Beginning October 1, 2026, British Columbia will expand its Provincial Sales Tax to several professional services that were previously outside the PST system.
The affected categories include:
- Accounting and bookkeeping services
- Architectural services
- Engineering and geoscience services
- Security and private investigation services
- Certain non-residential real estate services
The standard PST rate is 7%. However, for architectural, engineering and geoscience services, PST applies to 30% of the purchase price, creating an effective tax of 2.1% of the total fee.
For staffing agencies, the good news is that staffing, recruitment and workforce-management services have not themselves been added to the list of taxable professional services.
That does not mean staffing agencies can ignore the change.
The bigger concern may be what happens upstream, when an incorporated contractor invoices the staffing agency for accounting, engineering, security or another newly taxable professional service.
That distinction could determine whether the agency faces an additional cost, whether an exemption is available and whether existing margins need to be adjusted.
Staffing services are not automatically subject to PST
A staffing agency’s normal services may include:
- Recruiting candidates
- Placing independent contractors
- Supplying temporary workers
- Managing contractor relationships
- Processing contractor payments
- Providing workforce administration
- Charging placement or staffing markups
These services are not specifically included among the five newly taxable professional-service categories.
Therefore, a staffing agency should not automatically begin charging 7% PST simply because one of its contractors performs accounting, engineering or another professional function.
The tax analysis generally looks at the service being sold in each transaction.
If the staffing agency is selling recruitment, placement or workforce-supply services, its invoice to the end client may remain outside the expanded PST rules.
The key point is that the worker’s profession does not necessarily determine the tax treatment of the staffing agency’s invoice. The nature of the agency’s contract and the service it actually supplies will matter.
There are two transactions to review
Staffing arrangements often involve two separate transactions:
- The contractor supplies services to the staffing agency.
- The staffing agency supplies staffing or other services to the end client.
Those two transactions may have different PST results.
For example, an incorporated accountant may invoice the staffing agency for accounting services. The staffing agency may then invoice the end client for contractor placement or workforce-supply services.
The staffing agency’s client invoice may be outside the newly taxable categories.
However, the contractor’s invoice to the agency could still be taxable if the contractor is legally supplying accounting services.
This upstream contractor invoice is likely to be the main PST risk for many staffing agencies. The current guidance provided for review similarly identifies the legal supply made by the contractor to the agency—not simply the description used on the agency’s downstream invoice—as the central issue.
What services could be taxable when supplied by a contractor?
The answer will depend on the contractor’s actual responsibilities and contractual obligations.
For accounting services, the B.C. guidance includes activities such as:
- Bookkeeping
- Payroll preparation
- Billing
- Accounts payable work
- Account reconciliation
- Preparing financial statements
- Preparing accounting records
- Cost, financial, management or tax accounting
- Preparing tax and information returns
- Providing tax advice or representation
These services become subject to 7% PST beginning October 1, 2026, unless an exemption applies.
A contractor who provides these services to a staffing agency may therefore be required to charge PST on the contractor’s invoice.
Similar questions can arise where the agency engages contractors who provide:
- Regulated engineering or geoscience services
- Architectural services
- Security or private investigation services
- Certain commercial real estate services
The fact that the contractor found the engagement through a staffing agency does not, by itself, make the contractor’s professional service exempt.
A staffing-industry exemption or a resale exemption?
This is where the new rules require careful wording.
It would be risky to say that the “staffing industry is exempt from PST” without further explanation.
A more accurate statement is:
Staffing and recruitment services have not been specifically added to the newly taxable professional-service categories.
That is different from saying every service purchased or sold by a staffing agency is exempt.
A staffing agency can still purchase a taxable professional service from a contractor. Unless a specific exemption applies, the agency may have to pay PST on that purchase.
The most important potential relief is the resale exemption.
How the resale exemption may help staffing agencies
B.C. confirms that accounting services purchased solely for resale to clients are exempt from PST.
The purchaser must generally provide the supplier with:
- Its B.C. PST registration number; or
- A completed Certificate of Exemption – General, if the purchaser is not registered
The supplier must retain the appropriate documentation supporting why PST was not collected.
For example, suppose a staffing agency purchases accounting services from an incorporated contractor and then sells those same accounting services to the end client.
If the service is purchased solely for resale, the agency may be able to acquire the contractor’s service without paying PST.
The agency would then generally charge PST when it sells the taxable accounting service to the client.
