REASONS
FOR JUDGMENT
Paris J.
[1]
These appeals are from assessments under Part IX
of the Excise Tax Act, R.S.C., 1985, c. E-15 (the “Act”) denying the appellants’
claims for refunds of GST paid in error. The reporting periods covered by the
assessments against Courtyard Terrace Assisted Living Residence Ltd. (“CT”) are from August 2, 2007 to October 31, 2007 and
from November 1, 2007 to June 30, 2009. The reporting periods covered by the
assessments against Cartier House Care Centre Ltd. (“CH”)
are from August 1, 2007 to October 31, 2007 and from November 1, 2007 to June
30, 2009.
[2]
Each appellant is a for-profit operator of a
residence for seniors and each is a subsidiary of Park Place Senior Living Inc.
(“Park Place.”)
[3]
The appellants are claiming refunds of GST paid
in error on supplies of “homemaker
services” provided by third-party contractors in
the course of operating the residences. “Homemaker services” are exempt from
GST pursuant to section 13 of Part II of Schedule V to the Act.
[4]
The amounts claimed by the appellants as GST
paid in error are as follows:
|
CT:
|
August 2, 2007-October 31, 2007
November 1, 2007-June 30, 2009
|
$5,253.00
$43,290.34
|
|
CH:
|
August 1, 2007-October 31, 2007
November 1, 2007-June 30, 2009
|
$13,051.00
$82,362.52
|
[5]
The issues in these appeals are i) whether the
services provided by the third-party contractors fall within the definition of “homemaker services” found in section 1 of Part II of Schedule V, and, if so, ii)
whether certain of the remaining conditions for the exemption set out in
section 13 of Part II of Schedule V have been met, and iii) whether certain non-exempt
supplies made by the third party contractor to CH are incidental to a supply of
exempt services.
[6]
The appeals were heard on common evidence. One
witness, Mr. Rizwan Gehlen, Vice-President of Finance for Park Place, testified
for the appellants.
Facts
[7]
During the periods in issue, CH operated a 78
bed residential care home in Coquitlam, British Columbia known as Cartier House,
and CT operated a 47 unit assisted living residence in Burnaby, British
Columbia known as Courtyard Terrace.
[8]
Both assisted living and residential care facilities
are regulated by the provincial government under the Community Care and Assisted
Living Act, [SBC 2002] C. 75. Assisted‑living residences are required
to register and residential care facilities must be licenced under that Act.
[9]
Individuals move to assisted living and
residential care facilities because they are unable, due to age, infirmity or
disability, to perform some or all of the activities of daily living on their
own. Assisted living residences offer an intermediate step between home living
and residential care and residents of assisted living facilities require fewer
support services than those in residential care.
[10]
The units at Courtyard Terrace are made up of 36
bachelor suites and 11 one bedroom suites, all equipped with a kitchenette and
an en-suite bathroom. There are also communal dining rooms where meals prepared
by the staff are served, and a central lounge.
[11]
Cartier House provided private or semi-private
furnished rooms to its residents, as well as communal dining rooms, an activity
room, visiting lounges and patios.
[12]
Both CH and 639385 B.C. Ltd., (“639385”) a
predecessor corporation to CT, entered into agreements with Fraser Health
Authority (“FHA”) for the
provision of certain services to residents living at Cartier House and
Courtyard Terrace. The agreement between FHA and 639385 was entitled
“Independent Living Agreement.” The agreement between FHA and CH was entitled
“Service Contract and Provider Agreement for Residential Care Services” For
ease of reference, I will refer to the agreement entered into between FHA and
639385 as the “FHA-CT Agreement” and the agreement between FHA and CH as the “FHA-CH
Agreement.”
[13]
FHA is a regional
health authority that was created pursuant to the B.C. Health Authorities
Act, [RSBC 1996] C.180. FHA is responsible for the management of health
care services in the region where the residences operated by the appellants are
located.
