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, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 168474
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Psycho-Vocational Rehabilitation Assessment Services and Job Search Support Services
This is in regard to your request for a ruling concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to payments made to [the] […]([…][Contractor]) by […]([…][X]) for Psycho-Vocational Assessment Services and Job Search Support Services further to the Memoranda of Agreement which were faxed to the CRA on December 15, 2014 and December 19, 2014.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island and 15% in Nova Scotia. 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
1. […]
2. […]
3. […]
Psycho-Vocational Assessment Services
4. [X] and (the “Contractor”) entered into a Memorandum of Agreement (MOA1), effective [mm/dd/yyyy] to [mm/dd/yyyy] entitled “Psycho-Vocational Assessment Services”. The terms of the MOA1 include the following:
a) Section 1.1 states “The Contractor shall provide to [X] the specific Psycho-Vocational Assessment Services as described in Schedules A, A1, C, D, Attachments 1, 2, 3, 4 and at the rates set out in Schedule B. The Schedules and Attachments are attached to and form part of this Agreement.”
b) Section 1.3 states “This Agreement is a non-exclusive Agreement, and the Contractor acknowledges that Psycho-Vocational Assessment Services are provided to [X] by other Contractors. The Contractor agrees and acknowledges that [X], its directors, officers, employees, or agents have not made any representations or warranties in regard to the quantity of referrals/requests for specific Psycho-Vocational Assessment Services during the Term of this Agreement. The Contractor acknowledges that any referrals or requests for Psycho-Vocational Assessment Services made by [X] under this Agreement are only as requested by [X]. The Contractor shall only provide Services to a […][client] after receiving authorization from a […].”
c) Section 1.6 states, in part, “[X] reserves the right to provide referrals to other providers of the Services and/or to initiate a competitive process to identify other providers of the Services where the Contractor is unable to provide the Services in a timely manner, does not meet reasonable referral acceptance rates, or provides Services in an unsatisfactory manner.”
d) Section 4.3 states “The Contractor shall reference the Services provided to only one (1) [client] in an invoice. Where a Contractor is providing Services for multiple [clients] simultaneously, the Contractor shall submit a separate invoice for Services rendered for each [client].”
e) Section 4.6 states “The Contractor shall not charge any fee or charges associated with the Services provided under this Agreement directly or indirectly to the [client] or, any other individual, business or other entity.”
f) Section 5.1 states “[X] shall pay the Contractor in accordance with Schedule B for providing Services only if the Services have been authorized by [X] and if the Contractor has provided the Services in compliance with the terms and conditions of this Agreement.”
g) Section 10.1 states “During the Term of this Agreement, the Contractor shall ensure that the Contractor, their employees, servants, agents and/or subcontractors providing Services have the appropriate professional qualifications, skills, experience and licenses as required and defined for Services provided in Schedule A.”
h) Section 11.1 states “The Contractor shall maintain all records and books concerning the Services provided and fees invoiced by the Contractor under this Agreement.”
i) Section 11.4 states “[X] may, at any time during the Term of this Agreement, audit all of the Contractor’s accounting records and books concerning Services provided under this Agreement, including any and all documents and other materials, in whatever form they may be kept, upon which the accounting records and invoices are based.”
j) Section 13.1 states “[X] shall have the right to access the Contractor’s locations during regular business hours for the purpose of ensuring that the quality of the Services provided are satisfactory to [X]. When requested by [X], the Contractor shall meet with representatives of [X] to review the quality of the Services and attend to any matter of concern to [X].”
k) Section 24.1 states “The Contractor is an independent Contractor and neither the Contractor, nor their directors, officers, employees, servants, agents, or subcontractors are the directors, officers, employees, or agents of [X].”
l) Section 31.1 states “[X] reserves the right to terminate all or any part of this Agreement upon the occurrence of any of the following events that includes, but is not limited to:
(a) the Contractor’s failure to deliver Services in accordance with the terms of this Agreement to the satisfaction of [X]; or
(b) the Contractor’s failure to ensure that the Services are provided by the appropriate qualified and/or certified personnel and in compliance with regulations and/or licenses as required by this Agreement; or
(c) the Contractor’s failure to meet the Performance Standards as outlined …”
m) Schedule A to the MOA1 entitled “Psycho-Vocational Assessment Services” includes the following:
i. Section 1.1 states “Psycho-Vocational Assessment is a specialized testing intended for [clients] with suspected or confirmed learning disabilities, post-traumatic stress, English as a second language, pain-focused behaviour, or any other psychological or emotional barrier which would hinder routine psychometric testing. The assessment involves in-depth vocational assessment by a qualified Psychologist, to ensure that the above issues are identified and addressed for purposes of vocational rehabilitation planning and development of the vocational rehabilitation plan.
