2 November 2004 GST/HST Ruling 49358 - Site lease

Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.

Dear XXXXX:

Thank you for your letter XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to services provided by speech-language pathologists.

Interpretation Requested

You are requesting clarification on the GST/HST exemption contained in paragraph 7(h) of Part II of Schedule V to the Excise Tax Act (the "ETA") to services provided by speech-language pathologists (SLPs). You indicated that the services provided by SLPs are diverse and you would like confirmation as to whether the entire scope of services that they provide would fall within the exemption. We understand these services as follows:

•   Direct service delivery, where one SLP provides services to an individual client or a group of individual clients.

•   Consultative service delivery, where an SLP provides information regarding intervention target, procedures and context to another agent of intervention, such as parents, classroom teachers, supportive personnel, and it is the second agent that carries out the program for the individual based on the information provided to the agent by the SLP.

•   Collaborative service delivery, where an SLP works with one or more students who have been identified as having speech-language disorders in collaboration with a classroom teacher or other personnel in the classroom or clinical setting.

In addition, SLPs provide education and counselling services for people experiencing communication and swallowing difficulties, and work closely with other professionals, sometimes as part of a multi-disciplinary team, in which they are participants in a coordinated program of care for an individual.

You advised that the XXXXX. SLPs work in a variety of health and educational settings, such as:

•   Hospitals,

•   Public health units,

•   Community health centres,

•   Schools,

•   Children's treatment centres,

•   Community Care Access Centres,

•   Private practice,

•   Preschool settings and daycare centres,

•   Resource centres,

•   Facilities for developmentally or physically challenged individuals, and

•   Nursing homes and long-term care facilities.

You indicated that the duties of an SLP include the following:

•   Administering tests and examinations and observing patients to diagnose and evaluate speech, voice resonance, language, cognitive linguistic and swallowing disorders.

•   Planning and implementing remedial programs to correct speech, language and voice disorders.

•   Establishing group and personalized care plans working as a member of an interdisciplinary team.

•   Conducting research on speech and other communication disorders and on the development and design of diagnostic procedures and devices.

•   Instructing students and other personnel.

Interpretation Given

As you are aware, paragraph 7(h) of Part II of Schedule V to the ETA exempts a supply of speech therapy services when rendered to an individual, where the supply is made by a practitioner of these services; i.e., a person who practices the profession of speech therapy. ^[v]1 Note that a practitioner of speech therapy services is defined in that Part as a person who is licensed or otherwise certified to practice the profession of speech therapy in the province in which he or she supplies his or her services. Where the supplier is not required to be licensed or otherwise certified to practice the profession of speech therapy in the province in which the service is supplied, the supplier must have the equivalent qualifications required to be licensed or certified in a province where there is such a requirement.

The exemption for speech therapy services supplied by a speech therapist is not dependent on who pays for the supply. For instance, a speech therapist may treat an individual for a speech dysfunction, but bill another person for payment of that service.

Basically, the exemption applies to speech therapists in private practice who are licensed or otherwise certified to practice the profession of speech therapy in the province in which they supply their services. The exemption does not apply to speech therapy services supplied by other persons, such as governments, institutions, corporations, and other organizations, as these persons do not meet the legislative criteria of being a supplier who practises the profession of speech therapy. ^[vi]2

With respect to the various health and educational settings that you identified in your letter, it is unclear as to whether the services provided in these settings are in fact supplies made by speech therapists in private practice, or whether the speech therapists are employees of the institution, organization, etc. If a speech therapist is an employee, please note that under the ETA, services provided by employees to their employers are not supplies, and therefore no GST/HST applies to wages or salaries paid to employees. However, as noted above, the exemption would not apply to the institution or organization's supplies, notwithstanding the qualifications of its employees.

As a transactional tax the application of the GST/HST is determined on a supply-by-supply basis. The approach behind the exemptions in Part II of Schedule V to the ETA is to exempt a supply of a particular service rendered to an individual on a fee-for-service basis. This is evident in the wording of the provisions of that Part, which describes supplies of particular services rendered to individuals. The exemption in paragraph 7(h) of that Part is explicit in its limited application to a speech therapy service supplied and rendered by a person with specific professional qualifications to an individual. In addition, within the context of this exemption there is a direct connection between the speech therapy service and the individual to whom the service is rendered. Evidence that the legislative criteria is met would generally involve a billing by the speech therapist to the individual for a service rendered, or to a third party who is paying for the speech therapy service on behalf of the individual. A situation that does not involve a billing by the speech therapist for this service would have to be evaluated to determine whether the legislative criteria are met; i.e., that a practitioner of speech therapy as defined in the ETA made the supply and the supply constituted a speech therapy service rendered to an individual.

The direct service delivery of speech therapy services between a speech therapist and an individual that you described would fall within the scope of the exemption where the supplier of this service is in fact the speech therapist. Whether the consultative and collaborative models of service delivery that you described fall within the scope of the exemption will be a question of fact, as it depends on whether these services are supplies made by a speech therapist "practitioner" as defined in the ETA of speech therapy services rendered to an individual.

For example, in the collaborative service delivery context, the extent of collaboration with a classroom teacher or other personnel in the classroom or clinical setting requires further explanation to determine the extent that this method of service delivery is that of a speech therapy service rendered to an individual or whether the interaction with the students is an aspect of a different supply.

Because of the explicit wording of the exemption, we would not consider the criteria for the exemption to be met for general services supplied by a speech therapist. For example, where a speech therapist enters into a contract with an organization to provide services such as data collection, case management, supervision, documentation and writing reports, conducting research, instructing other health care personnel, and program planning of a general nature, these services would not fall within the scope of the exemption as they do not constitute a speech therapy service rendered to an individual. A contract that does not identify specific speech therapy services to be provided to specific individuals is not indicative of a supply of a speech therapy service rendered to an individual and therefore this type of contract would not constitute an exempt supply described in paragraph 7(h) of Part II of Schedule V to the ETA.

In conclusion, because the criteria set out in the exemption limits its application to speech therapy services rendered to an individual when supplied by a licensed or certified speech therapist, the entire scope of services provided by SLPs that you described would not be exempt from the GST/HST.

The foregoing comments represent our general views with respect to the subject matter of your letter. Proposed amendments to the ETA, if enacted, could have an effect on the interpretation provided herein. These comments are not rulings and, in accordance with the guidelines set out in section 1.4 of Chapter 1 of the GST/HST Memoranda Series, do not bind the Canada Revenue Agency with respect to a particular situation.

Should you have any further questions or require clarification on the above matter, please do not hesitate to contact me at (613) 952-6761.

Yours truly,

Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division

2004/11/02 — RITS 50061 — Services Supplied by XXXXX [Instructors and Therapists]