Example: Professional service purchased for resale
An agency contracts with a bookkeeping company to perform monthly bookkeeping for one of the agency’s clients.
The bookkeeping company charges the agency:
| Description | Amount |
| Bookkeeping services | $80,000 |
| PST under resale exemption | $0 |
The agency then charges the client:
| Description | Amount |
| Bookkeeping services | $100,000 |
| PST at 7% | $7,000 |
The agency collects the $7,000 from the client and remits it to B.C.
Its gross margin remains:
$100,000 less $80,000 = $20,000
In this situation, PST should generally be a pass-through tax rather than a margin cost.
The resale exemption is not automatic
The resale exemption is helpful, but it is not a blanket exemption for staffing agencies.
The agency must purchase the professional service solely for the purpose of selling or providing that service to someone else.
This creates an important question:
Is the agency reselling the same professional service, or is it using the contractor’s service as an input in a broader staffing service?
That distinction is not always obvious.
Arrangement more likely to support resale
The staffing agency’s client contract says:
The agency will provide monthly bookkeeping, payroll processing, bank reconciliations and financial reporting.
The contractor’s agreement says:
The contractor will perform monthly bookkeeping, payroll processing, bank reconciliations and financial reporting for the agency’s client.
In this situation, the agency may have a stronger argument that it purchased accounting services solely to resell those same services.
Arrangement where resale is less certain
The agency’s client contract says:
The agency will provide contractor placement, administration and workforce-management services.
The contractor’s agreement says:
The contractor will provide accounting and financial reporting services.
Here, the agency may be purchasing the contractor’s accounting service as an input into a larger staffing or workforce-management offering.
The exemption may be less certain because the agency may not be selling the same accounting service to the client.
The documentation supplied for review reaches the same general conclusion: the exemption may be available where the agency is genuinely reselling the same covered service, but it may be less likely where the professional service is simply an input into a broader staffing arrangement.
When could PST reduce a staffing agency’s margins?
The new rules could affect staffing-agency margins in several practical situations.
Scenario 1: The contractor charges PST and the resale exemption does not apply
Assume an incorporated accounting contractor charges the agency:
| Description | Amount |
| Contractor fee | $100 per hour |
| PST at 7% | $7 per hour |
| Total contractor cost | $107 per hour |
The agency’s client billing rate is fixed at $120 per hour.
Before the PST change:
| Calculation | Amount |
| Client billing rate | $120 |
| Contractor cost | $100 |
| Gross margin | $20 |
After the contractor begins charging PST:
| Calculation | Amount |
| Client billing rate | $120 |
| Contractor fee | $100 |
| Unrecoverable PST | $7 |
| Gross margin | $13 |
The agency’s gross margin falls from $20 to $13 per hour.
That is a 35% reduction in gross margin.
The agency would need to increase its client billing rate from $120 to $127 per hour to preserve the original $20 margin.
Scenario 2: The agency cannot claim the contractor service was purchased solely for resale
An agency may provide a complete workforce solution that includes:
- Recruiting
- Contractor onboarding
- Timekeeping
- Compliance reviews
- Contractor payment
- Account management
- Performance monitoring
- Replacement guarantees
An accounting contractor’s work may only be one input into that broader service.
If the contractor charges PST and the agency cannot support the resale exemption, the PST becomes part of the agency’s contractor cost.
Unlike GST or HST, PST is generally not recovered through input tax credits. That means the agency must either:
- Increase the client’s billing rate
- Reduce its markup
- Negotiate a lower contractor rate
- Redesign the contractual arrangement
- Absorb the cost
That is the margin issue staffing agencies need to watch most closely.
Scenario 3: The client contract has a fixed maximum billing rate
Many staffing agreements operate under:
- Vendor-of-record arrangements
- Master service agreements
- Government rate cards
- Preferred-supplier programs
- Maximum hourly rates
- Competitive procurement contracts
Suppose the maximum client rate is $110 per hour.
The agency pays the contractor $100 per hour and expected to earn a $10 markup.
If the contractor must charge an additional $7 of PST and no exemption applies:
| Calculation | Amount |
| Maximum client rate | $110 |
| Contractor fee | $100 |
| PST paid to contractor | $7 |
| Remaining margin | $3 |
The agency’s $10 margin falls to $3.
The agency would need to renegotiate the maximum billing rate to $117 to preserve its original margin.
If the client refuses, the agency may need to absorb the cost or reconsider whether the engagement remains commercially viable.
Scenario 4: The agency’s rate is stated to include all taxes
A contract may state:
All rates include applicable taxes, fees and charges.