[14]
As part of its mandate, FHA
is authorized by the B.C. Minister of Health to enter into agreements with private operators to deliver services under the
British Columbia Continuing Care Program. The agreements entered into with CH
and CT were entered into under this authority. Those agreements fall under the British
Columbia Continuing Care Act, [RSBC 1996] C.70, which prescribes certain
health care services provided to persons with a frailty, acute or chronic
illness or disability to be “continuing
care.” Both “continuing care residential services” and “assisted living
services” are prescribed as services to be
provided under the Continuing Care Program.
Courtyard Terrace
[15]
The FHA-CT Agreement was entered into on July 6,
2005 and provided that FHA would fund the delivery of personal support services
and health services to 40 of the 47 residents of Courtyard Terrace. I will
refer to the 40 residents covered by the Agreement as the “funded residents” and the remaining 7 private-pay residents as the “unfunded residents” . The admission of the funded residents to Courtyard Terrace was
determined solely by FHA.
[16]
The FHA-CT Agreement sets out that CT would
provide accommodation as well as “Hospitality Services” and “Health Services” to the funded residents and that FHA would fund the “Health Services” provided by CT to those residents. According to the definition of
the term “Hospitality Services” in the Agreement, the Hospitality Services were not funded by FHA.
[17]
“Health Services”
were defined in the Agreement as follows:
“Health Services”
means the services funded by FHA and provided to Tenants by the Independent
Living Provider, including personal support, security, health assessment,
medication management and social support, as more particularly identified in
Schedule A;
[18]
“Hospitality
Services” were defined as follows:
“Hospitality
Services” means the services not funded by FHA and provided by the Independent
Living Provider to Tenants including social and recreational programs, meals,
laundry, homemaking and related services, as more particularly described in
Schedule A, Part 2;
[19]
The Health
Services included assistance to funded residents with the activities of daily
living including bathing, dressing, grooming, transferring, skin, nail and
mouth care, feeding, washroom and medication assistance and incontinence
management, emotional and social support, safety and emergency response
assistance, and laundry of personal clothing if the residents were unable to do
it.
[20]
The Hospitality
Services included two meals per day, snacks and beverages, weekly laundry of
bedding and towels and weekly housekeeping services within the resident’s unit.
Housekeeping consisted of short daily cleaning and a more thorough weekly
cleaning of the residents’ rooms.
[21]
FHA funded the
Health Services that were provided under the FHA-CT Agreement based on a set
number of “direct care hours” per funded resident per day. CT was required to
provide quarterly reports to FHA showing the direct care hours provided to the
funded residents. Those reports set out the number of workers providing the
services and the hours they worked and divided the total hours by the number of
funded residents and days to arrive at the direct care hours per resident per
day.
[22]
CT was permitted
to charge a “Base Rent” for the accommodation and the Hospitality Services and
was required to obtain a monthly contribution from each funded resident equal
to 70% of the resident’s after-tax income to a maximum of the Base Rent. CT was
also required to obtain a rent subsidy for each low or moderate income funded
resident of Courtyard Terrace from BC Housing.
[23]
Section 6.5 of
the FHA-CT Agreement provided that if the amount of the resident contribution
plus the BC Housing rent subsidy was less than the amount of the Base Rent, FHA
would be required to pay CT the amount of the shortfall.
[24]
According to
summaries prepared by CT, for 13 out of the 40 funded residents the monthly
resident contribution combined with the BC Housing rent subsidy received was
less than the Base Rent charged for that resident’s unit. Pursuant to the FHA-CT
Agreement, this shortfall was made up by FHA. Therefore, while the FHA-CT Agreement
provided that FHA would not fund the Hospitality Services for the residents, FHA
was in fact funding a portion of those Hospitality Services for certain of the
funded residents.
[25]
The FHA-CT
Agreement provided that CT could use its own employees or independent
contractors to provide the services to the residents of Courtyard Terrace.