Psycho-Vocational Testing may include, but is not limited to, the administration of a battery of specialized tests…such as interest, aptitude, achievement, personality, etc. to identify and address specific issues related to vocational planning. Learning disability testing may also be included where specifically requested by […] and identified in the referral form.”
ii. Section 1.3 states “The Provider will ensure that validated and published test protocols are adhered to for each test and/or inventory administered.
In addition the contract-defined requirements, Psycho-Vocational Assessment services must be provided in accordance with the professional standards and Code of Conduct of the professional governing body/college for the provider.”
iii. Section 2.1.1 states “[X] is not bound by any estimated quantities or referrals or work volumes.”
iv. Section 2.1.2 states “Referrals will be distributed to Contractors based upon, but not limited to:
* Proximity of the [client] to the nearest service locations;
* Specific [client] requirements (i.e. language, etc.);
* Availability of the Contractor to provide the specific services required by the [client];
* Timeliness of referral to admission interval within a region.”
v. Section 2.1.3 states “[X] reserves the right to change the referral distribution process at any time as it deems necessary to meet operational requirements.”
vi. Section 2.2.1 states “The [client] must be referred for Services by [X]; the Contractor may only administer tests, assessments, or Services which are specifically identified in the referral form received.”
vii. Section 2.4.1 states “The Contractor must acknowledge a referral through the […] Portal within twenty-four (24) hours, excluding Saturday, Sunday and […][Province 1] statutory holidays. If a Contractor fails to acknowledge a referral within the timelines stated the referral may be redistributed.”
viii. Section 2.5 states “[X] may monitor referral acceptance rates, as measured by the percentage of referrals received that are accepted and booked for an appointment. Contractors are expected to maintain a reasonable referral acceptance rate as compared to their network peers.”
ix. Section 3.1 states “The Contractor must complete a final Psycho-Vocational Assessment report summarizing the final test results and conclusions.”
x. Section 3.3 states “The Contractor’s Psycho-Vocational Assessment report must be submitted to [X] within thirty (30) business days from the date of referral.”
xi. Subsection 3.6 states “The Contractor’s Psycho-Vocational Assessment report, submitted…must include, but is not limited to, all of the following information:
* Service Delivery Information (Date of Initial Contact, Testing Start Date, Testing Completion Date)
* Relevant background information
* Protocol
* Test(s) administered
* Test results including standardized scores
* Summary of findings
* Recommendations and/or Conclusions
* Response(s) to specific referral questions
* Additional relevant information”
xii. Section 4.1 states “This Service must be delivered by [X] Approved Personnel meeting the following qualification requirements:
4. 1.1 Must be performed by a registered Psychologist who is a current member in good standing with […]
n) Section 7.1 states “The Contractor acknowledges that [X] Officer shall not have authority to bind [X] and to deviate from Fee Schedule B. No additional charges shall be invoiced to or payable by [X].” Schedule B includes the following fees for each [client] referred and for whom services/programs are appropriately delivered:
* Psycho-Vocational Testing/Assessment $[…] flat fee
* Psycho-Vocational Testing/Assessment Plus Disability Testing $[…] flat fee
* Psycho-Vocational Testing/Assessment – Document review $[…] flat fee
(generally paid where a referral results in a cancelled appointment)
o) Section 7.2 states “No additional charges shall be invoiced to [X] without the prior authorization by [X] Manager of […]…”
p) Section 7.3 states “The flat fee for Psycho-Vocational Assessment Services is inclusive of all elements except travel time and expenses outlined in Schedule A1...”
q) Attachment 3 to MOA1 entitled “Reference – Roles and Responsibilities” includes the following:
The […] in […] “is responsible for the vocational rehabilitation decisions under the claim. […] is the primary vocational rehabilitation professional responsible for ensuring the delivery of high quality vocational rehabilitation to assist [clients] in achieving timely and safe return to work and other appropriate rehabilitation outcomes.
To this end, […] may utilize the […] to deliver specific services required for the vocational planning process or as part of the Rehabilitation Plan…
[…] is responsible to provide specific, high quality, Psycho-Vocational Assessment Services under the direction of […] in Vocational Rehabilitation Services. In so doing, […]…
* Delivers approved Psycho-Vocational Assessment Services as outlined in the Agreement with [X];
* Communicates and involves the [client], […] and any other relevant stakeholders in the vocational Service where appropriate;
* Completes and submits reports on a timely basis.
[…] will ensure that Services are delivered as per the contract defined terms, provide recommendations that are appropriate to the [client]’s individual circumstances and entitlement level under the claim, and strive to obtain the [client]’s active participation throughout the provision of Services.”