This language creates a different risk.
Suppose the staffing agency is itself supplying a taxable managed accounting service and charges the client a fixed total of $100 per hour.
If the $100 includes PST:
| Calculation | Amount |
| Total amount collected | $100.00 |
| Revenue before PST | Approximately $93.46 |
| PST included in price | Approximately $6.54 |
If the agency’s contractor cost is $80 per hour, the agency’s margin becomes:
$93.46 less $80 = $13.46
Without PST, the agency expected a $20 margin.
To protect the original margin, the contract should generally allow the agency to charge:
$100 plus applicable PST
rather than treating the $100 as tax-inclusive.
Scenario 5: The agency pays PST unnecessarily because the exemption paperwork is missing
Assume an agency purchases accounting services for $200,000 solely to resell those services to its clients.
The resale exemption may be available, but the agency fails to provide its PST number or the required exemption certificate.
The contractor charges:
| Description | Amount |
| Professional services | $200,000 |
| PST at 7% | $14,000 |
| Total invoice | $214,000 |
The $14,000 could become an unnecessary cash cost or create the need for a refund or correction process.
For a low-margin staffing agency, $14,000 is not pocket change. It is the kind of administrative oversight that can turn a decent engagement into a very expensive lesson.
Scenario 6: The contractor serves both the agency and the client
The same contractor may perform:
- Accounting work for the end client
- Internal reporting for the staffing agency
- Contractor-payment reconciliation
- Agency payroll support
- Internal financial analysis
The portion related solely to services resold to the client may qualify for different treatment than the portion used internally by the agency.
If the contractor issues one combined invoice with no reasonable allocation, it may be difficult to establish how much qualifies for the resale exemption.
The agency could end up paying PST on a larger portion of the invoice than necessary.
Separate scopes of work, time records and invoice lines will be important.
Scenario 7: The contractor is outside B.C. and does not charge PST
Using an out-of-province contractor does not necessarily avoid B.C. PST.
The B.C. accounting guidance states that taxable accounting services provided outside B.C. can still be subject to PST where they are purchased by a B.C. person and relate to a B.C. presence, activity, transaction or property.
If the supplier does not charge PST, the purchaser may have to self-assess and remit it directly.
For example, a B.C. staffing agency hires an Alberta accounting contractor to support a Vancouver client.
The contractor charges $100,000 and does not collect B.C. PST.
If the service is taxable and no resale or other exemption applies, the staffing agency may need to self-assess $7,000 of PST.
The absence of PST on the contractor’s invoice does not necessarily mean no PST is payable.
Scenario 8: The service relates partly outside B.C.
The new rules include relief where certain professional services relate to another jurisdiction.
For example, accounting services relating to property, activities, transactions or business operations outside B.C. may be fully or partially exempt.
The B.C. guidance provides an example where services relating partly to B.C. and partly to the rest of Canada are allocated, with PST applying only to the B.C. portion.
This may help national staffing agencies where a contractor supports operations across several provinces.
However, the allocation must be reasonable and supported.
An agency should not simply divide the invoice by the number of provinces and hope the tax auditor enjoys symmetry.
Scenario 9: The contractor qualifies as a small seller
The B.C. accounting guidance also confirms an exemption for accounting services purchased from a qualifying small seller.
This could reduce exposure where an independent contractor meets the small-seller requirements.
However, staffing agencies should not assume every incorporated contractor qualifies.
The contractor’s registration status, revenues and activities should be reviewed against the actual small-seller rules.
Scenario 10: The parties misclassify the arrangement
The most difficult situations will be those where the contracts tell different stories.
For example:
- The contractor agreement says the contractor provides accounting services.
- The client agreement says the agency provides staffing services.
- The agency claims it is reselling accounting services.
- The end client believes it is simply acquiring temporary labour.
That inconsistency could weaken the agency’s position.
The agency may have difficulty arguing both that:
- Its service to the client is merely non-taxable staffing; and
- It purchased the contractor’s accounting service solely to resell that same accounting service.
This does not mean one position is always wrong. It means the legal agreements, invoices and actual conduct must be aligned.
The agency should determine what it is truly selling and document it consistently.
Other exemptions staffing agencies should consider
In addition to the resale exemption, the confirmed regulations include other relief that may apply in limited situations.
Related-corporation services
Certain professional services provided to a corporation by an employee of a related corporation may be exempt.
This may help staffing businesses operating through multiple related corporate entities.