[26]
All of the
services provided by CT to the residents of Courtyard Terrace were performed by
workers employed by Simpe “Q” Care Inc. (“SimpeQ”). Under an agreement between
CT and SimpeQ dated February 28, 2006, SimpeQ agreed to provide care services,
hospitality services and housekeeping services at Courtyard Terrace. The care
services that SimpeQ provided were performed by home support workers, and Mr.
Gehlen estimated that the home support workers spent about 85% of their time on
those services. The remainder of their time was spent on the laundry and
housekeeping services.
[27]
SimpeQ invoiced
CT and charged GST on the services provided to CT. CT subsequently filed claims
with the Minister for a rebate of tax paid in error.
Cartier House
[28]
Under the FHA-CH
Agreement, entered into on August 7, 2003, CH agreed to provide residential care
services to 78 residents of Cartier House selected by FHA, and FHA agreed to
provide funding for those services.
[29]
The residential
care services provided to residents of Cartier House consisted of assistance
with the activities of daily living including bathing, dressing, grooming,
transferring, skin, nail and mouth care, meal preparation and feeding, washroom
and medication assistance and incontinence management, emotional and social support,
safety and emergency response assistance, laundry, housekeeping and assistance
with treatments and medications.
[30]
The FHA funding
for the residential care services provided by CH at Cartier House was
determined annually and set out in a funding letter to CH. The funding
of the services by FHA was based on a minimum number of direct care hours to be
provided by CH. For the year ending March 31, 2008 CH provided approximately
2.32 hours of direct care per day to residents of Cartier House. For the year
ending March 21, 2009 this figure was approximately 2.39 hours.
[31]
The residents of
Cartier House were required to contribute to the cost of their care to a
maximum of 80% of their after-tax income. The amount of their contribution was
determined by FHA, collected by CH and deducted from the amounts to be paid by
FHA.
[32]
The FHA-CH
Agreement permitted CH to use contract staff or employees to provide the
services. During the relevant periods, CH contracted with Health and
Recreational Personnel Services Inc. (“HARPS”) to provide care aide services, housekeeping
and laundry services and activity aide services at Cartier House. HARPS
invoiced CH and charged GST on those services. CT subsequently filed claims
with the Minister for a rebate of tax paid in error.
[33]
Generally
speaking, the care aides performed all of the personal care services, which
made up the bulk of the residential care paid for by FHA. The evidence showed
that approximately 1.8 hours per day per resident were spent by the care aides
performing the personal care services. The remainder of the direct care hours
were performed by the housekeeping, laundry and activity aides. The
housekeeping aides performed housekeeping in the residents’ rooms as well as
common areas and nursing stations and offices. The laundry aides collected
laundry from residents’ rooms, laundered it and returned it, and laundered
linens used elsewhere in the facility, and the activity aides organized and
animated social activities for the residents.
Applicable Legislation
[34]
Section 165 of
the Act imposes GST on “taxable supply.” The term “taxable supply” is
defined in subsection 123(1) of the Act as a supply made in the course
of commercial activity.
[35]
The definition of
“commercial activity” in subsection 123(1) excludes the making of “exempt
supplies,” which are those supplies set out in Schedule V to the Act.
Part II of Schedule V exempts healthcare services. Section 13 of Part II of
Schedule V exempts certain homemaker services.
[36]
Section 13 of
Part II of Schedule V read as follows for the periods in issue:
13. A supply of a
homemaker service that is rendered to an individual in the individual’s place
of residence, whether the recipient of the supply is the individual or any
other person, where
(a)
the supplier is a government or municipality;
(b) a
government, municipality or organization administering a government or
municipal program in respect of homemaker services pays an amount
(i) to the supplier in respect of the supply, or
(ii) to any person for the purpose of the acquisition of the
service;
or
(c)
another supply of a homemaker service rendered to the individual is made in the
circumstances described in paragraph (a) or (b).
[37]
At the relevant
time, “homemaker service” was defined in section 1 of Part II of Schedule V as
follows:
“homemaker service”
means a household or personal service, such as cleaning, laundering, meal
preparation and child care, that is rendered to an individual who, due to age,
infirmity or disability, requires assistance.
