In September 2020, the provincial government published updates to the PST for engineering services. Please see PST Bulletin 65
(Information For Businesses Providing Engineering, Geoscience And Architecture Services) for more detail.
In this article we would like to draw your attention to two things:
- The following clause within the updated bulletin that is very important with respect to your firm’s record-keeping practices:
If an invoice for engineering services fails to segregate the engineering services outlined above from other categories of fully taxable or exempt engineering services, or other taxable goods and services, PST applies at 6 percent on the total amount invoiced.
ACEC-SK consulted with the Ministry of Finance and has been reassured that any readily available documentation, not uniquely an invoice, will suffice to substantiate claims. The Ministry points out that segregation between taxable and exempt items on an invoice is required across all industries, with the PST shown as a separate line item, so that the tax is clearly applied and calculated correctly, and that this is not new or unique to engineering services. Subsection 7.28(4) of The PST Regulations provides the basis for this addition to the bulletin. Please note however, it is not the Ministry of Finance’s intention to broadly apply this provision where the PST invoiced to the client can be readily substantiated through backup documentation. So, bottom line – you need to continue your practice of keeping CLEAR records!
- The other critical piece that is very important for our industry to consider is the difference between Contract Administration and Construction Management. Note that one of the critical changes in the Bulletin is an expanded articulation of the difference between Contract Administration and Construction Management, including specific definitions to be used for guidance purposes.
In this era of “words matter”, it is critical that our members ensure they are using the proper terminology in their records to ensure they are taxed appropriately. The Ministry has confirmed that it interprets construction management very generally to mean where a firm is actually directing the contractor’s work in the same way that ACEC-SK does. It chose to use the wording noted for this section of Bulletin because it feels this wording provides a more detailed understanding of what Construction Management involves.
As a consequence, ACEC-SK reminds its members to be very mindful and purposeful in the language chosen when submitting descriptions of services performed for accounting purposes. Almost ALL work done by ACEC-SK members is considered “Contract administration”. There are very limited instances where Construction Management is performed in Saskatchewan.
October 5, 2020