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EXPANSION OF BC’S PROVINCIAL SALES TAX NARROWS THE GAP WITH THE HST
As we previously blogged on here, British Columbia (“BC”) recently announced a further expansion of its Provincial Sales Tax (“PST”) base to certain goods and services including new professional services like accounting, architectural, and real estate services.
For those who have followed the province’s post-HST trajectory, the move is really not surprising. BC briefly participated in Canada’s Harmonized Sales Tax (“HST”) system in 2010, only to exit following a 2011 referendum and revert to its standalone PST system in April 2013. Since returning to a traditional retail sales tax model, the PST tax base has been steadily expanding. In this Indirect Tax Report, we review BC’s PST trajectory, which currently appears to be heading back towards harmonization with the HST model.
BC PST Trajectory - Background
The expansion of the BC PST began in response to the BC Supreme Court’s decision in Hootsuite Inc, 2023 BCSC 358.
In that case, the court found that certain Amazon Web Services offerings acquired by a social media service provider did NOT fall within the definition of taxable “software” under BC’s PST legislation then in force. In its 2024 budget, BC amended the definition of “software” to expressly include software as a service (“SaaS”), infrastructure as a service (“IaaS”), and application programming interfaces (“APIs”), with retroactive effect to April 1, 2013 – effectively negating the result in Hootsuite.
In BC’s 2026 budget, the province continued the expansion. Effective October 1, 2026, BC’s PST will extend to a range of professional and commercial services, including (1) accounting, (2) bookkeeping, (3) property management, (4) security services, (5) certain real estate-related commissions and, more narrowly, (6) architectural, engineering, and geoscience services.
Various longstanding exemptions for consumer goods and services will also be removed. These changes were enacted on April 16, 2026, and regulations providing limited exceptions to certain services were finalized on July 9, 2026.
Why Do I Care?
Businesses supplying newly taxable services in BC may now face additional PST registration, collection, and remittance obligations.
More broadly, BC’s continued expansion of the PST base raises the question of whether BC is gradually working its way back towards the HST model it abandoned in 2013.
As BC’s PST reaches cloud infrastructure, professional services, and other categories of service-based commercial activity—categories generally subject to the GST/HST framework—the practical distinction between the two tax bases narrows.
Takeaways
BC continues expanding its PST into service-based and digital commerce, effectively broadening its tax base towards the more encompassing HST tax base. Indeed, this may prove more politically and economically practical than raising PST rates!
In the meantime, Canadian and US businesses operating in BC should review their tax compliance positions to avoid unexpected assessments. Experienced Indirect Tax Counsel can help.
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
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