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.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 11th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 185888
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Aeromedical Repatriation Services
Thank you for your letter of [mm/dd/yyyy], concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to supplies made by […] (the “Corporation”). More specifically, you […][asked about] the application of the GST/HST to supplies of aeromedical repatriation services supplied by the Corporation to insurance companies in Canada.
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. The Corporation is a registrant for GST/HST purposes.
2. […][Information about the Corporation]
3. […][Information about the Corporation’s supplies].
4. […]
5. The Corporation provides medical repatriation services which involve arranging […] to transport an individual [the patient] from a foreign hospital to a health care facility in the individual’s home country. This would include […][transport] between the medical facilities and airports via ground transportation (ambulance, taxi, or limo), […][and commercial airline transportation in the company of] a medical escort.
6. […][More information about the services supplied by the Corporation]
7. […]. The medical escorts will have […][instructions] for providing care to the patient.
8. […]
9. […]
10. […]
11. […]
12. Medical repatriation services are the activities of returning an individual, who requires medical assistance to travel due to an injury or illness, to their home country. The services listed […] are components/elements of a medical repatriation of an individual. The Corporation offers […][a variety of services] but not all of these components/elements will be included in each supply made by the Corporation. The medical repatriation service […] is based on the needs of the patient being repatriated. The patient may not need to be in a stretcher or need medical equipment (such as an oxygen concentrator) while on the aircraft. […].
13. The Corporation makes its supplies as part of the medical repatriation of an individual [patient] where the individual is transported by air on commercial aircraft. The Corporation advised that individuals who are well enough to travel on commercial aircraft with a medical escort can be accommodated on commercial aircraft and the transfer can be completed more economically than by using a dedicated air ambulance.
14. The medical escorts provided by the Corporation consist of registered nurses, physicians and Advanced Cardiac Life Support trained paramedics. All of the medical escorts are fully licensed in their respective professions in the Province of Ontario.
15. The medical escorts monitor and provide care and assistance to the patient during the trip. Generally the Corporation supplies one medical escort for a patient transfer but in a small number of cases a second escort is required due to the medical needs of the patient.
16. […][Information about the Corporation]
17. […][Information about the Corporation’s staffing].
18. […][Proportion of domestic and international patient transfers]
19. In addition to transfers of patients by commercial aircraft, the patients can be transported with […][a medical escort] by train or cruise ship if the patient is unable to fly.
20. The Corporation deals with the medical departments of the commercial airlines to obtain the medical clearances that the patient would require to travel as well as clearances for the equipment and medications that the medical escort will be bringing.
21. Airlines have emergency medical kits onboard the aircraft. The medical escorts carry their own equipment when a patient is being transported. Each medical kit brought by the escorts are approved for transport by the airlines and they are confirmed on the patient’s reservation with the airline.
22. […][Information about medical equipment and supplies]
23. Commercial airlines have emergency medical oxygen equipment on board the aircraft but this equipment is for emergency use only. […] portable oxygen concentrators are FAA approved for use on commercial aircraft [when repatriation arrangements require oxygen].
24. The medical escorts also bring narcotics that the patient might require or to handle any in-flight emergencies. The narcotics are also approved by the airlines’ medical departments.
25. Some commercial air carriers are able to accommodate stretchers on their aircraft for patients who are unable to sit during the transfer. The Corporation works with the airlines’ medical departments to get the medical clearances and aircraft modifications to allow patients to be transported by stretcher.
26. Commercial airlines can make accommodations for patients that need to travel by air. Patients who require more space can be given an empty seat beside them. They can also be accommodated by using the full lie-flat seats that some airlines have in business and first class. If a patient is required to be on a stretcher, airlines can adapt the aircraft to accommodate the stretcher either by folding down seats that allow the stretcher to be placed overtop or by removing seats from the aircraft.
27. […][Description of commercial aircraft equipment for transporting critical care patients]
28. […]
29. […].
30. The Corporation bills the recipient of the supply [as appropriate, an amount] for:
- […][the medical escort services];
- […][the use of medical equipment, such as an oxygen concentrator];
- […][air and ground transportation for the medical escort];
- […][logistical services];
- […];
- […].
31. The Corporation charges a daily rate for the medical escort and a fee for the medical equipment required by the patient. […]
32. […][Billing information]
33. The services that the Corporation provides will depend on what is required to transport the patient. The person contracting for the service is not able to pick and choose between services in a package.
