Legal Services Provided to British Columbians |
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Information Update August 17, 2006 | |
Commissions Commission will be allowed for every reporting period from December 2005 up to and including August 2006 for tax collected and remitted on legal services if all tax that must be remitted is remitted in full on or before September 15, 2006. Lawyers are only required to submit their August 2006 return with one payment showing the total tax remitted for the period December 1, 2005 to August 31, 2006. (See Tax Collected and Held in Trust from Information Update July 11, 2006). However, in order to claim commission for each period, lawyers must fax a breakdown of tax collected and remitted for each reporting period between December 2005 and August 2006 to 250 356-1090. For returns due after September 15, 2006, commission will be calculated based on the amount of tax remitted for each period. After the Supreme Court of Canada decision, if additional tax is to be remitted, each period's remittance will be amended and any additional commission paid at that time. Self-Governing Bodies A self-governing body is responsible for regulating the activities of its membership. As such, it is not considered to be an independent administrative tribunal for the purposes of these Guidelines. Tax collected on legal services provided to persons appearing before self governing bodies must be remitted in the usual manner. Self-governing bodies has been added to the list of bodies that are NOT Independent Administrative Tribunals. |
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Information Update July 11, 2006 | |
On February 14, 2006, the British Columbia Court of Appeal ruled on the form of the order made on December 20, 2005 in Christie v. British Columbia, 2005 BCCA 631. The Order declares that “the Social Service Tax Amendment Act (No. 2) 1993, S.B.C. c.24 is unconstitutional to the extent that it purports to tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals.” The Supreme Court of Canada has granted leave to appeal this decision. The appeal is scheduled to be heard in March of 2007. On March 10, 2006, the British Columbia Court of Appeal granted a partial stay such that lawyers were required to collect tax on all legal services. However, lawyers could hold tax collected on legal services related to the determination of rights and obligations by courts or independent legal tribunals in trust pending the outcome of the appeal to the Supreme Court of Canada. On May 11, 2006, the British Columbia Court of Appeal varied the partial stay granted on March 10, 2006, such that lawyers are not required to collect tax from low income persons in respect of legal services related to the determination of rights and obligations by courts or independent legal tribunals. The partial stay still applies in respect of legal services provided to persons who do not meet the low income criteria. These guidelines are provided to assist the legal community in determining when to charge, collect, remit or hold the tax in trust until the issue is resolved by the Supreme Court of Canada. |
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GUIDELINES |
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General Principles | |
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Barristers' Services | |
For the purposes of these guidelines, “barristers’ services” means all services directly related to the conduct of proceedings before a court or an independent administrative tribunal. These services are provided to a client in relation to an adversarial dispute between the client and another party. In order to qualify as “barristers’ services”, the services must relate to an existing dispute that, barring a negotiated settlement, will require resolution by a court or independent administrative tribunal. Barristers’ services include:
“Barristers’ services” does not include advice designed to avoid future disputes. |
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Solicitors' Services | |
For the purposes of these guidelines, “solicitors’ services” involve all legal services that are not barristers’ services, such as:
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Files with Barristers’ and Solicitors’ Services | |
If a file involves both barristers’ and solicitors’ services, lawyers must determine a reasonable allocation of the services involved in each category. | |
Tax Collected and Held in Trust | |
Lawyers were advised on January 12, 2006, that they would not be charged penalties or interest for the failure to remit tax collected pending the publication of these Guidelines. Lawyers are now advised to remit the amounts related to solicitors’ services as outlined below. For monthly remitters, the due date is September 15, 2006. Lawyers are only required to submit their August 2006 return with one payment showing the total tax remitted for the period December 2005 to August 31, 2006. For less frequent filers, the due date is September 15, 2006 or the due date of your next return, which ever is later. You are only required to submit that return with one payment showing the total tax remitted for the period December 2005 to that date. Lawyers are advised that the remittance process will return to normal practice as of September 15, 2006. This means:
Lawyers may refer to questions and answers regarding return remittance for further information. |
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Barristers’ Services to Low Income Persons | |
Tax is not payable in respect of barristers’ services provided to low income persons. See guidelines for determining whether a person qualifies as low income for this purpose. | |
Information about Independent Administrative Tribunals | |
Independent Administrative Tribunals are entities created by statute with the express authority to make decisions about a person’s rights and obligations, which is to be exercised in a quasi-judicial manner, and which may include conducting dispute resolution processes. The members of independent administrative tribunals are appointed for a fixed term and make their decisions independently from the appointing authority. The following are not Independent Administrative Tribunals:
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Examples of bodies that are Independent Administrative Tribunals: | |