It will generally not apply to ordinary third-party independent contractors.
Services relating outside B.C.
Certain accounting, architectural, engineering and security services may be fully or partially exempt where they relate to a jurisdiction outside B.C.
National staffing firms should review whether contractor services relate to:
- Employees outside B.C.
- Clients outside B.C.
- Property outside B.C.
- Transactions outside B.C.
- Business activities outside B.C.
Federal government purchasers
Certain services purchased by the Government of Canada may be exempt where the required government documentation is provided.
Agencies working with public-sector clients should still review the specific contracting party because not every government agency or Crown entity receives the same treatment.
What should staffing agencies do before October 1, 2026?
Staffing agencies should perform an engagement-by-engagement review rather than applying one answer across the entire contractor population.
For each engagement, ask the following questions.
1. What service is the contractor supplying to the agency?
Is the contractor supplying:
- Accounting services?
- Engineering services?
- Security services?
- Temporary labour?
- General consulting?
- Project management?
- Administrative support?
The job title alone is not enough.
2. What service is the agency supplying to the client?
Is the agency selling:
- Recruitment?
- Placement?
- Workforce supply?
- Contractor administration?
- A managed accounting service?
- A managed engineering service?
- A managed security service?
This determines whether the agency’s own downstream invoice may be taxable.
3. Is the agency reselling the same service?
To support the resale exemption, the agency should be able to show that it purchased the professional service solely to sell or provide that service to another person.
The contractor agreement, client agreement, statements of work and invoices should tell a consistent story.
4. Has the required exemption documentation been collected?
The agency may need to provide:
- Its PST registration number
- A Certificate of Exemption – General
- Other prescribed declarations or documentation
The exemption should be documented before invoices begin arriving with PST.
5. Does the client agreement allow taxes to be added?
Contracts should clearly state that billing rates are exclusive of:
- GST
- PST
- HST
- Other applicable sales or transaction taxes
Without this wording, the agency may be forced to absorb a new tax within its existing markup.
6. Are the services properly separated?
Invoices should separately identify:
- Staffing and recruitment fees
- Contractor professional services
- Administrative charges
- Managed-service charges
- Reimbursed expenses
- Services relating outside B.C.
Bundling everything into a single “consulting fee” may be easy today and painful during an audit.
7. Are out-of-province invoices being reviewed?
Accounts payable teams should flag contractor invoices involving:
- B.C. clients
- B.C. work
- B.C. business activities
- Newly taxable professional services
The agency may have a self-assessment obligation even if the contractor does not charge PST.
Contract language staffing agencies should review
Client agreements should generally include language such as:
All fees, rates and charges are exclusive of GST, provincial sales tax and any other applicable sales, transaction or similar taxes. Applicable taxes will be added to invoices and are payable by the client.
Contractor agreements may also need to address:
- Whether fees include or exclude PST
- Whether the contractor is required to register
- Whether the agency is claiming a resale exemption
- What documentation must be provided
- Who is responsible for incorrect tax treatment
- Whether the contractor must separately identify taxable services
- Whether the services relate to B.C. or another jurisdiction
The bottom line for staffing agencies
The B.C. PST expansion does not mean every staffing-agency invoice becomes subject to an additional 7%.
Staffing, recruitment and general workforce-supply services have not been specifically added to the list of newly taxable professional services.
However, staffing agencies may still face PST exposure when their contractors supply accounting, engineering, architectural, security or other newly taxable professional services.
The confirmed resale exemption provides meaningful relief, but only where the agency can show that it purchased the service solely to resell or provide that same service to another person.
The greatest margin risk arises where:
- A contractor charges PST and no exemption applies
- The agency cannot recover the PST through an input tax credit
- The client billing rate is fixed
- The client contract includes taxes in the agreed price
- The agency fails to document the resale exemption
- Contractor services are used partly for internal purposes
- Out-of-province invoices create a self-assessment obligation
- The contractor and client agreements describe inconsistent services
The right answer will depend on the exact contractor relationship, the agency’s client contract and the service supplied at each stage.
For staffing agencies, this is less about adding 7% to every invoice and more about making sure the tax does not quietly come out of the agency’s markup.
Because a 7% tax applied to a 10% markup does not create a small problem. It creates a very skinny margin.
This article provides general information only. The application of B.C. PST depends on the specific agreements, services, jurisdictions and parties involved. Staffing agencies should review their contractor and client arrangements before the October 1, 2026 effective date.