34. […][Information about an Agreement between the Corporation and ACo, an insurance company]
35. […][Information about supplies to be provided under the Agreement with ACo]
36. […][Information about the limitation of liability under the Agreement with ACo]
37. […][Information about charges and billing practices under the Agreement with ACo]
38. […][Information about rates and billing practices under the Agreement with ACo]
39. […][Other disclaimers and limitations of authority under the Agreement with ACo]
40. The Corporation […][provided documents with their GST/HST ruling request including] a Request for Quote (“RFQ”) that it received from an insurance company regarding the transfer of a patient requiring a medical escort from Canada to the United States.
41. The RFQ stated that the patient would require a Registered Nurse and a portable oxygen concentrator during the transport. It also stated that that circumstances might require that the medical escort cover some expenses […].
42. The Corporation responded to the RFQ […] [with a quote including] the daily fee for a Registered Nurse […] and the fee for the use of the portable oxygen concentrator. The quote provided by the Corporation also indicated that expenses would be billed on a cost-recovery basis.
43. […][Payment information]
44. […][Information about the Corporation].
45. The Corporation provides their services to insurance companies located both inside and outside of Canada. In some instances services are also provided to individuals as well.
46. […][Staffing information].
47. […].
48. […][Information about the Corporation]
RULING REQUESTED
You would like to know if the supplies made by the Corporation to insurance companies located in Canada are zero-rated international air ambulance services pursuant to section 15 of Part VII of Schedule VI.
RULING GIVEN
Based on the facts set out above, we rule the following:
1. The services supplied by the Corporation are not supplies of international air ambulance services. The Corporation is making supplies of medical escort services. Therefore, the supplies made by the Corporation are not zero-rated pursuant to section 15 of Part VII of Schedule VI.
2. Supplies of medical escort services are exempt pursuant to section 6 of Part II of Schedule V when the services are rendered to an individual by a registered nurse.
3. Supplies of medical escort services are exempt pursuant to section 5 of Part II of Schedule V when the services are rendered to an individual by a medical practitioner.
4. Medical escort services rendered to an individual by a paramedic are taxable pursuant to section 165.
5. […].
EXPLANATION
Generally, supplies of property and services made in Canada are subject to the GST/HST, unless they are specifically exempt under Schedule V or zero-rated (taxed at 0%) under Schedule VI. Supplies that are exempt are not subject to the GST/HST.
International Air Ambulance Services
[…]. Section 15 of Part VII of Schedule VI zero-rates a “supply of an air ambulance service made by a person who carries on the business of supplying air ambulance services, where the transportation is to or from a place outside of Canada.”
In order for a supply to be zero-rated pursuant to section 15 the supply must meet the following conditions:
1. the supply is a supply of an air ambulance service,
2. the supply is made by a person who carries on the business of supplying air ambulance services, and
3. the transportation is to or from a place outside of Canada.
The term “air ambulance service” is not defined in the ETA. Where a term is not defined, the established principles of statutory interpretation provide that the usual and ordinary meaning of the term applies. To properly define “air ambulance service” it is necessary to determine the definitions of “ambulance” and “ambulance service”.
Ambulance is not defined in the ETA. The Cambridge Dictionary defines ambulance as “a special vehicle used to take sick or injured people to hospital”. The Tax Court of Canada discussed the meaning of “ambulance” and “ambulance service” in respect of ground ambulances in Angels of Flight Canada Inc. v. The Queen, 2009 TCC 279 (“Angels of Flight”). The decision stated that it is “relevant in this case to consider the nature of the requirements imposed by provincial law on ambulances with respect to vehicles, equipment and supplies carried and with respect to the training of staff. These are all relevant considerations as to the contemporary meaning of “ambulance” and “ambulance service”.” Therefore in addition to dictionary definitions consideration should be given to the provincial legislation governing ambulances and ambulance services.
The Ambulance Act of Ontario defines ambulance as “a conveyance used or intended to be used for the transportation of persons who,
- have suffered a trauma or an acute onset of illness either of which could endanger their life, limb or function, or
- have been judged by a physician or a health care provider designated by a physician to be in an unstable medical condition and to require, while being transported, the care of a physician, nurse, other health care provider, emergency medical attendant or paramedic, and the use of a stretcher”.
The dictionary definition and definition in the provincial legislation suggest that the meaning of “ambulance” is a special vehicle that is used to transport injured or ill individuals who require the care of a physician, nurse or other health care provider while being transported.
