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.
GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 225768
Dear [Client] :
Subject: GST/HST RULING
Application of GST/HST to services rendered by a social worker
Thank you for the letter of June 6, 2021 from […], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to services rendered by a social worker. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario; and 15% in New Brunswick, Newfoundland and Labrador, Nova Scotia and Prince Edward Island. 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 registered for GST/HST […] under GST/HST registration number […].
2. You practice in […] (the Province) and are licensed under the Alberta College of Social Workers (ACSW). According to the ACSW’s registrar, you are a Registered Social Worker (RSW) holding registration number […].
3. According to the ACSW website (Footnote 1) , “Social Work” is a profession that is regulated in Alberta under the Health Professions Act (HPA). Registration is mandatory for persons with a recognized social work credential, practicing within the scope of social work, with clients located in […] (the Province). As such, only registered social workers can identify as a “Social Worker”.
4. The Scope of Practice of a Social Worker in the Province is explained in Schedule 27 (section 3) of the HPA as follows:
“In their practice, social workers do one or more of the following:
(a) enhance or restore the social functioning of individuals, families, groups, organizations and communities by improving developmental, problem-solving and coping capacities of people and systems,
(b) promote effective and humane systems that provide resources, opportunities and services to people and link people to those systems,
(c) contribute to the development and improvement of social policy, and
(c.1) teach, manage, and conduct research in the science, techniques and practice of social work, and
(d) provide restricted activities authorized by the regulations.” (Footnote 2)
5. As an RSW, you work extensively in high conflict evaluation, developing parenting plans and positive communication.
6. You are also a licensed […] coach for […].
7. You have additional specialised training in family mediation. You are a Registered Family Mediator (RFM) with a specialization in Divorce and Separation.
8. The Alberta Family Mediation Society (AFMS) states it is a non-profit organization governing RFMs.
9. As an RFM, you provide mediation and coaching for families who are restructuring including separation, divorce, co-parenting and blended families. Your mediation services would cover common issues such as the division of property, assets, and debts, the creation of parenting plans, the calculation of child support and the determination of spousal support.
10. Your services are rendered within a professional-client relationship.
11. The types of services you provide include unbundled and bundled mediation services:
- The unbundled mediation services include […]. Additional services are also available such as mediation roadmaps, parenting plans, resolution summaries among others.
- The bundled mediation services include four different mediation packages, […][description of different mediation packages, A and B]. All “B” packages include a meeting to review and finalize the mediation agreement.
12. A copy of the […] (Sample Agreement) between you and your clients has been made available.
13. Section 1 of the Sample Agreement defines “mediation” as:
“ [a process in which the mediator’s role] is to be an impartial facilitator who will help the parties with their negotiation process. [The mediator] will help them get the necessary information and review options so that they will make informed decisions. [The mediator] will not make decisions about what the agreement should be.
The goal of the mediation is a wise, equitable and workable agreement rather than a settlement at any cost. At no time should the parties feel coerced or threatened into an agreement.”
14. According to the Sample Agreement, the mediation process can result in three types of mediation reports:
- If the mediation is successful:
- a “without prejudice” Mediation Report is provided and can be utilized as an informal roadmap for future use; or
- a “without prejudice” Separation Report is provided and can be used by lawyers to turn it into a legally binding document;
- If the mediation is unsuccessful:
- a “without prejudice” Mediation Report is provided outlining the tentative agreements reached and the issues still unresolved and can be used by lawyers to restart a negotiation process.
In all cases, the reports are not legally binding nor enforceable unless they are drafted into a formal Separation Agreement reviewed and signed by the lawyers and the parties involved.
15. According to the Sample Agreement, the billing process differs between bundled and unbundled services.
- For bundled packages:
50% of the package price will be charged at time of the booking and the rest charged at completion of the services included in the package.
- For unbundled services:
Fees will be based on an hourly rate depending on the time spent on a client’s file and are charged at the end of each session.
- Additional services such as, telephone discussions, email correspondence with parties or lawyers, and the writing of mediation reports or agreements will also be billed as additional fees.
