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
5th floor, Tower A, Place de Ville
320 Queen Street
Ottawa ON K1A 0L5
[Client Address]
Case Number: 248537
Business Number: […]
Dear [Client]:
Subject: GST/HST ruling - Supplies of Psychotherapy Services
Thank you for your correspondence of [dd/mm/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies of psychotherapy services made in […][a non-regulated province]. Specifically, you are inquiring as to the application of the exemption for psychotherapy services when the services are rendered in a province that does not regulate the profession of psychotherapy by a health care provider who is regulated in another province.
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 Government of Nova Scotia has proposed to decrease the rate of the HST from 15% to 14% effective April 1, 2025. 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 member of […][a provincial regulatory body] ([…][College]) and you are a Registered Psychotherapist (RP).
2. You are a member of […][a provincial professional practitioner association] ([…][Association]) and have their […] designation.
3. You live and render psychotherapy services in [a non-regulated province] while maintaining your registration as a psychotherapist with the [College].
4. […]
5. The profession of psychotherapy is not regulated in BC, Manitoba, Saskatchewan, Newfoundland and Labrador, Yukon, Northwest Territories, or Nunavut.
RULING REQUESTED
You would like to know if your supplies of psychotherapy services are exempt from the GST/HST.
RULING GIVEN
Based on the facts set out above, we rule that your supplies of psychotherapy services are exempt supplies pursuant to paragraph 7(j.1) of Part II of Schedule V as of June 20, 2024.
EXPLANATION
Generally, all supplies of property 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 listed in Schedule V.
Part II of Schedule V lists supplies of health care services that are specifically identified as exempt supplies. If a supply of a particular health care service is not included in Part II of Schedule V, then the supply of the service would be subject to the GST/HST at the applicable rate, depending on the province in which the supply is made, unless another relieving provision in the ETA applies to the supply.
Paragraph 7(j.1) of Part II of Schedule V exempts a supply of a psychotherapy service when the service is rendered to an individual by a practitioner of the service.
Practitioner
Section 1 of Part II of Schedule V defines a “practitioner” in respect of supplies of psychotherapy services, to mean a person who
(a) practises the profession of psychotherapy,
(b) where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and
(c) where the person is not required to be licensed or otherwise certified to practise the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.
A person is not required to be licensed or otherwise certified to practise the profession of psychotherapy in [a non-regulated province]. Therefore, in order to be a practitioner in respect of psychotherapy services, you are required to have qualifications equivalent to what is required to be licensed or otherwise certified to practise the profession of psychotherapy in a province that licenses the profession. As you are certified to practise the profession of psychotherapy in […][Province X], which regulates the profession, you meet this requirement.
Therefore, you meet the definition of “practitioner” in respect of psychotherapy services that are supplied in provinces that do not regulate the profession of psychotherapy. As a practitioner in respect of psychotherapy services, supplies of psychotherapy services that you render to individuals are exempt pursuant to paragraph 7(j.1) of Part II of Schedule V.
For purposes of the exemption, psychotherapy services are services included in the scope of practice of the profession in the province of the regulatory body to which you have equivalent qualifications. As you are a registered psychotherapist member of the [College], psychotherapy services would be services within your scope of practice as a registered psychotherapist in [Province X].
The exemption in paragraph 7(j.1) only applies to supplies that are psychotherapy services. If you make supplies that are not psychotherapy services, the tax status (taxable or exempt) of the other supplies are determined independently from your supplies of psychotherapy services. You must determine if another exempting provision may apply to the other supplies.
Limitations to the Exemption
It is important to note that the application of paragraph 7(j.1) of Part II of Schedule V is limited by sections 1.1 and 1.2 of that Part. Section 1.1 deems supplies that are made for cosmetic purposes to be excluded from Part II of Schedule V. In addition, section 1.2 provides that for the purposes of Part II of Schedule V, other than sections 9 and 11 to 14, a supply that is not a “qualifying health care supply” is deemed not to be included in Part II of that Schedule. Generally, supplies deemed not to be included in Part II of Schedule V would be taxable at the applicable rate of GST/HST, unless they are exempt pursuant to another provision.
A qualifying health care supply is defined in section 1 of that Part to mean a supply of property or a service that is made for the purpose of:
(a) maintaining health;
(b) preventing disease;
(c) treating, relieving or remediating an injury, illness, disorder or disability;
(d) assisting (other than financially) an individual in coping with an injury, illness, disorder or disability; or
(e) providing palliative health care.
Read together, sections 1.1 and 1.2 provide that the exemption for supplies of psychotherapy services under paragraph 7(j.1) is dependent upon the purpose for which the supply is made. For the exemption to apply, the supply has to be made for at least one of the enumerated qualifying health care supply purposes listed above and not be a cosmetic service supply.
For more information on qualifying health care supplies, please refer to GST/HST Policy Statement, P-256, Qualifying Health Care Supplies and the Application of the GST/HST to Supplies of Medical Examinations, Assessments, Reports and Certificates.
Tax paid in error
Your supplies of psychotherapy services are exempt, effective June 20, 2024. Therefore, if you charged or collected an amount as GST/HST in error on an exempt supply made after that date, you may, pursuant to section 232:
* adjust the amount charged if the amount has not been collected; or
* refund or credit the amount to the patient if the amount has been collected.
Alternatively, you can choose not to adjust the amount charged or issue a refund or credit. In these cases, patients who have paid an amount as GST/HST on exempt supplies in error may claim a rebate of the amount paid using Form GST189, General Application for GST/HST Rebates. The time limit to apply for this rebate is two years after the day the patient paid the amount.
For more information, refer to GST/HST Memorandum 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act and Guide RC4033, General Application for GST/HST Rebates.
Registration
If all of your services are exempt, you may close your GST/HST account with the CRA, online or by mail. If only some of your services are exempt, you may have to keep your account open and continue to charge the GST/HST on any non-exempt services and goods. For more information on closing your account, please refer to https://www.canada.ca/en/revenue-agency/services/tax/businesses/topics/gst-hst-businesses/account-close.html.
DISCLAIMER
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.
CONTACT
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 343-573-6088. Should you have additional questions on the interpretation and application of the GST/HST, please contact a GST/HST Rulings officer at 1-800-959-8287.
Sincerely,
Kate Portner Gartke
Senior Rulings Officer
Health Care Sectors Unit
Public Service Bodies and Governments Division
GST/HST Rulings Directorate
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