Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 170955
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Supply of psychotherapy services
Thank you for your [correspondence], concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of psychotherapy services.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand the following:
1. You are a registered psychotherapist with the College of Registered Psychotherapists and Registered Mental Health Therapists of Ontario (CRPO).
2. The CRPO is established under section 5 of the Psychotherapy Act, 2007 effective April 1, 2015. The profession of psychotherapy is governed under the Regulated Health Professions Act, 1991.
3. Section 8 of the Psychotherapy Act, 2007 restricts the use of the titles “psychotherapist”, “registered psychotherapist” or “registered mental health therapist” to members of the CRPO.
4. You provide psychotherapy services through your corporation, […][YCo]. [YCo] is registered for GST/HST purposes and collects GST/HST on the supply of psychotherapy services you render to individuals. Your psychotherapy services are not covered under the Ontario Health Insurance Plan (OHIP).
RULING REQUESTED
You would like to know if the supply of psychotherapy services rendered to an individual by a psychotherapist registered with the CRPO is a taxable supply for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that the supply of psychotherapy services rendered to an individual by a psychotherapist registered with the CRPO is a taxable supply for GST/HST purposes.
EXPLANATION
Generally, most supplies of property and services made in Canada are subject to GST/HST, unless they are specifically exempt under Schedule V or zero-rated (taxed at 0%) under Schedule VI. Part II of Schedule V sets out the health care services that are exempt from GST/HST. A supply of a health care service rendered by a health care professional that is not included in Part II is generally subject to GST/HST.
Currently, there is no provision in the ETA that specifically exempts from the GST/HST supplies of psychotherapy services or services rendered by a psychotherapist, even if the psychotherapist is licensed and renders the service in a province that regulates the profession of psychotherapy.
However, a supply of psychotherapy services may be exempt from the GST/HST if the service is supplied by a health care professional authorized to render psychotherapy services within the scope of practice for his or her own profession and for which a GST/HST exemption is available.
For example, specific exemptions are available in sections 5, 6, and 7.2 of Part II of Schedule V for supplies of services (including psychotherapy) made by licensed physicians, nurses and social workers, respectively. In addition, section 7 of this Part lists specific services, supplies of which are exempt from the GST/HST if the particular service is rendered to an individual by a “practitioner” of the service. Psychological services and occupational therapy services are both listed in section 7 of Part II. The list of health care practitioners in the definition of the term “practitioner” includes registered psychologists and occupational therapists.
As no other exempting or relieving provision applies, the consideration for the supply of psychotherapy services rendered to an individual by a psychotherapist registered with the CRPO is subject to GST/HST at the applicable rate.
It should be noted that even though the supply of psychotherapy services by a psychotherapist registered with the CRPO is a taxable supply for GST/HST purposes, GST/HST will not apply to payments made to a person who is a small supplier [and who is not registered for the GST/HST].
In general, under section 148, a small supplier is a person whose total revenue from taxable supplies (other than supplies of financial services, sales of capital property and goodwill attributable to the sale of a business) in the previous four consecutive calendar quarters, or in a particular calendar quarter, and those of associated persons, does not exceed $30,000.
However, once the small supplier's total taxable revenue exceeds $30,000 in the previous four consecutive calendar quarters, or in a particular calendar quarter, they are no longer considered to be a small supplier and are required to register for the GST/HST. As the wording in the legislation includes the expression “four consecutive calendar quarters”, exceeding the $30,000 threshold must be verified every calendar quarter.
Additional information on registration requirements and small suppliers can be found in our publications GST/HST Memorandum 2.1, Required Registration and GST/HST Memorandum 2.2, Small Suppliers. Further information on your obligations and entitlements may be found in GST/HST Guide RC4022, General Information for GST/HST Registrants.
We understand your concern that the supply of psychotherapy services rendered by a registered psychotherapist are not exempt from GST/HST under the ETA where supplies of similar services made by members of other regulated professions may be exempt. The Canada Revenue Agency is responsible for the administration of the ETA and its Regulations. An amendment to the ETA would be required to treat the supply of services made by a psychotherapist as an exempt supply. Legislative amendments are a matter of tax policy, which falls within the responsibility of the Department of Finance. We have advised officials of that Department of your concern regarding the tax status of these services.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling(s) given in this letter provided that: none of the issues discussed in the ruling(s) are currently under audit, objection, or appeal; no future changes to the ETA, regulations or the CRA’s interpretative policy affect its validity; and all relevant facts and transactions have been fully and accurately disclosed.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 905-572-2636. Should you have additional questions on the interpretation and application of GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Yours truly,
Maria Forte-Long
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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