The Low Down on Construction – July 6
Last week the PST Transition Committee finalized the last few outstanding items with Saskatchewan Finance with respect to transition rules for PST on Construction services.
I believe we made a few gains in the negotiation process that will ultimately help our members and other contractors navigate their way through the complex process of transitioning their businesses to the new PST rules.
Throughout the last 3 months, one of the biggest concerns we heard surrounded what was known as the 10% rule. This rule required contractors to track change orders on projects that had been initiated prior to March 31. When the cumulative value of change orders exceeded 10% of the value of the contract, subsequent change orders would have to follow the new PST rules. Anyone involved in the industry could tell this policy would represent numerous operational and accounting issues.
It’s always difficult to explain the intricacies of construction to someone outside of the industry and this was no exception. However, with the help our other Committee members and some data from the General Contractors Association, we were able to demonstrate the 10% rule simply did not work for projects that involved alterations. As a result, the threshold for those projects has been adjusted to 25%. The threshold for new projects will remain at 10%.
Another hotly contested item was the sunset date, the date when all projects, regardless of when they were started would be required to operate under the new rules. Once again, this caused significant concerns for contractors as it’s extremely difficult to do a switch in the middle of a complex project.
The Ministry’s response to this concern was welcomed. The sunset date will now be the completion date specified on the Project Registry application. If that date changes then the contractor will have to contact Sask Finance to inform them of the reasons and get approval for a different sunset date.
While there were other “wins” in the negotiation process, we are fully aware that the outcomes we reached were not perfect and will still represent considerable pain for contractors.
The transition period, which may very well last up to a year or more, will no doubt be difficult for some. If you are experiencing issues or have project owners that have cancelled work because of the PST, we’d appreciate hearing from you.
As Chair of the PST Transition committee, I’d like to recognize the efforts of my colleagues over the past 3 months:
- Amanda Thick – SCA
- Brian Wallace – Wallace Construction Specialties
- Chris Guerette – Saskatoon Home Builders
- Dave Flamand – Peak Mechanical
- Keith Henry – Henry Downing Architects
- Mitch Beauchamp – PCL
- Stu Niebergall – Regina Home Builders
I would also like to thank officials from the Ministry of Finance that worked collaboratively with our Committee to reach resolution. They, no doubt, have had their hands full since March 22!
One final note …. we can’t stress enough the importance of registering your “old rules” projects with Sask Finance. This registration will provide you with clarity in the case of future audit.