The Ambulance Act of Ontario defines “ambulance service” to mean “a service that is held out to the public as available for the conveyance of persons by ambulance”. “Ambulance service” is defined in The Dictionary of Canadian Law, third edition as “The service of transporting a patient by means of an ambulance vehicle, and may include the service of carrying the patient into and out of the ambulance vehicle and the service of attending and assisting the patient while being so transported or carried.” Therefore, based on the definitions of “ambulance service” from the dictionary and the Ambulance Act, an ambulance service is the transportation of a person who requires medical care by means of an ambulance.
The Ambulance Act of Ontario defines “air ambulance service” to include “all services provided by an ambulance service in connection with the transportation of persons by air”. When one looks at this definition in conjunction with the meanings of the terms “ambulance” and “ambulance service”, the common meaning of the term “air ambulance service” would be the service of transporting a patient by air in an ambulance. In this case it would be by using an air ambulance to transport injured or ill individuals who require the care of a physician, nurse or other health care provider while being transported.
In Angels of Flight the judge stated that where there is a highly equipped vehicle of the same sort as used for 911 calls, with very well trained professionals, this falls within “ambulance service”. In paragraph 62 of the decision the judge also states “a nurse accompanying a patient with an IV, whether in a standard car or in a standard van with a stretcher and little equipment, would not constitute the provision of an ambulance service.” This indicates that an ambulance service is required to be more than a patient being transported in a passenger vehicle with a medical escort and medical equipment.
The patients that are accompanied by the Corporation’s medical escorts are transported on commercial aircraft. An air ambulance service involves transporting a patient in an air ambulance, therefore it would be necessary for a commercial aircraft to be an air ambulance for the services supplied by the Corporation to be air ambulance services.
The addition of a medical escort along with medical equipment and supplies would not transform a commercial aircraft into an air ambulance. A commercial aircraft is designed to transport passengers from one location to another. An air ambulance is a special aircraft that is designed or configured to be used for transporting injured or ill individuals who require care of a physician, nurse or other health care professional during transport. Although a commercial aircraft can accommodate the transportation of a patient, even a patient who is in a stretcher, under the care of a medical escort, the commercial aircraft is not an air ambulance as it is still being used to transport passengers. The definition of air ambulance suggests a vehicle that is not providing general transportation services at the same time.
As we have concluded that commercial aircraft are not air ambulances, the transfer of a patient in a commercial aircraft would not be an air ambulance service. Therefore, section 15 of Part VII of Schedule VI would not apply to the supply made by the Corporation.
Section 15 also requires that the supply be made by a person who carries on the business of supplying air ambulance services and that the transportation is to or from a place outside of Canada. As the supplies made by the Corporation are not air ambulance services it is not necessary to determine if the Corporation’s supplies meet these conditions.
It is also important to note that an air ambulance service is the transportation of an injured or ill individual who requires the care of a physician, nurse or other health care provider in an air ambulance. An air ambulance service involves both the provision of health care and the transportation of an individual. A supply that only includes the provision of health care but not the transportation of the individual would not be an air ambulance service for purposes of the ETA.
In the Corporation’s case, the Corporation does not own, lease or operate any aircraft. The supplies made by the Corporation involve the transportation of an individual on a commercial airline but the Corporation is not supplying the transportation of the individual in an aircraft/air ambulance operated by the Corporation. A third party – the commercial airline – is supplying the transportation services while the Corporation is supplying a medical escort, […] and other logistical support. […]
The [Corporation’s response to the] RFQ […] also demonstrates that […][a] supply made by the Corporation does not [necessarily] include the transportation of the individual. The RFQ asks for a quote for the provision of a nurse medical escort and a portable oxygen concentrator. The insurance company requesting the quote also asks if the responding companies would be able to provide assistance with airline clearances but does ask for a quote on the cost of transporting the patient. The RFQ also states that unexpected and uncontrolled circumstances may necessitate the medical escort to cover some expenses […]. Receipts for these expenses should be submitted to the insurance company for reimbursement. The Agreement and […][the Corporation’s quote in response to the RFQ] demonstrate that the Corporation is providing medical escort services as well as logistical services rather than a service of transporting an individual in an aircraft/air ambulance operated by the Corporation.
Characterization of the Supply of Services Made by the Corporation
With our conclusion that the Corporation is not making supplies of air ambulance services we must determine the nature of the supplies made by the Corporation and the application of the GST/HST to those supplies. In determining the tax status of the Corporation’s supplies it is necessary to identify all of the elements that are being supplied, determine if each of the elements is its own supply or if the elements form a single supply, and to characterize the supply or supplies being made.
