Beginning October 1, 2026, British Columbia’s provincial sales tax (PST) will expand to certain professional services, including engineering and geoscience services.
At first glance, the calculation appears straightforward: PST is charged at 7% on 30% of the purchase price. On $100,000 of taxable engineering services, that produces $2,100 of PST:
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Example calculation |
In other words, the effective tax is 2.1% of the taxable service fee.
However, engineering firms should not assume that every dollar on every invoice is subject to this calculation. Some categories of engineering and geoscience services are specifically exempt. Other exemptions depend on the customer, the project location or the purpose of the services. Mixed contracts may therefore need to be reviewed and allocated carefully before PST is calculated.
When is a service an engineering or geoscience service for PST purposes?
Under the B.C. guidance, advice or services must meet both of the following conditions:
- They are provided by a person who is registered, or required to be registered, with Engineers and Geoscientists British Columbia (EGBC) under the Professional Governance Act, and
- They fall within the regulated practice of professional engineering or professional geoscience, including qualifying ancillary services.
If either condition is not met, the service is not an engineering or geoscience service for this particular PST rule. Services an employee provides to their employer in the course of employment are also outside the definition.
This means the analysis begins with the nature of the provider and the service—not simply the wording used on an invoice.
Which services are taxable?
The province identifies the following as examples of taxable engineering and geoscience services:
- Schematic design services,
- Design development and contract document services, and
- Tender services.
These are generally associated with categories 2, 3 and 4 in the Association of Consulting Engineering Companies British Columbia (ACEC-BC) budget guidelines. The list is not exhaustive. Other work that meets the definition of engineering or geoscience services may also be taxable unless a specific exemption applies.
For taxable services sold on or after October 1, 2026, PST is generally calculated as 7% of 30% of the purchase price.
Which categories of service are exempt?
The province specifically lists the following categories as exempt:
- Advisory services,
- Construction-related services,
- Resident engineering services,
- Project management services, and
- Construction management services.
These services are generally associated with categories 1, 5, 6, 7 and 8 of the ACEC-BC budget guidelines.
This is where invoicing can become complicated. A single project may include schematic design, tender support, construction-related services and project management. If those services are billed together, the firm must determine the fair market value of the taxable portion before applying the 30% taxable base.
A mixed-service invoice example
Assume an engineering firm charges a single fee of $100,000 for a contract that includes both taxable design and tender services and exempt construction-related services. If the fair market value of the taxable services is $75,000, the PST would be:
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Mixed-service example |
The firm would not calculate PST on the full $100,000 merely because the contract contains some taxable engineering work.
The practical takeaway is that contracts, time records, project phases and invoices should clearly distinguish taxable and exempt work. Generic descriptions such as “professional services” or “engineering fees” may not provide enough support for the allocation if the treatment is later reviewed.
Other important exemptions
In addition to the exempt service categories above, the provincial guidance includes several situation-specific exemptions.
Design of goods for retail sale
Engineering or geoscience services used to design tangible personal property solely for retail sale are exempt.
Projects and property outside B.C.
Services may be exempt when they relate to real property, tangible personal property or a project situated outside British Columbia.
For work that relates partly to B.C. and partly to another jurisdiction, a reasonable allocation is required. For example, if 60% of an infrastructure project relates to B.C. and 40% relates to Alberta, the 40% portion may be exempt. PST would apply to 30% of the portion attributable to B.C.
Services purchased for resale
An engineering firm that purchases qualifying engineering or geoscience services solely for resale to its client may purchase those services exempt from PST. It must generally provide its PST number or, if it is not registered, a completed Certificate of Exemption – General (FIN 490) to the supplier.
The firm must then charge PST when it resells taxable services to its client. The resale exemption does not apply to a purchaser that qualifies as a small seller.