RULING REQUESTED
You would like to know whether the services rendered to your clients in the Province are exempt from GST under section 7.2 of Part II of Schedule V to the ETA.
RULING GIVEN
Based on the facts set out above, we rule that the supplies of mediation services are taxable and subject to the GST.
EXPLANATION
Generally, all supplies of goods and services made in Canada are taxable unless an exemption from the GST/HST applies. Taxable supplies are supplies made in the course of a commercial activity and may be taxable at the rate of 0% (zero-rated supplies), 5%, 13%, or 15% on the value of the consideration for the supply depending on the province in which the supply is made. Zero-rated supplies are included in Schedule VI. Exempt supplies are not subject to the GST/HST and are included in Schedule V.
Social worker services
Section 7.2 of Part II of Schedule V exempts certain supplies of services rendered in the practice of the profession of social work. In particular, section 7.2 states:
“A supply of a service rendered in the practice of the profession of social work where
(a) the service is rendered to an individual within a professional-client relationship between the particular individual who renders the service and the individual and is provided for the prevention, assessment or remediation of, or to assist the individual in coping with, a physical, emotional, behavioural or mental disorder or disability of the individual or of another individual to whom the individual is related or to whom the individual provides care or supervision otherwise than in a professional capacity; and
(b) either
(i) if the particular individual is required to be licensed or otherwise certified to practise the profession of social work in the province in which the service is supplied, the particular individual is so licensed or certified, or
(ii) if the particular individual is not required to be licensed or otherwise certified to practise that profession in that province, the particular individual has the qualifications equivalent to those necessary to be licensed or certified to practise that profession in a province in which such a requirement exists.”
According to section 7.2 of Part II of Schedule V, a supply of a service rendered in the profession of the practice of social work is exempt where:
- the service is rendered to an individual (or to a relative or caregiver of the individual with a disorder or disability) within a professional-client relationship between the social worker and the individual;
- the service is provided for the prevention, assessment or remediation of a physical, emotional, behavioural, or mental disorder or disability of the individual, or to assist the individual in coping with a disorder or disability, and,
- the person providing the services must be licensed or otherwise certified to practise the profession of social work in the province in which the services are supplied. Alternatively, where the person is not required to be licensed or otherwise certified in that province, the person must have qualifications equivalent to those required for licensing or certification in another province.
It is important to note that section 7.2 does not apply to all the services rendered in the practice of the profession of social work. Paragraph (a) of the section restricts the exemption to circumstances where social work services are rendered to prevent, assess, remediate or to assist a person in the coping with an illness, disability or disorder at the physical, emotional, behavioural and/or mental level.
It is therefore important to identify the exact nature and scope of the service that is performed by a social worker in order to determine if the exempting provision of section 7.2 of Part II of Schedule V applies. The simple fact that a social worker performs social work is insufficient to conclude that the supply of the service is exempt under section 7.2.
Based on the above-stated facts, the Alberta College of Social Workers (ACSW) regulates the practice of social work in the Province. You are licensed with the ACSW and practice as a registered social worker. You provide mediation services in order to better assist individuals to plan for separation and divorce. You act as an impartial third party to help assist individuals in resolving any conflict relating to their divorce/separation such as financial conflict, asset separation, child support and spousal support payments among other issues through open communication and negotiation.
Although your services fall within the scope of practice of social work as dictated by the ACSW, divorce counselling and mediation services are not services that are among the scope of what’s allowable within the exemption of section 7.2 of Part II of Schedule V. Such services, even if considered to be social work services by the provincial governing body, will not be part of the exemption provision in section 7.2. Therefore, pursuant to section 7.2 of Part II of Schedule V, the bundled and unbundled services rendered are not exempt. Since no other exempting provision applies, the services you render are subject to GST.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the Canada Revenue Agency (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 343-553-4626. 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,
Amal Khorchid
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
FOOTNOTES
1 https://acsw.ab.ca/site/registration?nav=sidebar
2 Health Professions Act: Schedule 27 - Profession of Social Workers https://www.qp.alberta.ca/1266.cfm?page=H07.cfm&leg_type=Acts&isbncln=9780779826650&display=html
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