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Examples of bodies that are NOT Independent Administrative Tribunals: | |
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Further Information | |
Lawyers may refer to questions and answers regarding the distinction between barristers’ services and solicitors’ services, or other general information about these Guidelines | |
Information Update May 17, 2006 | |
The British Columbia Court of Appeal has ruled on Mr. Christie’s application to vary the March 10, 2006 order of the Court granting a partial stay with respect to Christie v. British Columbia, 2005 BCCA 631. The Court varied the partial stay, such that, lawyers are not required to collect tax from low income persons in respect of legal services related to the determination of rights and obligations by courts of law or independent legal tribunals. Lawyers may refer to the guidelines for information regarding the financial eligibility test, the statutory declaration necessary to establish net income and answers to frequently asked questions. Government is continuing work on the development of Guidelines, based on the British Columbia Court of Appeal decision of December 20, 2005, to assist in determining which legal services relate to the determination of rights and obligations by courts of law or independent legal tribunals. The Government will continue to hold all applications for refunds of tax previously collected and remitted in abeyance until the Government’s appeal is decided by the Supreme Court of Canada. |
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Information Update March 10, 2006 | |
The British Columbia Court of Appeal has ruled on the Government’s application for a stay with respect to Christie v. British Columbia, 2005 BCCA 631. The Court granted the Government’s application to the extent of maintaining the statutory obligation of lawyers to collect the tax. However, to the extent that any tax is collected in respect of "legal services related to the determination of rights and obligations by courts of law or independent legal tribunals”, lawyers may hold the collected tax in trust pending the outcome of the Government’s appeal to the Supreme Court of Canada. Given the Court’s decision, effective immediately, tax applies to all legal services in the same manner as before the February 8, 2005, British Columbia Supreme Court decision in Christie v. AG of B.C. et al 2005 BCSC 122. Government is continuing work on the development of Guidelines, based on the British Columbia Court of Appeal decision of December 20, 2005, regarding the circumstances in which tax collected on legal services can be held in trust and when tax collected on legal services must be remitted in the normal fashion. Once the Guidelines are issued, lawyers will be required to remit taxes collected on all legal services other than legal services related to the determination of rights and obligations by courts of law or independent legal tribunals. 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 Government will hold all applications for refunds of tax previously collected and remitted in abeyance until the Government’s appeal is decided by the Supreme Court of Canada. |
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Information Update February 23, 2006 | |
The province has filed an application for a stay with British Columbia Court of Appeal on Christie v. British Columbia, 2005 BCCA 631. The hearing is scheduled for Tuesday, February 28, 2006. | |
Information Update February 14, 2006 | |
The Court of Appeal has ruled on the form of the order with respect to Christie v. British Columbia, 2005 BCCA 631. The Court has declared that “the Social Service Tax Amendment Act (No. 2) 1993, S.B.C. c.24 is unconstitutional to the extent that it purports to tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals.” As of today, the province is seeking leave to appeal to the Supreme Court of Canada. Government is also in the process of developing Guidelines, based on the Court of Appeal form of the order, regarding the circumstances in which tax should and should not be collected on legal services. Discussions with British Columbia Law Society representatives have commenced. Until government has completed its review and provided guidelines, lawyers should continue to refer to the judgment for guidance, and collect tax as instructed by the BC Court of Appeal. |
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Information Update February 3, 2006 | |
The Court of Appeal has not ruled on the form of the order with respect to Christie v. British Columbia, 2005 BCCA 631. Therefore, lawyers are advised that the information provided on January 12, 2006 still applies. | |
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. |
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December 22, 2005 | |
On December 20, 2005, the British Columbia Court of Appeal released its decision with respect to the Province of British Columbia’s appeal of the February 8, 2005, Christie decision1. The BC Court of Appeal held that “to the extent that the [Social Service Tax Act] Act purports to tax legal services related to the determination of rights and obligations by courts of law or independent administrative tribunals, it is unconstitutional as offending the principle of access to justice, one of the elements of the rule of law.” This decision changes, but does not completely eliminate, the tax on legal services. Effective December 20, 2005, tax under the Social Service Tax Act (the Act) applies to legal services on the basis of the Court of Appeal decision. Until government has completed its review and provided guidelines, lawyers should refer to the judgment for guidance, and collect tax as instructed by the BC Court of Appeal. At this time, there is no decision whether the Government of British Columbia will appeal this decision to the Supreme Court of Canada. Previous Tax Application - Christie Decision February 8, 2005 1 The Supreme Court of BC ruled on a constitutional challenge to the Social Service Tax Act regarding the 7% tax on legal services. The court ruled people with an annual household net income and assets below a threshold established for the Family Duty Counsel Program under the Legal Services Society Act do not have to pay the province's 7% tax on legal services (the Christie decision). |
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