[38]
Section 138 of
the Act deems certain incidental supplies of property or services to
form part of the dominant supply of property or services:
138. For the purposes of this Part, where
(a) a particular property or service is
supplied together with any other property or service for a single
consideration, and
(b) it may reasonably be regarded that the
provision of the other property or service is incidental to the provision of
the particular property or service,
the other property or
service shall be deemed to form part of the particular property or service so
supplied.
[39]
A rebate for tax
paid in error is available under subsection 261(1) of the Act:
261.(1)Where a person has paid an amount
(a) as
or on account of, or
(b)
that was taken into account as,
tax, net tax, penalty, interest or other obligation under this Part in
circumstances where the amount was not payable or remittable by the person,
whether the amount was paid by mistake or otherwise, the Minister shall,
subject to subsections (2) and (3), pay a rebate of that amount to the person.
Issues
1)
Did the services
performed by the workers of SimpeQ and HARPS at Courtyard Terrace and Cartier
House fall within the definition of “homemaking services” found in in section 1
of Part II of Schedule V to the Act?
2)
Were the supplies
made by SimpeQ to CT and by HARPS to CH supplies of personnel services rather
than supplies of “homemaking services”?
3)
Were the services
supplied by SimpeQ and HARPS rendered to the residents of Courtyard Terrace and
Cartier House in their place of residence?
4)
Was FHA administering
a program in respect of homemaker services?
5)
Were the amounts
paid by FHA to CT and CH paid for the purpose of acquiring the services
supplied by SimpeQ and HARPS?
6)
Was the supply of
the activity aide services by HARPS to CH deemed by section 138 of the Act
to form part of the supply of care aide services by HARPS to CH?
Meaning of “Homemaker Services”
[40]
The respondent argues
that the ordinary meaning of the phrase “homemaker service” would be “a service
that would assist someone with the domestic tasks of running a household”. She
relies on the definition of the word “homemaker” found in the Oxford English
Dictionary, 3rd ed. (Oxford University Press, 2014):
1. A person who runs
his or her own household; one skilled at domestic tasks; a housewife or
househusband.
2. N. Amer. A
person employed to assist (esp. a sick, elderly; or disabled person) with
domestic tasks. Also (and in earliest use) attrib., as homemaker
service, etc.
[41]
The respondent
submits that the reference to “personal services” in the definition of “homemaker
service” would not include the type of personal care and health services
performed by SimpeQ and HARPS workers which made up the bulk of the supplies in
issue. Counsel says that according to the noscitur a sociis rule of statutory interpretation, the term “personal
service” would be restricted to services similar in nature to the examples set
out in the definition: cleaning, laundering, meal preparation and child care. The
noscitur a sociis rule of interpretation provides that the meaning of a
word in a statute may be determined by reference to associated words in the
statute.
[42]
The respondent also
submits that a recent amendment to Part II of Schedule V, which replaced the
term “homemaker service” in section 13 with the term “home care service” and
the corresponding addition of the definition of “home care service” to section
1, had the effect of broadening the application of section 13 to cover the
personal care services like those supplied by SimpeQ and HARPS in these cases.
The definition of “home care services” in section 1 of Part II of Schedule V
reads:
A household or
personal care service, such as bathing, feeding, assistance with dressing or
medication, cleaning, laundering, meal preparation and child care.
[43]
Counsel states that
the clear effect of these changes was to expand the type of services qualifying
for exemption from GST, as stated in the government document entitled “Economic
Action Plan 2013”:
The fact that the Act was specifically amended to expand the
exemption to include such services as bathing, feeding and assistance with
dressing and medication clearly indicates that these services were not exempt
prior to the amendment.
[44]
The issue here is
the meaning to be given to the term “personal service” found in the definition
of “homemaker service.”