Job Search Support Services
5. [X] and […](“Provider/Contractor”) entered into a Memorandum of Agreement (MOA2), effective [mm/dd/yyyy] to [mm/dd/yyyy], entitled “Job Search Support Services”. The terms of MOA2 include the following:
a) Section 1.1 states “The Provider shall provide to [X] the specific Job Search Support Services as described in Schedules A, C, Attachments 1, 2, 3, and […] and at the rates set out in Schedule B. The Schedules and Attachments are attached to and form part of this Agreement. The Provider acknowledges by executing this Agreement that […] forms part of this Agreement...”
b) Section 1.3 states “This Agreement is a non-exclusive Agreement, and the Provider acknowledges that Services are provided to [X] by other Providers. The Provider agrees and acknowledges that [X], its directors, officers, employees, or agents have not made any representations or warranties in regard to the quantity of referrals/requests for Services during the Term of this Agreement. The Provider acknowledges that any referrals or requests for Services made by [X] under this Agreement are only as requested by [X]. The Provider shall only provide Services […] after receiving authorization from […].”
c) Section 1.6 states “[X] reserves the right to provide referrals to other Providers of the Services and/or to initiate a competitive process to identify other Providers of the Services where the Provider is unable to provide the Services in a timely manner, does not meet reasonable referral acceptance rates, or provides Services in an unsatisfactory manner.”
d) Section 4.1 states “The Provider shall only submit invoices for authorized Services as described in Schedules A, A1, A2, B, C, D, Attachments 1, 2, and […] provided to a [client]. The Provider acknowledges that the […] shall not have authority to deviate from Fee Schedule B. No additional charges shall be invoiced to or payable by [X].”
e) Section 4.3 states “The Provider shall reference the Services provided to only one (1) [client] in an invoice. Where a Provider is providing Services for multiple [clients] simultaneously, the Provider shall issue a separate invoice for Services rendered for each [client].”
f) Section 4.6 states “The Provider shall not charge any fees or charges of any nature for Services provided under this Agreement directly or indirectly to the [client] or, any other individual, business or other entity.”
g) Section 5.1 states “[X] shall pay the Provider in accordance with Schedule B for providing Services only if the Services have been authorized by [X] and if the Provider has provided the Services in compliance with the terms and conditions of this Agreement.”
h) Section 11.1 states “The Provider shall maintain all records and books concerning Services provided and fees invoiced by the Provider under this Agreement.”
i) Section 11.3 states “When requested by [X], the Provider shall make available all records and books concerning the Services, together with the supporting or underlying documents and materials, to [X] for inspection, audit, or reproduction by its employees and/or subcontractors or authorized representatives, during normal business hours…”
j) Section 24.1 states “The Provider is an independent Contractor and neither the Provider, nor their directors, officers, employees, servants, agents, or subcontractors are the directors, officers, employees, or agents of [X].”
k) Schedule A to the MOA2 entitled “Job Search Support Services” includes the following:
i. Section 1.0 states “[…] offers a variety of quality programs and services to assist [clients] to achieve timely and safe return to work. […] works directly with [clients] to develop suitable return to work or vocational rehabilitation plans.
[…] may refer [clients] to an external Provider to deliver specific Job Search Support services that facilitate successful return to suitable and durable employment with a new employer and to obtain the best possible return to work outcomes.
The three (3) main types of Services that may be requested by […] are:
* Resume and Cover Letter Preparation
* Job Search Skills
* Individualized Job Placement”
ii. Section 1.1 entitled “Resume and Cover Letter Preparation” states, in part, “This service is designed for [clients] who have an identified occupational goal(s) and job target(s). It is intended to provide the [client], who will be undertaking independent job search activity, with a professional quality, marketable resume(s) and cover letter(s) appropriate to the [client]’s occupational goal(s) and job target(s)”
iii. Section 1.2 entitled “Job Search Skills” states, in part, “The primary objectives of the job search skills service are to:
* enable the [client] to organize, develop and implement a focused and effective job search action plan; motivate the [client] to participate in actual job search activities;
* develop and/or re-establish attitudes, skills, behaviours, and knowledge necessary to conduct an active independent job search and successfully attain suitable employment;
* provide the [client] with a professional quality resume and cover letter in accordance with format and content, and quality requirements …”
iv. Section 1.3 entitled “Individualized Job Placement” states, in part, “The Provider will assist the [client] to prepare for and undertake an active job search, and will identify and secure durable employment consistent with the occupational goal(s) and job target(s) identified on the referral form. With agreement of the […], efforts may also focus on other employment consistent with the [client]’s aptitudes, interests, abilities, and transferable skills that will maximize the [client]’s earnings up to the targeted wage rate.
