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: 155280r
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Services provided for children in care of province
Thank you for your letter of [mm/dd/yyyy], wherein you requested that we reconsider our ruling of [mm/dd/yyyy], which stated that your supplies of services to […][Company A] were taxable and subject to the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) at 5%. We apologize for our delay in responding. We have carefully considered your submissions in our review. This letter revokes the original ruling issued to you on [mm/dd/yyyy]. The following rulings replace and supersede our previous ruling, effective […][the day the original ruling was issued].
The HST applies in the participating provinces at the following rates: 13% in Ontario; 14% in Prince Edward Island; and 15% in New Brunswick, Newfoundland and Labrador and Nova Scotia. The Government of Prince Edward Island has proposed to increase the rate of the HST in that province from 14% to 15% effective October 1, 2016. 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. You are a self-employed sub-contractor engaged by […]([…][Company A]), which is based in […], Alberta.
2. You are registered for GST/HST purposes with account number […].
3. You have worked with children for […][many] years. You have aboriginal training, diversity training, suicide intervention, and first-aid training. You have been educated and trained to deal with high risk children, violent children, violent and non-violent child offenders and behaviour-challenged children. The main focus of your training has been children with Fetal Alcohol Spectrum Disorder.
4. You are not a social worker.
5. Alberta’s Child, Youth and Family Enhancement Act governs child intervention, foster care and adoption services in the province. Services under this act are provided by regional Child & Family Services Authorities and 17 Delegated First Nations Agencies. The regional Child & Family Services Authorities are listed entities of the Government of Alberta for GST/HST purposes.
6. According to your letter dated [mm/dd/yyyy], [Company A] is […] contracted by Alberta Child & Family Services Authorities to provide services for children under the guardianship of the Province of Alberta. [Company A] is accredited to provide services in four specific areas: transportation, supervision, youth work and crisis work.
7. The Enhancement Policy Manual, available on the Alberta Human Services website, www.humanservices.alberta.ca, contains policies and procedures that direct casework staff when delivering services under the Child, Youth and Family Enhancement Act. All casework staff in Child & Family Services Authorities and Delegated First Nation Agencies are expected to comply with the requirements set out in the Enhancement Policy Manual.
8. Chapter 9 of the Enhancement Policy Manual is titled “Service for Children”. Section 9.5 of the manual governs contracted services and payments. Pursuant to section 9.5, a caseworker must complete a Referral and Evaluation of Service form to purchase services for a child. Subsection 9.5.3 of the manual states “A Referral and Evaluation of Services (R&E) is used for any external assessment or provision of services to the child and family…The R&E is used to record the reason for referral, objective, terms of service and evaluation of the service provided. It is completed before the service commences, or in an emergent situation, within three working days of the oral agreement.”
9. You have provided us with several examples of R&Es, which [Company A] received from a caseworker. Each R&E provides information from the caseworker about why the referral is needed and the service objective.
[…][R&E 1]
This R&E is in respect of […][the safe supervision of children during parental visits; report writing, and transportation services (from foster home for appointments and family visits)] to be provided for five children, […][age 14 and under]. […]
You also provided a timesheet related to this R&E showing your hours worked and kilometres driven in [mm/yyyy]. You provided services for periods of less than 24 hours per day.
[…][R&E 2]
This R&E is in respect of [level three visit supervision] services to be provided for two children, […][age 14 and under]. […]
In a telephone conversation, you explained that level three visitation means that the visit supervisor teaches parenting skills.
[…][R&E 3]
This R&E is in respect of [(one on one) care and supervision)] services to be provided for one [special needs] child, age […][14 and under]. […]
[…][R&E 4]
This R&E is in respect of […][transportation services from foster home for appointments, family visits and counselling)] to be provided for one child, age […][14 and under]. […]
[…][R&E 5]
This R&E is in respect of […][transportation services from foster home to a daily program] to be provided for one child, age […][14 and under]. […]
[…][R&E 6]
This R&E is in respect of […][transportation services for parental visits] to be provided for one child, an infant. […]
10. When [Company A] receives an R&E from a caseworker, it uses a sub-contractor to provide the requested services to the Child & Family Services Authority. You supplied the services described in the R&Es above to [Company A].
11. You provided us with a document titled […][the Agreement] dated [mm/dd/yyyy]. This document was signed by you and a director of [Company A]. The document states, in part, “As a contractee working with [Company A] I am aware that all work is on a fee for service basis.”