The Corporation itemizes its invoices, [as outlined in Fact # 30] showing a separate charge for each of the elements being supplied. […]
The Corporation also bills […][the recipient] for the expenses for the medical escort to travel to the patient’s location and return home afterwards. This expense would include the airfare for the medical escort, […] and any meals, accommodations or other travel expenses such as taxis. As discussed above, the amount paid to the Corporation for expenses incurred in its own right in the course of making supplies of medical escort services would form part of the consideration for the supply of the medical escort services. Expenses incurred in transporting the medical escort to and from the location of the patient as well as expenses incurred in the provision of services by the medical escorts would be incurred by the Corporation in the course of making supplies of medical escort services.
[…][Logistical services] are also billed to […][the recipient] by the Corporation. These expenses would include taxi, limousine, airport attendants and other expenses incurred during the transfer of the patient back to his or her home country. […][Information in the Agreement and the Corporation’s quote in response to the RFQ indicate] that the ground transportation expenses are also incurred by the Corporation in the course of making its supplies […]. […] the consideration paid for the ground transportation expenses will form part of the consideration for the supplies made by the Corporation.
Single/multiple supplies
The Corporation’s supplies […] [may] consist of [some or all] the following elements:
- the medical escort services;
- the use of medical equipment;
- […];
- […][logistical services].
- […];
- […].
It will be necessary to determine if the Corporation is making a single supply consisting of these elements […] or if the Corporation is making multiple supplies with each of the elements being a separate supply.
Where a transaction consists of several elements, there may be a single supply or multiple supplies. This distinction is important, for example, in cases where a combination of elements is supplied, some of which would be zero-rated or exempt for GST/HST purposes and some of which would not if supplied separately. It is a question of fact whether the person is making a single supply or multiple supplies.
The characterization of a transaction as a single supply or multiple supplies considers the interrelationships among the various elements of the agreement, the purpose of an agreement, the needs of the customer, and the economic reality of the transaction. There is a single supply where one or more elements constitute the supply and any remaining elements serve only to enhance the supply. Where the essential elements are part of a single composite supply, that single supply cannot be artificially split into separate supplies.
Multiple supplies occur when one or more of the elements can sensibly or realistically be broken out. Conversely, two or more elements are part of a single supply when the elements are integral components; the elements are inextricably bound up with each other; the elements are so intertwined and interdependent that they must be supplied together; or one element of the transaction is so dominated by another element that the first element has lost any identity for fiscal purposes.
When performing an analysis, it is important that the analysis be confined to the transaction at issue, rather than referring to other possible transactions containing the same or similar elements. This process should not involve artificially splitting something that commercially is a single supply.
For property with several components, an analysis would consider how the components work together, the needs of the recipient, and identify which components are ancillary or merely optional accessories or attachments.
Although concluding whether a single supply or multiple supplies are made always depends on the facts surrounding a particular transaction, including the terms of any relevant agreements, GST/HST Policy Statement P-077R2, Single and Multiple Supplies, provides additional information on determining whether a single supply or multiple supplies are being provided.
P-077R2 lists the following questions that may assist in this determination:
- Is the property or service provided by two or more suppliers?
- Is there more than one recipient?
- What did the supplier provide for the consideration received?
- Is the recipient made aware of the elements (in detail) that are part of the package?
- In the context of the particular transaction, does the recipient have the option to acquire the elements separately or to substitute elements?
In addition, an important question to consider is what has been supplied for the payment made. Policy Statement P-077R2 also explains that the way in which the consideration for a transaction is set out does not in itself determine whether there are one or more supplies. A single consideration does not automatically mean that there is one supply. Equally, separately identified consideration for certain elements does not necessarily mean that there are two or more supplies. Thus, one cannot rely solely on the breakdown of charges in an agreement or on an invoice to conclude that a supplier is making multiple supplies of different property and/or services.
The key factor to consider in making the determination as to what, and how many, supplies are made in a particular situation is the need/purpose of […][the recipient of the supply] when requesting the Corporation's services. From a supplier point of view, one must consider what the Corporation is being requested to do or to provide that satisfies the request or need of […][the recipient of the supply].
The Agreement with […][ACo] states that the Corporation will render medical escort services to its patients […]
The Corporation […][provided a quote in response to the RFQ which involved] a patient being moved from […][Canada to another country]. In this case […][the quote] from the Corporation included charges for the medical escort and portable oxygen concentrator that the patient would need while in transit. The RFQ also states that due to unexpected and uncontrolled circumstances it may be necessary for the medical escort to cover some expenses […].