All negotiations for work assessments, on the job training, or wage subsidy will be conducted by […] in Vocational Rehabilitation Services.”
v. Section 2.2.1 states “The [client] must be referred for Service by [X]; the Provider may only provide Services which are specifically identified in the referral form received.
vi. Section 7.1 states “The Provider acknowledges that [X] Officer shall not have authority to bind [X] and to deviate from Fee Schedule B. No additional charges shall be invoiced to or payable by [X].” Schedule B includes the following fees:
* Resume and Cover Letter Preparation $[…] flat fee
* Job Search Skills $[…] flat fee
* Job Placement $[…] flat fee
* Job Placement Extension $[…] per week
* Durable Placement Fee (permanent) $[…] flat fee
* Durable Placement Fee (temporary) $[…] flat fee
* Service Cancellation Fee $[…] flat fee
vii. Section 7.2 states “No additional charges shall be invoiced to [X] without the prior authorization by [X] Manager of […]…”
viii. Section 7.3 states “The flat fee for Services/programs is inclusive of all elements except travel time and expenses outlined under Schedule A2…”
RULING REQUESTED
You would like to know
1. Whether [X]’s supply of Psycho-Vocational Assessment Services under the MOA1 with [X], effective [mm/dd/yyy] to [mm/dd/yyyy] is a taxable supply and is subject to the GST/HST?
2. Whether [X]’s supply of Job Search Support Services under the MOA2 with [X], effective [mm/dd/yyyy] to [mm/dd/yyyy], is a taxable supply and is subject to the GST/HST?
RULING GIVEN
Based on the facts set out above, we rule that
1. [X]’s supply of Psycho-Vocational Assessment Services under the MOA1 with [X], […] is an exempt supply pursuant to section 7 of Part II of Schedule V to the ETA. As such, the consideration paid for this supply is not subject to the GST/HST.
2. [X]’s supply of Job Search Support Services under the MOA2 with [X], […] is a taxable supply and is subject to the GST/HST.
EXPLANATION
Generally, most supplies of property or services made in Canada are subject to the GST/HST, unless the supply is specifically zero-rated (subject to GST/HST at the rate of 0%) or exempt (not subject to the GST/HST) under the ETA. Exempt supplies are listed in Schedule V to the ETA.
Ruling 1
Section 7 of Part II of Schedule V to the ETA exempts the supply of a number of services including the supply of psychological services rendered to an individual by a practitioner of the service. “Practitioner” is defined in section 1 of Part II of Schedule V to mean, in respect to a psychological service: (a) a person who practises the profession of psychology; (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. In the current case, the MOA1 requires that [X] psychologists be registered as members in good standing with […]. As […] is the regulatory body for the profession of psychology in […][Province 1], a member of […] in good standing will meet the definition of a "practitioner" for purposes of section 1 of Part II of Schedule V.
In addition to meeting the exempting provision above, section 1.2 of Part II of Schedule V to the ETA provides that for the purposes of this Part, 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. Further, a supply that is a “cosmetic service supply” and a supply in respect of a “cosmetic service supply”, that is not made for medical or re-constructive purposes are also, generally, not to be included in Part II pursuant to section 1.1 of Part II of Schedule V. Therefore, to be included under the exempting provision in section 7, the service provided must also meet the definition of a “qualifying health care supply” and not be a “cosmetic service supply”.
A “qualifying health care supply” is defined in section 1 of Part II of Schedule V to the ETA 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.”
A “cosmetic service supply” is also defined in section 1 to mean, “a supply of property or a service that is made for cosmetic purposes and not for medical or reconstructive purposes.”
In this case, the supply of psycho-vocational assessment services being rendered to an individual would fall within paragraph (c) or (d) of the definition of “qualifying health care supply” as the purpose of the service is to confirm or identify the issues related to an individual’s injury or disability for the purpose of vocational rehabilitation planning and the development of the individual’s vocational rehabilitation plan. In addition, the supply of psycho-vocational assessment services would not be a “cosmetic service supply”.
Based on the above, [X]’s supply of psycho-vocational assessment services would meet the conditions of section 7 of Part II of Schedule V to the ETA and it is, therefore, an exempt supply for purposes of the ETA. As such, the consideration paid for this service is not subject to the GST/HST.
Ruling 2
Concerning the supply of job search support services, there are no exempting provisions in the ETA that would apply to these services. As a result, the supply of these services is a taxable supply and the consideration paid or payable for these services is subject to the GST/HST.
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 613-841-4707. 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,
Brent Fleming
Government Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
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