12. You provide services in all four areas for which [Company A] is accredited. You provided us with a document titled “Position Descriptions and Wages” that describes the four types of work that you may be contracted to perform. These positions include
* Support Services Worker (wages: $[…]/hour, $[…]/km);
* Transportation Facilitator (wages: $[…]/hour, $[…]/km);
* Youth Worker ($[…]/hour, $[…]/km); and
* Child/Youth Intervention Worker ($[…]/hour, $[…]/km).
13. In our phone conversation on [mm/dd/yyyy], you explained that the specific services you provide to [Company A] are determined on an ad hoc basis depending on the services required by the Child & Family Services Authority. When you receive an R&E you provide the specific services requested and submit timesheets on a monthly basis detailing the number of hours worked and kilometres driven.
14. You primarily provide services as a Transportation Facilitator. In your letter dated [mm/dd/yyyy], you stated
[…][describes the transportation and supervisory services you provide]
15. According to the document titled “Position Descriptions and Wages”, the duties and responsibilities of a Transportation Facilitator are as follows: […]
RULING REQUESTED
You would like to know
1. If your supplies of services to [Company A] are exempt from the GST/HST; and
2. If you are required to be registered for GST/HST purposes.
RULING GIVEN
Based on the facts set out above, we rule that
1. The supply of services described in [R&E 1] is exempt from the GST/HST under section 1 of Part IV of Schedule V;
2. The supply of services described in [R&E 2] is taxable as no exempting provision applies;
3. The supply of services described in [R&E 3] is exempt from the GST/HST under section 1 of Part IV of Schedule V;
4. The supply of services described in [R&E 4] is taxable as no exempting provision applies;
5. The supply of services described in [R&E 5] is taxable as no exempting provision applies; and
6. The supply of services described in [R&E 6] is taxable as no exempting provision applies.
EXPLANATION
What is the GST/HST?
The GST/HST is a tax that applies to most supplies of property and services made in Canada. If you are a GST/HST registrant, you generally have to charge and collect the GST/HST on taxable supplies (other than zero-rated supplies) you make in Canada and file regular GST/HST returns to report that tax. A “supply” is the provision of property or a service in any manner.
Almost everyone has to pay the GST/HST on purchases of taxable supplies of property and services (other than zero-rated supplies). However, Indians and some groups and organizations, such as certain provincial and territorial governments, do not always pay the GST/HST on their purchases.
Some supplies are exempt from the GST/HST – that is, no GST/HST applies to them. This means that you do not charge the GST/HST on these supplies of property and services.
For more information, see Guide RC4022, General Information for GST/HST Registrants, available on the CRA website.
The GST/HST is a transaction-based tax and for each transaction, the supplier must determine whether the tax is applicable. When you provide services to [Company A], you have made a supply for GST/HST purposes. It is our view that there are multiple supplies between you and [Company A]. The specific services you provide to [Company A] as described in each R&E are viewed as a separate supply, because the R&Es are not related and each R&E is issued by a different case worker in respect of a particular child or family.
Exempt supplies
Exempt supplies of property and services are listed in Schedule V. The only exempting provision that could possibly apply to your supplies of services is section 1 of Part IV of Schedule V, which exempts certain supplies of child care services.
Section 1 of Part IV of Schedule V exempts a supply of child care services, the primary purpose of which is to provide care and supervision to children 14 years of age or under for periods normally less than 24 hours per day, but not including a supply of a service of supervising an unaccompanied child made by a person in connection with a taxable supply by that person of a passenger transportation service.
The supplies of services described in the following R&Es are exempt under section 1 of Part IV of Schedule V:
* [R&E 1]; and
* [R&E 3];
These supplies are not subject to the GST/HST.
The supply described in [R&E 1] is considered a child care service. The primary purpose of this supply was to supervise the children and maintain their safety during visits with their parents. The other elements of the supply, the transportation and the report writing, were incidental to the supervision, as the supervision was the main component of the supply. The children were aged […][14 and under] and your reported hours related to this R&E were for periods normally less than 24 hours per day. Therefore, this supply is exempt under section 1 of Part IV of Schedule V. Supplies of similar services would also be exempt.
