• Getting the Tax Rules Right - A Call To Action

    May 4, 2017

    Getting the Tax Rules Right - A Call to Action

    The new PST on construction services has been in place for 34 days now. The government is still trying to sort out how and when the tax applies, and companies are scrambling to sort out contractual and financial obligations. It’s a mess for our industry, and no one is happy about it.

    Your associations and government officials continue to work together to update information and provide clarity around the implementation of new tax rules. While the associations, including the SCA, do not support the changes we are trying to make as much sense of them as possible for you – our members.

    To that end, we’ve partnered with MNP – tax and audit specialists – to provide members with as much information as we can on what changes are finalized and what they mean. Together, we held a webinar in April during Saskatchewan Construction Week and, this past week, we partnered on in-person question and answer sessions for contractors. The first half of the session offered a presentation by MNP on the latest PST updates, followed by break out sessions.

    Contractors and suppliers were able to grill Ministry of Finance officials on the ins and outs of the PST changes. The sessions sometimes got a bit heated, and lots of tough questions were asked. I hope most attendees found the sessions to be helpful. I also want to express my gratitude to the officials from the Ministry of Finance who attended these sessions. They’re in a tough spot, left trying to figure out how to implement a tax they didn’t get any notice about either. I don’t feel sorry for them, but I do empathize with their challenge, and I know they’re doing their best.

    While we’re working, for the most part, to help members understand the changes, we are not done fighting them yet. Specifically, we, and other associations, oppose the government’s arbitrary decision to impose a 10% change order limit for projects contracted pre-April 1. The rule, as currently written, says that if a project is approved on the pre-April 1 registry, the pre-April 1 tax rules apply…UNLESS that project experiences cumulative change orders in excess of 10%. Everything over the 10% is taxed according to the new rules, including the entirety of the change order that pushes the total past that threshold.

    This is an arbitrary and unfair percentage, chosen only to grow the revenue pie for the government with no consideration or understanding to the impact on the industry. This rule must change. The coalition of industry partners has written a formal letter to Brad Wall, asking the government to scrap the 10% rule and instead establish a three-year completion window for projects under the old rules. You can read more information in other parts of the SCA’s newsletter this month on this issue and on other parts of the PST issue.

    What we know today is that the only way this change will happen is if we have the political support of the government. We need to let our MLAs and Cabinet Ministers know why this rule needs to go. To do that, we need your help!

    We want our members to write to your local MLAs, and other MLAs you know. Send a letter or an email to them, call their offices. Get in touch with Minister Kevin Doherty (Minister of Finance) and tell him what you think. If we really want this rule to change, we need to let them know, and you have a part to play. In our newsletter this month we include a template letter, and information on how you can contact your MLAs.

    Complaining about the rules is one thing, doing something about them is another. At the SCA we will keep fighting hard to get these rules changed. Join us in this fight, and together, let’s get it done.

    Mark Cooper, MBA, PMP

    President and CEO
    Saskatchewan Construction Association