Provincial Tax on Legal Services

There has been quite a bit of action this year on the topic of taxes on legal services. In a case called Christie, the BC Supreme court found that the tax of legal services for people under a certain annual income ($28,000 - however there is debate whether that is increasing to $32,000) is unconstitutional as it act as a barrier to access to the judicial system.

The government has appealed the decision, however, in the mean time has taken the position that any award that is made should be counted in calculating the "income" of the individual. This created an injustice as people who have the money pay a lawyer by the hour would not have to pay the tax, however, people too poor to pay a lawyer by the hour, but rather pay the lawyer out of the settlement would be paying the tax.

Recently, in the Muira case, the court found that the settlement funds should not be considered in calculating annual income.

To date, there has been no direction from the government or the law society of British Columbia.

The cases can be found at:

Muira
http://www.courts.gov.bc.ca/Jdb-txt/SC/05/15/2005BCSC1569.htm

Christie
http://www.courts.gov.bc.ca/Jdb-txt/SC/05/01/2005BCSC0122err1.htm