The supply described in [R&E 3] is also considered a child care service. This R&E was in respect of one on one care and supervision provided to a […] special needs child [age 14 and under]. The service was provided from 8am to 5pm two days a week to relieve the child’s foster parents. Therefore, this supply is exempt under section 1 of Part IV of Schedule V. Supplies of similar services would also be exempt.
Taxable supplies
Generally, most supplies of property and services made in Canada are taxable for GST/HST purposes, unless they are specifically exempt. There is no specific exempting provision that applies to the supplies of services described in the following R&Es:
* [R&E 2];
* [R&E 4];
* [R&E 5]; and
* [R&E 6].
Therefore, you made taxable supplies to [Company A] when you provided the services described in each of the above R&Es. If you are a GST/HST registrant, you are required to charge and collect the GST/HST on these supplies. Supplies of similar services would also be taxable, as no exempting provision applies.
The supplies of services described in these R&Es are not exempt supplies of child care services. [R&E 2] was in respect of “level three visit supervision”. In a telephone conversation, you explained that level three visitation means that the visit supervisor teaches parenting skills. This supply is not exempt under section 1 of Part IV of Schedule V. Even though the service involved children and families; it was not a child care service. Further, the primary purpose of this supply was not to provide care and supervision to children. Rather, the service described in the R&E involved working with the mother on basic parenting skills, providing reports and attending case conferences. As explained above, the supply of services described in [R&E 2] is taxable, as no exempting provision applies.
The supplies of services described in [R&Es 4, 5, and 6], were transportation services, not child care services. Although you were responsible for the care and supervision of the children during the transportation, this was not the primary purpose of the supply. Therefore, section 1 of Part IV of Schedule V does not apply. As explained above, the supplies of services described in these R&Es are taxable, as no exempting provision applies.
ADDITIONAL INFORMATION
Registration for GST/HST purposes
We are unable to provide a ruling on whether you are required to be registered for GST/HST purposes. In general, every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for the GST/HST, except where the person is a small supplier. You are a small supplier if your total revenues from taxable supplies are $30,000 or less in the last four consecutive calendar quarters and in any single calendar quarter.
You make a combination of taxable and exempt supplies. Therefore, not all of your income is revenue from taxable supplies. Your revenue from exempt supplies is not included in your small supplier calculation.
If you are a small supplier, you do not have to be registered for GST/HST purposes. However, a small supplier engaged in a commercial activity in Canada may choose to register voluntarily. For more information, see GST/HST Memorandum 2.2, Small Suppliers, available on the CRA website.
Input tax credits
In general, a GST/HST registrant is eligible to claim an input tax credit for the GST/HST paid or payable by the registrant on property or a service to the extent that the property or service was acquired, imported or brought into a participating province for consumption, use or supply in the course of the registrant's commercial activities (e.g., for making taxable supplies for consideration) provided all other conditions for claiming the input tax credit are met.
Therefore, you may be entitled to claim input tax credits to recover the GST/HST paid or payable on your purchases and expenses to the extent that they are for consumption, use, or supply in making taxable supplies for consideration, such as taxable supplies of transportation services. You cannot claim input tax credits for the GST/HST paid or payable on property and services to the extent the property or service is consumed, used or supplied in making exempt supplies, such as exempt supplies of child care services.
Likewise, if [Company A] is a GST/HST registrant, it may be entitled to claim input tax credits to recover the GST it is required to pay on the services it acquires from you, provided all the conditions for claiming input tax credits are met.
For more information on the general rules for claiming input tax credits and methods for calculating input tax credits, see GST/HST Memoranda Series 8.1, General Eligibility Rules and 8.3, Calculating Input Tax Credits.
Supplies to the Province of Alberta
Generally, provincial governments are not required to pay the GST/HST. The Government of Alberta does not pay the GST/HST to its suppliers. Although a supplier is not required to charge the GST/HST on taxable supplies of property and services made to the Government of Alberta, the revenue from these supplies must be included in its small supplier calculation. For more information, see GST/HST Memorandum 18.2, Provincial Governments.
Although [Company A] makes supplies to listed entities of the Government of Alberta, it is not part of the government of Alberta for GST/HST purposes. Therefore, if you are a GST/HST registrant, you must charge GST/HST on your taxable supplies of services to [Company A].
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 rulings given in this letter provided that: none of the issues discussed in the rulings 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. The interpretations given in this letter, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or the CRA's interpretative policy could affect the interpretations or the additional information provided herein.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-952-9592. 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,
Heather Reardon
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
cc: [CRA official]
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