5 February 2016 Interpretation 153241

A medical doctor residing in the U.S. who is registered for GST purposes would, at the request of insurance companies, interview and physically examine a patient in Ontario in an office usually provided by it or other interested parties and then, in the doctor’s home office, review medical documentation, and dictate and edit the report to the insurance company. Billing and other office duties also were performed in the home office. The doctor also, at the request of lawyers for victims of motor vehicle accidents, and slips and falls, would examine and interview the patient in a rented office room in Ontario, and prepare in the home office a report regarding the patient’s diagnosis, restrictions and limitations, and recommendations for treatment. Are the charges for these independent medical evaluations (IMEs) exempt from the GST/HST?

Before going on to note that in the case of supplies of IMEs made after March 21, 2013, s. 1.2 of Part II of Sched. V was added to exclude supplies whose purpose was not patient care or treatment, so that this amendment rendered IMEs taxable, CRA noted that respecting such supplies made before that date:

A supply rendered by a medical practitioner of examining an individual is a health care service rendered to an individual for purposes of section 5 of Part II of Schedule V. The element of a health care service is present in an IME when the medical practitioner applies his or her medical expertise and makes a decision regarding this information on the individual's requirement for ongoing or future medical treatment. … Accordingly, the supply of an IME by a medical practitioner is exempt under section 5… .

A medical doctor residing in the U.S. who is registered for GST purposes would, at the request of insurance companies, interview and physically examine a patient in Ontario in an office usually provided by it or other interested parties and then, in the doctor’s home office, review medical documentation, and dictate and edit the report to the insurance company. Billing and other office duties also were performed in the home office. The doctor also, at the request of lawyers for victims of motor vehicle accidents, and slips and falls, would examine and interview the patient in a rented office room in Ontario, and prepare in the home office a report regarding the patient’s diagnosis, restrictions and limitations, and recommendations for treatment. Are the charges for these independent medical evaluations (IMEs) exempt from the GST/HST?

After noting that the IMEs supplied by the doctor before March 21, 2013 were exempt health supplies under s. 5, CRA stated, respecting supplies made after that date:

Section 1.2 of Part II of Schedule V has been added and provides that … a supply that is not a “qualifying health care supply” is … not exempt under any provision in Part II. …

…Specifically, paragraph (d) of the definition of qualifying health care supply includes supplies made for the purpose of assisting an individual (other than financially) in coping with an injury, illness, disorder or disability. This would include services provided directly to the individual to cope with the limitations or effects of an injury.

Supplies of medical examinations, reports and certificates that are made solely for other purposes, such as assisting a third party (e.g. insurance company or lawyer)… would be deemed not to be included in Part II of Schedule V and would be taxable for GST/HST purposes.

A medical doctor residing in the U.S. who is registered for GST purposes would, at the request of insurance companies, interview and physically examine a patient in Ontario in an office usually provided by it or other interested parties and then, in the doctor’s home office, review medical documentation, and dictate and edit the report to the insurance company. Billing and other office duties also were performed in the home office. The doctor also, at the request of lawyers for victims of motor vehicle accidents, and slips and falls, would examine and interview the patient in a rented office room in Ontario, and prepare in the home office a report regarding the patient’s diagnosis, restrictions and limitations, and recommendations for treatment. Are the charges for these independent medical evaluations (IMEs) exempt from the GST/HST? Can the charges be broken down between time spent on the interview and examination in Canada and the work in the U.S. to produce the IME report?

After finding that IMEs performed after March 21, 2013 generally are taxable supplies, CRA noted:

… In the case where a patient is examined in Canada and the report is prepared outside Canada, the supply of the service is deemed to be made in Canada pursuant to paragraph 142(1)(g), as the services are performed in part in Canada. Accordingly, where the supply of the IME is made or deemed to be made in Canada and is not a qualifying health care supply, the supply is taxable for GST/HST purposes at the applicable rate.

An IME … consists of an examination of the patient, reviewing medical documentation, dictation, editing and printing a report on the findings. These essential elements are part of a single composite supply of an IME that cannot be artificially split into separate supplies. In this case, the charges to the recipient are all part of a single supply of the IME and take on the same tax status. This applies whether the charges are invoiced separately or included in a single fee for the IME.

CRA considered that independent medical evaluations (IMEs) supplied by non-employee doctors to insurance companies or lawyers after March 21, 2013 were not exempt health supplies. CRA then advised the doctor in question:

[W]here in the ordinary course of your business you obtain an address in Canada of the recipient (e.g. lawyer or insurance company), the fee for the supply of your services is subject to the rate of GST/HST of the province in which the address is located.