Ontario Lawyers to Become More Expensive (Ontario’s PST Merging with the GST)?

The idea of merging Ontario’s PST (provincial sales tax – currently 8%) with Canada’s federal government GST (general sales tax – currently 5%) took one further step forward yesterday with speculation that this measure might be introduced as a part of tomorrow’s Ontario budget announcement.

A merger of the PST to the GST would likely affect legal fees – i.e. increase the cost of legal services to the Ontario consumer.

Currently, PST is not charged on Ontario legal fees. GST is charged on Ontario legal fees.

Another effect of the PST/GST merger – in personal injury cases, only GST is currently charged on certain file disbursements.  Applying PST (i.e. 8%) to those disbursements will be significant.

For example, a typical personal injury file often incurs between $10,000 to $50,000 in disbursements, plus GST.

It is noted that personal injury damage awards are exempted from income tax pursuant to s.81(1)(g.1) of the Act. For reference, review the 1987 interpretation bulletin and a further 1992 interpretation bulletin. The PST / GST merger idea would not affect the tax status of personal injury awards.

Gregory Chang

Toronto Insurance Litigation Lawyer