What Members Need to Know
In response to questions from members regarding Social Services Tax payment, particularly in the case of contingency fee agreements, the following information is provided. Specifically, the government is not requiring prorating of tax on work performed; the rate of Social Services Tax due is the rate at time of billing. If you have any questions in this regard, you are welcome to contact Stuart Rennie, Canadian Bar Association BC Branch Legislation and Law Reform Officer at srennie@bccba.org.

Tax Payments on Legal Services, including Contingency Fee Agreements
For legal services, including work completed under contingency fee agreements, tax must be paid by the date on which the purchase price of the legal services is paid or payable, whichever is earlier (s. 49(1)). The purchase price for legal services is deemed to be payable when it is billed or otherwise charged to the purchaser. (s. 49(3)). Thus, bills or charges for legal services which are rendered payable on or after October 21, 2004 should include a 7 per cent Social Services Tax.

Government Background Information
For government background information, see the government’s Notice to British Columbia Sellers and Taxpayers Tax Rate Reduction to 7% - Social Service Tax Act.

In that Notice, the government’s interpretation of when the tax is to be paid is as follows:

Telecommunication Services and Legal Services
The tax is payable at the time the purchase price of the service is paid or payable, whichever is earlier. The tax rate is the rate in effect at that time.

The 7% tax rate applies to all payments for taxable services made or that become payable on or after the effective date, even if the contract for the services was entered into before the effective date.

The 7.5% rate applies to all payments for telecommunication and legal services made or that became due and payable before the effective date.

Additional information: CBABC Briefing

[posted February 2005]