First Nations and government-related exemptions
Exemptions may also apply to qualifying services:
- Purchased by a First Nations individual or band and performed on, or relating to property or a project on, First Nations land,
- Related to specified First Nations consultations or negotiations,
- Provided by an employee of a related corporation in qualifying circumstances,
- Purchased by certain members of the diplomatic or consular corps, and
- Purchased by the Government of Canada when the relevant federal department provides its PST number.
Each exemption has conditions. Firms should obtain and retain the required information or documentation before treating a sale as exempt.
How are disbursements treated?
Most disbursements form part of the purchase price of engineering or geoscience services and are included when calculating PST.
Travel, food and accommodation disbursements can be excluded when they reasonably reflect the actual cost of providing the services. If those costs are marked up or do not reasonably reflect the actual cost, they are included in the purchase price.
Blueprints supplied as part of taxable engineering or geoscience services are also included in the purchase price. If the underlying services qualify for an exemption, the blueprints are exempt as well.
The location of the firm is not the only consideration
An out-of-province provider can still be involved in a taxable transaction. For example, engineering services provided outside B.C. to a B.C. purchaser may be taxable when they relate to B.C. real property, goods or a B.C. project.
If the supplier does not collect PST, the purchaser may be required to self-assess the tax. A purchaser with a PST number reports it on the applicable PST return. A purchaser without a PST number generally uses the Casual Remittance Return (FIN 405) by the end of the month following the month in which the amount was paid or became due.
Registration and electronic filing
Businesses selling taxable engineering or geoscience services provided on or after October 1, 2026 generally must register to collect and remit PST, unless they provide only non-taxable or exempt services or qualify as a small seller.
Registration can be completed through eTaxBC up to six months before the first taxable sale. Businesses selling any taxable engineering or geoscience services must file their PST returns and pay electronically.
Watch the transitional rules
The date the work was performed does not always determine whether PST applies.
- If consideration is paid or becomes due on or after October 1, 2026, PST applies even if the services were provided earlier, unless an exemption applies.
- If consideration is paid or becomes due before October 1, 2026 and the services are completed entirely before December 1, 2026, PST does not apply.
- If consideration is paid or becomes due before October 1, 2026 but some services are provided on or after December 1, 2026, PST applies to the consideration attributable to services provided on or after October 1, 2026.
Long-term contracts, retainers, advance billings and work spanning the implementation date should therefore be reviewed before October.
What engineering and geoscience firms should do now
Before October 1, 2026, firms should consider the following steps:
- Review service lines and map them to taxable and exempt categories.
- Identify contracts that combine design, tender, advisory, project management or construction-related work.
- Update engagement letters, proposals and billing descriptions so that different service categories can be supported and allocated.
- Confirm how time and project costs will be tracked when a contract includes both taxable and exempt work.
- Review disbursement policies, including any markups or flat-rate recovery charges.
- Identify out-of-province and multi-jurisdiction projects that may require an allocation.
- Establish a process for collecting and retaining exemption documentation.
- Review work in progress, advance billings and long-term contracts for the transitional rules.
- Register for PST if required and ensure accounting software is configured to calculate, report and remit the tax correctly.
- Train project managers and billing staff so tax treatment is considered before an invoice is issued—not after.
Final thoughts
“7% PST on 30% of engineering fees” is a useful shorthand, but it is not the complete rule. The correct calculation may depend on the type of work, where the project is located, who purchases the service, whether the work is acquired for resale, how disbursements are billed and when the amount is paid or becomes due.
For firms providing several services within one engagement, the most important preparation may be improving the detail in contracts, project records and invoices. Clear classifications and supportable allocations will make it easier to charge the correct amount of PST and explain the treatment later.
Virtual Heights Accounting can help B.C. engineering and geoscience firms review their billing workflows, accounting setup and PST reporting before the new rules take effect.
Disclaimer: This article provides general information only and is not tax or legal advice. The application of PST depends on the facts of each transaction. PST regulations for engineering and geoscience services may continue to be updated before the October 1, 2026 effective date – this article reflects published guidance as of July 16, 2026; consult the Province of British Columbia’s current publications or obtain professional advice for your circumstances.
