they charge PST to their customers. For example, suppose a company providing digital services carries on business in both Ontario and BC. If that company purchased accounting services from an Ontario service provider, the service provider would charge GST/HST, but that GST/HST is fully recoverable by the company. In contrast, if that company purchases the same accounting services from a BC service provider, the company must pay PST on the accounting service fees yet be unable to recover that PST. The company would also need to pay GST/HST (and then recover that GST/HST paid later by way of a credit or refund) because the proposed legislation does not harmonize with the place of supply rules for GST/HST, which is based on the company’s business address. In certain circumstances, the accounting services could also be subject to Saskatchewan’s or Manitoba’s provincial sales taxes.

Exemptions?

The stated intent of the Amendments is to align the taxation of services in BC with that of other provinces. However, it is important to note that there are significant differences in the application of tax on the Services between the proposed Amendments, the Manitoba Retail Sales Tax Act (the “MB RSTA”), and the Saskatchewan Provincial Sales Tax Act (the “SK PSTA”).

No exemptions have so far been announced by BC in respect of the Services. Notably, however, the MB RSTA and SK PSTA provide numerous exemptions for professional services. For example, under the MB RSTA, an otherwise taxable service provided in Manitoba is exempt from tax if the service relates solely to a physical location outside of Manitoba or a business activity outside Manitoba, even if the recipient is in Manitoba. The MB RSTA also contains related-party exemptions.

Most of the exemptions from BC PST are set out in the PSTA’s regulations. Given the vast expansion of the PST tax base, one hopes that the regulations will introduce exemptions to prevent cascading tax effects. Indeed, provinces are not legally permitted to impose indirect taxes pursuant to the Constitution. Thus, for both constitutional reasons and to improve the competitiveness of BC businesses, various exemptions, including ones for related parties and services purchased for resale, should be introduced.