[45]
The rules
governing the interpretation of tax statutes were set out by the Supreme Court
of Canada in Canada Trustco Mortgage Co. v. The Queen, 2005 SCC 54 at
paragraph 10:
It has been long established as a matter of statutory interpretation
that "the words of an Act are to be read in their entire context and in
their grammatical and ordinary sense harmoniously with the scheme of the Act,
the object of the Act, and the intention of Parliament": see 65302
British Columbia Ltd. v. Canada, [1999] 3 S.C.R. 804, at para. 50. The
interpretation of a statutory provision must be made according to a textual,
contextual and purposive analysis to find a meaning that is harmonious with the
Act as a whole. When the words of a provision are precise and unequivocal, the
ordinary meaning of the words plays a dominant role in the interpretive
process. On the other hand, where the words can support more than one
reasonable meaning, the ordinary meaning of the words plays a lesser role. The
relative effects of ordinary meaning, context and purpose on the interpretive
process may vary, but in all cases the court must seek to read the provisions
of an Act as a harmonious whole.
[46]
In my view, the plain
and ordinary meaning of “personal service” would clearly encompass such
services assistance with the activities of daily living such as were provided
to the residents of Courtyard Terrace and Cartier House, due to their age,
infirmity or disability. In fact, there is little that I can think of as more
personal than those services. I find there is little ambiguity in the words
“personal service” and
that the ordinary meaning of those words must therefore play a dominant role in
their interpretation.
[47]
I reject the
respondent’s submission that meaning of the term “personal service” in the
definition of “homemaker service” is restricted to services similar in nature to
the examples that follow the term “household or personal service” in the
definition. The use of specific examples after a general term in legislation
does not restrict the meaning of the general term to cases similar to the
specific examples. Rather, the presumption is that, in using the specific
examples, Parliament intended to extend the meaning of the general term to
things that would ordinarily have been seen as not falling within the general
term. This principle of interpretation was discussed by the Supreme Court of
Canada in National Bank of Greece v. Katsikonouris, [1990] 2 S.C.R. 1029 at
paragraphs 12 and 14:
…Whatever the particular document one is
construing, when one finds a clause that sets out a list of specific words
followed by a general term, it will normally be appropriate to limit the
general term to the genus of the narrow enumeration that precedes it. But it
would be illogical to proceed in the same manner when a general term precedes
an enumeration of specific examples. In this situation, it is logical to infer
that the purpose of providing specific examples from within a broad general
category is to remove any ambiguity as to whether those examples are in fact
included in the category. It would defeat the intention of the person drafting
the document if one were to view the specific illustrations as an exhaustive
definition of the larger category of which they form a part…
. . .
As I have noted, the natural inference is that the drafter will
provide a specific illustration of a subset of a given category of things in
order to make it clear that that category extends to things that might
otherwise be expected to fall outside it.
[48]
In my view, the noscitur
a sociis rule is inapplicable in this case because it is normally applied
when interpreting terms in a list: R. v. Daoust, 2004 SCC 6 at paragraph
60. Here, the words “personal service” are general words that are part of the
term “household or personal service” which is followed by a list of examples. The term “household or personal service” is
not part of the list of examples that follow that term.
[49]
In Daoust,
the Supreme Court also found that the use of the word “or” to separate two
terms in a statute indicated Parliament’s intent to distinguish the two terms,
and that the noscitur a sociis rule was not applicable in that case. The
Court said at paragraph 61:
In the present case, the words “conceal” and “convert”
are not part of a list. On the contrary, they are two distinct terms with
distinct meanings. This is demonstrated by Parliament’s use of the expression
“with intent to conceal or convert”, as the use of the word “or” shows an
intent to distinguish the two terms from each other. For this reason, these
two terms should not be read together, and the noscitur a sociis rule
does not apply.
[50]
Here, the use of
the word “or” between “household” and “personal” in the term “household or
personal service” supports the view that Parliament intended to distinguish
between household services and personal services and intended to include
services beyond those ordinarily considered household services.
