In mid-June, the Ministry of Finance advised the Association of Consulting Engineering Companies – Saskatchewan (ACEC-SK) it accepted the association’s arguments against significant changes relative to which engineering services should be PST-chargeable. Here is what we currently know.
Two important changes will be the new application of PST to construction management services and computer services provided by engineering companies. Therefore, the full 6 per cent PST will now be chargeable on the following:
- For engineering, procurement and construction (EPC) contracts, the new definition will clarify that PST applies in full to construction management services, if provided in relation to a construction contract, including an EPC contract, and otherwise taxable pursuant to sub-clause 3(1)(k)(vii) or (xix) of the Act.
- For computer services, the new definition will specify that PST applies in full to services related to designing software or systems, or any other computer service described as a computer service.
The application of PST to "engineering services" will essentially remain status quo per the defined categories in ACEC-SK's Recommended Schedule of Fees, as follows:
- Professional engineering services in the category of design services (Category 3) remain taxable based on a formula that applies PST to 30 per cent of the taxable charges.
- Professional engineering services in other categories in the Fee Schedule will remain exempt from PST, including:
- a. Category 1 – Consultative and advisory services
- b. Category 2 – Pre-design services
- c. Categories 4 & 5 – General engineering or geoscience services during construction or field projects, resident engineering or geoscience services during construction or field projects, geological or geophysical services of defined scope, and geological or geophysical services on comprehensive projects
It is critical to note that where a vendor fails to differentiate the engineering services that are taxable at 30 per cent from other services, PST will apply to the total amount shown on the invoice. The onus will be on engineering firms to clearly differentiate for which service(s) they are invoicing.
ACEC-SK will be offering educational sessions over the coming months to help members understand the differences among such things as: contract administration, construction administration, EPC and EPCM. Ensuring you are clear about the differences among these services will help you make more informed future decisions to navigate Saskatchewan's taxation system.