[…][it is the CRA’s] view that the Corporation is making […] a single supply […][including several elements:] medical escort services, medical equipment, […] and logistical services, with a provision for reimbursement of expenses incurred in the course of making the supply. The dominant element of the supply made by the Corporation is the medical escort services. The […][recipients] come to the Corporation because their patients require a medical escort to be able to travel and their needs would not be satisfied without these services. The logistical services are inputs that are consumed in the provision of the medical escort services. […].
Part II of Schedule V to the ETA sets out the health care services that are exempt from the GST/HST. The Corporation’s supplies of medical escort services are rendered by registered nurses, physicians and paramedics. Section 6 of Part II of Schedule V exempts supplies of nursing services and section 5 of Part II of Schedule V exempts certain services rendered by medical practitioners.
Nursing Service
Section 6 of Part II of Schedule V exempts a supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse, if the service is rendered within a nurse-patient relationship. To be exempt, the service must be a nursing service rendered to an individual by a registered nurse within a nurse-patient relationship.
Nursing services would be services that are in the scope of practice for nurses. Almost all of the registered nurses on the Corporation’s staff list practise in Ontario. The College of Nurses of Ontario […][clarifies] that the practise of nursing must have the following three elements:
1. Applying nursing knowledge, skill and judgment.
2. Applying relevant nursing practice standards and guidelines.
3. Having a direct or indirect effect on the recipient of a health care service.
The services rendered to a patient during the transfer would meet these three criteria. The nurse would be applying nursing knowledge, skill and judgement during the transfer when monitoring the condition of the patient, deciding when to intervene, and managing the movements and transfers of the patient. In undertaking these actions the nurse is required to apply the relevant nursing practice standards and guidelines and will have a direct effect on the patient being transferred.
The publication also lists different types of activities that would indicate nursing services are being provided. This list includes activities such as providing treatment, assessing the health care needs of […][an individual], analyzing the findings of a health assessment, and determining the appropriate service, treatment or equipment. These are activities that a nurse would be engaged in during the transport of a patient. Therefore, supplies of medical escort services made by the Corporation are exempt supplies pursuant to section 6 of Part II of Schedule V when the service is rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse.
Physician Services
Section 5 of Part II of Schedule V exempts a “supply of a consultative, diagnostic, treatment or other health care service that is rendered by a medical practitioner to an individual.” A “medical practitioner” is defined in section 1 of that Part to mean “a person who is entitled under the laws of a province to practice the profession of medicine or dentistry”. The activities of monitoring and caring for a patient during transfer would be activities in a health care service rendered to an individual and would fall under the exemption in section 5 when rendered to an individual by a licensed physician.
The information provided by the Corporation indicated that the physicians contracted by the Corporation are entitled to practice the profession of medicine in Ontario. The physicians would be medical practitioners for purposes of section 5. Therefore supplies of medical escort services supplied by the Corporation and rendered to individuals by the physicians would be exempt supplies pursuant to section 5 of Part II of Schedule V.
The application of sections 5 and 6 of Part II of Schedule V are limited by sections 1.1 and 1.2 of that Part. Sections 1.1 and 1.2 deem supplies that are made for cosmetic purposes and supplies that are not qualifying health care supplies to not be included in Part II of Schedule V. 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, the provisions provide that the exemptions under section 5 and 6 of that Part are 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.
The CRA considers that the services rendered by the nurses and physicians in the provision of medical escort services are performed for the purpose of maintaining the health of the patient during the transfer. As such the services would not be performed for cosmetic purposes and the supply would be a qualifying health care supply.
Paramedic Services
There are no provisions in Part II of Schedule V, or any other part of the ETA, to exempt the supply of paramedical services. As a result, a supply of paramedical services under the conditions discussed above is taxable for GST/HST purposes.
We understand that the medical escorts have […][instructions] that allows the medical escort to provide care in case of an in-flight medical emergency. The fact that a paramedic may perform certain services on the delegated authority of a physician does not change the nature of the supply. As discussed above, the exemption in section 5 applies to health care services rendered by medical practitioners, delegated services performed by paramedics are being rendered by the paramedic not the medical practitioner who allowed the delegation.
[…]
For more information regarding the place of supply rules please refer to GST/HST Memoranda Series Chapter 3.3 - Place of Supply and GST/HST Technical Information Bulletin B-103 - Place of supply rules for determining whether a supply is made in a province.
[…].
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7932. 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,
Art Blommesteijn
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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