[51]
The fact that the
exemption for homemaker services falls within Part II of Schedule V, which
deals with health care services, is further contextual support for the
conclusion that assistance provided to elderly or infirm persons with the
activities of daily living would be included in the concept of “personal
service.” It would also support the conclusion that the examples used in the
definition of “homemaker service” –cleaning, laundering, meal preparation and
child care – are included because they might not be otherwise thought of as
health care services.
[52]
In so far as the
exemption falls within Part II of Schedule V, it would also appear that the
purpose of section 13 is to exempt personal services in the nature of health services
such as assistance with the activities of daily living as well as household services.
[53]
Given my
conclusion regarding the plain meaning of the words “personal service”, I
attribute little interpretive weight to the subsequent amendment of section 13
of Part II to Schedule V or to the material in the “Economic Action Plan 2013” document
cited by counsel. I agree with the following observations of Bowie, J. in Glaxo Wellcome Inc. v. The
Queen, [1996]
DTC 1159, affd [1998] 6638 (at
page 1162) regarding the use of extrinsic materials in statutory
interpretation:
One must bear in mind that it is Parliament
that passes legislation, and it is through the words of that legislation that
Parliament speaks. An act of Parliament represents the collective will of
Parliament. One cannot be certain that the same can be said of extrinsic
materials. To attempt to determine the intent of a statutory provision by reference
to a speech delivered by a member of the government, a speech that he or she
may well not have written, or by technical or explanatory notes prepared by
officials of the Department of Finance, or other budgetary materials, strikes
me as a potentially dangerous course of action. Where a court strains to assign
to reasonably comprehensible language an extended meaning that conforms to what
it conceives, on the basis of extrinsic materials, to be what Parliament was
seeking to achieve it runs the risk of crossing the line that separates the
judicial from the legislative function.
[54]
I find that the
interpretation proposed by the appellants is more consonant with the text,
context and purpose of the definition of “homemaker service”.
Did SimpeQ and HARPS supply homemaker services or personnel services
to the appellants?
[55]
The respondent’s
next argument was that the supplies made by SimpeQ to CT and by HARPS to CH
were supplies of personnel or general staffing services rather than of
homemaking services.
[56]
This submission
however, is not supported by the evidence before me. The contracts between SimpeQ
and CT and between HARPS and CH clearly provide for the supply of services
including care services, hospitality services and housekeeping services. There
is also the uncontradicted evidence of Mr. Gehlen that these services were
provided by SimpeQ and HARPS. The respondent’s attempt to recharacterize the
supplies as supplies of personnel services is therefore unfounded.
Were the services rendered to individuals in their place of
residence?
[57]
The opening
wording of section 13 of Part II require that the homemaker services be
rendered to an individual in the individual’s place of residence. The respondent
admits that Courtyard Terrace and Cartier House were the sole place of
residence of their residents, but argues that the services in issue were rendered
in each of those facilities “as a whole”, while the place of residence of the
residents was restricted to their individual suites in the case of Courtyard
Terrace or to their rooms in the case of Cartier House.
[58]
Once again, there
is little basis in the evidence on which to limit the spatial bounds of the residents’
residence as suggested by the respondent. The area beyond the units or rooms
were either common areas for all residents and used exclusively by them as
living space in the ordinary course of residing in Courtyard Terrace or Cartier
House, or were areas such as kitchens, laundries or offices that were used
entirely and directly to support and maintain the everyday needs and activities
of the residents in using Courtyard Terrace or Cartier House as their place of
residence. As I understood the evidence, both Courtyard Terrace and Cartier
House were used solely as places of residence for the residents. Therefore, it
seems artificial to distinguish between the residents’ units or rooms and the
remainder of the premises when determining their place of residence.
[59]
I find, therefore,
that the services in issue were provided to the residents in their place of
residence, regardless of whether they were provided inside their units or rooms
or in the other areas of the premises.
Was FHA administering a program in respect of homemaker services?
