The Canadian Bar Association passed a resolution entitled «Double Taxation of Legal Fees and Other Professional Services.» 1 What is double taxation? How does that apply to legal services in British Columbia? Provincial sales tax («PST») and goods and services tax («GST») or harmonized sales tax («HST») apply to legal services. The rules that specify when PST applies are different from those that specify whether GST or HST applies. This can lead to double taxation: PST and HST (a province other than British Columbia) apply to an invoice. Fees (e.g. flight and hotel expenses) incurred on behalf of a particular client and charged to the client for the exact reimbursement of the actual costs of the fees do not constitute the purchase price of the legal service. While legal services are usually subject to GST/HST, withdrawals may not be. If a payment accumulates as an agent for the client, the lawyer simply transfers the gross amount to the client without adding GST/HST and does not claim ITCs on any tax paid to the third-party provider of the payment. On the other hand, if a payment is an input for legal services, the law firm would claim ITCs on each tax paid for the acquisition of the payment, include the net amount of the tax in its legal services fees, and apply the applicable tax rate (see above) to the total consideration. A charity runs a community law clinic where it provides legal services to people who cannot afford a lawyer.
The charity`s provision of legal services is exempt in accordance with Schedule V, Part V.1, Division 1. However, you need to check the registration of a law firm that provides legal services outside of India. Apart from that, you should also check the receipt of the amount of the foreign currency equivalent in India. A not-for-profit organization acquires legal services from an active private lawyer to resell the legal services to a client of the not-for-profit organization. The not-for-profit organization then provides the legal services to the client in an amount that does not exceed the direct cost of the legal services. The not-for-profit organization will not charge the customer any GST/HST amount in respect of delivery. The supply of legal services by the non-profit organisation to the contracting entity shall be exempt in accordance with Section 6 of Part VI of Annex V. A non-profit organization that specializes in immigration law and provides legal services to clients for a small fee. Services are provided by an employee of the non-profit organization. 5. Division 1 of Part V of Schedule V provides that legal services provided under a legal aid plan administered or under the supervision of a provincial government shall be provided by the person responsible for the administration of the plan.
For the purposes of this section, the term «province» includes a region. As part of a legal assistance plan, a community legal clinic provides legal services to a client. The Community Legal Clinic is a separate person from the administrator of the legal aid plan. The supply provided by the community legal clinic is not exempt under Division 1 of Part V of Schedule V because the community legal clinic is not the administrator of a legal aid plan. However, another derogation provided for in Annex V may apply. 14. Legal services provided by a charitable organization are normally exempt under Section 1 of Part V.1 of Schedule V. A person buys legal services from a lawyer to help them buy a business. Some of the documents regarding the purchase are reviewed by an art student who is supervised by the lawyer. The services of the lawyer and the student are considered legal services. While legal services are usually subject to GST/HST, this may not be the case for expenses. If a payment is made as an agent for the client, the lawyer simply passes on the gross amount to the client without adding GST/HST and does not claim ICT for any tax paid to the third-party payment provider.
On the other hand, if a payment is an input for legal services, the law firm would claim ITCs on any tax paid upon acquiring the payment, include the net amount of tax in its legal services fees, and apply the applicable tax rate (see above) to the total consideration.