What Does BC Budget 2026 Mean for Professional Services Firms Along with Other PST Changes?
On February 17, 2026, British Columbia’s (“BC”) Ministry of Finance released its 2026 Budget, introducing significant changes that will impact professional services firms across Canada and potentially beyond.
These changes expand the application of BC’s provincial sales tax (“PST”) to many professional services that were previously not taxed. Beginning October 1, 2026, BC’s 7% PST will apply to many common professional services, leaving these professionals with a limited runway to prepare, update billing systems, and communicate cost increases to clients. Importantly, the tax will apply regardless of where the services are provided from (within or outside Canada) and will include most disbursements added to professional services charges.
How Will These PST Changes 2026 Impact Professional Services Firms?
In line with Saskatchewan and Manitoba, which have applied provincial sales taxes to professional services for many years, BC has now expanded its PST tax base to include a wide range of professional services. While BC has historically applied PST to most legal services, the 2026 Budget significantly broadens the scope to many other professions.
As a result, all three PST provinces in Canada apply PST (and GST of course) to most professional services.
Which Professional Services Are Subject to PST Under BC Budget 2026?
Under the new rules, providers of the following professional services firms and sole practitioners will generally be required to register for BC PST and charge tax on many of their services rendered to BC clients (including non-BC clients, for matters “relating to BC”) on or after October 1, 2026:
- Accounting, tax, assurance, and bookkeeping services,
- Architectural, engineering, and geoscience services,
- Rental property and strata management services,
- Commissions related to buying and selling non-residential real estate, and
- Security and private investigation services.
These rules apply to BC-based providers as well as many non-BC professional services firms (including those outside of Canada) that provide services in BC or outside BC but consist of service for “matters that are in relation to BC.”
When Do the New PST Rules Take Effect for Professional Services in BC?
The expanded PST rules take effect on October 1, 2026. However, professional services firms can begin registering as early as April 1, 2026, but not before.
BC Finance has indicated that additional details and potential exclusions will be released over the summer, including guidance on transitional rules. These timing rules will be especially important for firms with work-in-progress that spans the effective date.
Do Canadian and Non-Canadian Professional Services Providers Need to Register for BC PST?
Yes. Canadian firms in and outside BC, as well as offshore (e.g., US firms) providers, will need to register, if they provide these professional services in BC, or simply regarding “matters in relation to BC”. PST will apply for work performed on or after October 1, 2026, which will be outlined in the coming transitional rules.
This means that even Canadian firms without a physical presence in BC will still have registration and collection obligations, depending on the nature of their services and clients, especially for firms outside BC, with BC clients or clients with matters “relating to BC”.
How Does BC PST Apply to Professional Services Disbursements After October 1, 2026?
For all newly taxable services, most disbursements will also be taxable. However, for accounting and tax services, they will be fully taxed at 7% along with the professional fees. However, similar to the approach taken by Manitoba and Saskatchewan, architectural, engineering, and geoscience services BC has adopted a reduced tax base approach for the professional fees AND any taxable disbursements.
Under these rules:
- PST at 7% applies to professional services charges and most related disbursements.
- The PST base is calculated as 30% of the total charge.
Example:
If an invoice for professional engineering services performed on or after October 1, 2026, includes $10,000 of professional services and $2,000 of taxable disbursements, the PST base is 30% of $12,000 ($3,600), multiplied by the 7% PST rate.
How Do BC’s New PST Rules Compare to Saskatchewan and Manitoba?
BC’s expanded PST rules align closely with the long-standing treatment of similar professional services taxed in Manitoba and Saskatchewan, both of which apply their provincial sales taxes to most professional services.
By adopting similar rules, BC is closing what it views as a gap in its tax base and aligning its indirect tax regime more in line with the other two PST provinces.
What Other BC PST Changes Were Introduced in the 2026 Budget?
In addition to expanding PST to many professional services, BC’s 2026 Budget eliminated several existing exemptions, increasing costs for residents and businesses. Newly taxable items include:
- Clothing patterns, yarn, natural fibers, synthetic thread, and fabric,
- Services related to clothing and footwear (basic laundry services remain exempt),
- Basic cable television services, and
- Residential landline and tollfree telephone services.
What New PST Relief Measures Were Introduced for Businesses?
Despite the broader PST expansion, the Budget introduced a positive change for businesses with a a new point-of-sale PST exemption for exported commercial goods. Previously, where a BC vendor delivered the taxable goods to a purchaser who would export the goods themselves or retain a carrier to do so, the BC vendor was required to charge PST, forcing the purchaser to apply for a BC PST refund with BC Finance’s Consumer Taxation Branch, after the goods were in fact exported out of the province.
Under this new rule, BC vendors are not required to collect PST on goods delivered in BC if:
- The purchaser arranges and pays for export of the commercial goods out of BC, and
- The purchaser provides a completed exemption certificate along with proof of export and certifies on a new prescribed form (FIN 464) that they will:
- Not use the goods within BC, other than for storage and shipping purposes,
- Certify that the commercial goods are for business use outside BC and
- Agree that if these requirements are not (or no longer met) at any time, the purchaser acknowledges they will self-assess report and remit PST, unless the goods are otherwise exempt or non-taxable.
This aligns closely with the GST zero-rating rules for exported goods, requiring documentation such as freight invoices, bills of lading, or proof of import into another jurisdiction.
What Are the Key Compliance Risks for Professional Services Firms Under BC Budget 2026?
BC’s 2026 Budget reflects a projected $9.6B+ deficit, increasing to $13.7B+ in the 2026–2027 fiscal year. As a result, we expect strict enforcement of these new PST rules, particularly for Canadian service providers, but may also impact non-Canadian providers of these newly taxable professional services.
Failure to properly register, charge, and remit PST could result in assessments, penalties, and interest, particularly with BC’s recently “enhanced” penalty regime introduced in the last year.
What Should Professional Services Firms Do Now to Prepare for BC’s PST Expansion?
Professional services firms in and outside Canada that are affected by these significant changes should begin preparing by:
- Reviewing whether their services fall within the expanded PST scope,
- Assessing registration obligations for BC PST,
- Updating engagement letters, pricing, and billing systems,
- Planning client communications ahead of the October 1, 2026, effective date, and
- Informing and educating all internal professional, support and billing staff, how the new rules will work, especially when it comes to proposing or quoting work with clients and their operations, projects or matters “related to BC”.
How Can Achen Henderson Help Professional Services Firms Navigate BC Budget 2026 PST Changes?
At Achen Henderson, we have a team of Canadian indirect tax who are ready to help your business navigate the 2026 Budget changes; however, we can also assist with broader national and global tax and Customs & Trade considerations.
Simple stuff, right?
If you’re unsure how these rules apply to your firm—or whether you need to register—we’re here to help.