[60]
Section 13 of
Part II of Schedule V provides that in order for a supply of homemaker services
to be exempt, the supplier of the services must be a government or municipality
(paragraph 13(a)), or that a government, municipality or organization
administering a program in respect of homemaker services pay an amount to the
supplier (subparagraph 13(b)(i)) or that a government, municipality or
organization administering a program in respect of homemaker services pay an
amount to any person for the purpose of acquiring the homemaker services
(subparagraph 13(b)(ii)).
[61]
Paragraph 13(a)
is not applicable here because neither SimpeQ nor HARPS, the suppliers of the
homemaker services, was a government or municipality. Subparagraph 13(b)(i)
is not applicable because the payments for the supplies were made by CT and CH,
neither of which was a government, municipality
or organization administering a program in respect of homemaker services.
[62]
The respondent
takes the position that the conditions in subparagraph 13(1)(b)(ii) are
not met either, because FHA was not administering a program in respect of
homemaker services and because the amounts paid to the appellants by FHA
were not paid for the purpose of acquiring homemaker services.
[63]
The respondent maintains
that the program operated by FHA under which payments were made to CT and CH
was a program to provide health services and not homemaker services.
[64]
The respondent’s argument
turns largely on the narrow interpretation of the term “homemaker service”
which I have already rejected. Having concluded that the personal care services
provided by CT and CH to the residents of Courtyard Terrace and Cartier House
were “personal services” that fell within the definition of “homemaker
services,” it would follow that the program pursuant to which FHA paid for
those personal care services, i.e. the B.C. Continuing Care Program, would be a
program “in respect of homemaker services.”
[65]
In my view, subparagraph
13(1)(b)(ii) does not require that the sole purpose of the program under
which funding is provided be to fund homemaker services. In Nowegijik v.
The Queen, [1983] 1 S.C.R. 29, the Supreme Court of Canada held at page 39
of that decision that the words “in respect of” were “words of the widest
possible scope” and that the phrase “in respect of” is probably the widest of
any expression intended to convey some connection between two related matters.
[66]
It is only
necessary, then, to show some connection between the B.C. Continuing Care
program and the provision of the homemaker services by SimpeQ and HARPS.
Since the personal care services at Courtyard Terrace and the residential care
services at Cartier Home (which I have found to qualify as homemaker services)
were funded as part of the Continuing Care Program administered in part by FHA,
I find that FHA was administering a government program in respect of homemaker
services.
Did FHA pay
amounts to CT and CH for the purpose of acquiring the homemaker services?
[67]
The respondent
says that the amounts paid by FHA to CT and CH were not paid for the
specific purpose of acquiring homemaker services. In the case of CT, counsel
says that the purpose of the payments was to acquire the Health Services, which
were not homemaker services, and in the case of CH, that the purpose was to
have CH operate Cartier House.
[68]
Since I have
already found that the Health Services were homemaker services, the respondent’s
argument in respect of CT cannot succeed. Insofar as CH is concerned, the
operation of Cartier House would include the provision of the residential care
services and therefore the payment by FHA to have CH operate Cartier House
would also be for the purpose of acquiring those services. The FHA-CH Agreement
also specifically provided that CH was entitled to utilize contracted staff to
deliver the residential care services.
[69]
Furthermore, it is clear under the agreements that FHA
paid CT and CH amounts for the purpose of the acquisition of the services in
issue. Both agreements oblige FHA to pay amounts to CT and CH for the purpose
of providing services to the residents of Courtyard Terrace and Cartier House.
Section 7.1 of the FHA-CT Agreement required FHA to pay CT the “fees set forth
on Schedule B” “for the Health Services”. Sections 3.4 and 7.5 of the FHA-CH
Agreement provide that CH would provide residential care service to its residents
and that FHA would pay for those services. According to the FHA-CH Agreement,
the funds paid by FHA could only be utilized for the purpose of providing the
residential care services.
