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On February 17, 2026, British Columbia (“BC”) Minister of Finance Brenda Bailey tabled the 2026 provincial budget (the “2026 Budget”), which will expand the scope of services subject to provincial sales tax (“PST”) while eliminating certain exemptions from PST. The 2026 Budget also remedies one longstanding issue for purchasers acquiring goods in BC for use outside the province. A brief summary of the key PST changes announced in the 2026 Budget are set out below.
Expanding the PST Tax Base
Introduced in 1948, BC’s PST has primarily applied to the sale of goods. However, reflecting the province’s shift toward a more service‑based economy, the 2026 Budget will expand the PST base to cover certain services, aligning BC more closely with other provinces imposing a sales tax. Effective October 1, 2026, the PST will apply at a rate of 7% to the following services.
- Accounting and bookkeeping services;
- Architectural services;
- Engineering and geoscience services;
- Non-residential real estate services including trading services, rental property management services, strata management services and commissions related to the purchase and sale of non-residential real estate; and
- Security services, including private investigation services.
PST generally applies to the full purchase price of most property and services. However, for architectural, engineering and geoscience services, PST will apply to only 30 per cent of the purchase price. By contrast, PST will apply to 100 per cent of the purchase price for the other newly taxable services.
Businesses providing these services will be required to register for PST and collect and remit PST thereon. Alternatively, in some cases, purchases may be required to self-assess PST. PST will not apply when these services are provided by an employee to their employer as part of their employment. Where the services are purchased for use both in and outside BC, PST will generally apply to the extent the services relate to BC based on percentage.
The Budget Measures Implementation Act, 2026 (Bill C‑2), which contains the proposed amendments to the Provincial Sales Tax Act (British Columbia) (the “Act”) expanding the PST base, was released on February 17, 2026. While the newly taxable services are defined in the legislation, careful review of those definitions will be required to determine whether a particular service is subject to PST. The full scope of the expansion will not be clear until amendments to the Provincial Sales Tax Exemption and Refund Regulation (the “Exemption and Refund Regulation”) prescribing the relevant services are released. Further clarification may also be provided through administrative policy.
Removing Existing PST Exemptions
The 2026 Budget also announced that the Exemption and Refund Regulation will be amended to eliminate exemption from PST for the following goods and services effective October 1, 2026:
- Clothing patterns, yarn, natural fibres, synthetic thread, and fabric commonly used in making or repairing clothing;
- Services related to clothing and footwear (other than basic laundry services, which will remain exempt);
- Basic cable television services;
- Toll-free telephone services; and
- Residential landline telephone services.
New PST Exemption
Effective February 18, 2026, the 2026 Budget introduces a new PST exemption for goods purchased for use outside BC. Sellers may provide a point‑of‑sale exemption or refund where the purchaser can substantiate out‑of‑province shipment for business use. The change offers welcome relief, as the exemption no longer depends on the seller shipping the goods out of the province.
Takeaways
The cost of doing business in BC just increased for many businesses because of the expansion to the PST base, and the additional complications associated with the proposed rule changes. Further, businesses providing the newly taxable services will now need to register for BC PST. While it is welcome relief to exempt goods from PST when goods purchased in BC are removed by the purchaser for use outside the province, overall the 2026 Budget appears likely, from a PST perspective, to increase visible and invisible costs to consumers and businesses that exceed the additional tax revenue raised. It is for this reason that organizations such as the Canadian Bar Association have advocated for harmonization of PSTs across Canada with the GST.1 Businesses are encouraged to review the newly taxable services and watch for the issuance of the amendments to the Exemption and Refund Regulations to determine the impact of the broader tax base on their PST obligations.
Footnote
1 See Recommendations to Reduce Significant Internal Trade Barriers (Sales Tax Harmonization), Canadian Bar Association, August 28, 2025. Online: https://cba.org/Our-Impact/Submissions/Recommendations-to-Reduce-Significant-Internal-Trade-Barriers-Sales-Tax-Harmonization
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