[70]
While the entire
cost of the homemaker services that CT contracted SimpeQ to provide and that CH contracted
HARPS to provide may not have been borne by FHA in each case, it did pay an
amount to each of them for the purpose of acquiring the homemaker services and
therefore the requirements of subparagraph 13(b)(ii) of Part II
have been met.
[71]
The respondent
also submitted that a finding that FHA paid amounts to the appellants for the
purpose of acquiring the homemaker services would have an adverse impact on the
entitlement of charitable and non-profit operators of facilities like Courtyard
Terrace or Cartier House to Public Service Body rebates under section 259 of
the Act. The respondent said that to be a qualifying non-profit
organization under that provision, funding it receives must fall within the
definition of “government funding” set out in the Public Service Body Rebate
(GST/HST) Regulations SOR/91-37. According to that definition, government
funding is an amount of money provided for the purpose of financially assisting
a person in carrying out the purposes of the person or as consideration for
making property or services available for the consumption or use by other
persons, where supplies of the property or services made by the particular
person to such other persons are exempt supplies. According to counsel, if
amounts paid by a regional health authority to a non-profit operator are found
to have been paid for the purpose of the operator acquiring homemaker services,
this purpose would preclude the amounts from being government funding as
defined in the Regulations and therefore the non-profit operator would
not be entitled to a PSB rebate.
[72]
On the basis of
the limited argument presented by counsel on this point, I am not able to
accept the respondent’s position. From my reading of Part II of Schedule V,
supplies of accommodation and services made to residents of assisted living and
residential care facilities would appear to be supplies of “institutional
health services” “provided in a health care facility” and therefore exempt
supplies by virtue of section 2 of Part II of Schedule V. As such, funds
received by a non-profit operator of an assisted living or residential care
facility from a grantor as consideration for making such property and services
available for consumption or use by the residents of the facility would still
fall within the definition of “government funding” in the Regulations
and the non-profit operator’s eligibility for the rebate would not be affected.
Single Supply
[73]
At the hearing,
the appellants conceded that the supplies of the activity aide services to CH
by HARPS were not supplies that qualify under section 13 of Part II of
Schedule V as exempt supplies. The appellants submit, though, that those
supplies should be deemed by section 138 of the Act to form part of a single
exempt supply of the care aide services.
[74]
The appellants
maintain that the activity aide services were provided together with the care
aide services for a single consideration, since both types of supplies were
invoiced together. The appellants also says the activity aide services were
incidental to the care aide services since the activity aide services made up
only 5.4% of the total hours billed by HARPS for the two types of services.
[75]
On this point, I
agree with the respondent’s counsel that the method of invoicing the activity
aide and care aide supplies does not result in those services being provided
for a single consideration. It appears to me from the sample HARPS invoice
entered into evidence that HARPS calculated the amount due from CH based on total
hours worked by the activity aides and care aides. I infer that the total hours
and fees for both types of aides were combined on the invoices because the
hourly rate for all of those aides was the same. Therefore, the consideration
for each category of worker would be determinable and separate amounts. This
conclusion is also supported by the fact that the sample invoice refers to
services of activity aides as well as care aides.
[76]
I also find that
the activity aide services were not incidental to the care aide services. In my
view, each kind of service was independent of the other and had value as a
separate supply. The activity aides focused on social activities for the
residents, while the care aides performed personal services and assisted
residents with the activities of daily living.
[77]
Therefore, section
138 does not deem the activity aide services to form part of a single supply of
care aide services.
Conceded Items
[78]
At the hearing,
the appellants conceded that claims for a rebate of GST paid in error on
amounts paid by CT to SimpeQ for security services, heating systems repair
services and for the services of the social and administrative coordinator
should not be allowed.
Conclusion
[79]
The appeals are allowed
in part and the assessments are referred back to the Minister of National
Revenue for reassessment in accordance with these reasons. The appellants are entitled to costs in
each appeal in accordance with the Tariff. Since the appeals were heard on
common evidence, there will be only one set of costs for the hearing.
Signed at Ottawa, Canada this 5th day of November 2015.
“B.Paris”
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