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: 163020
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to […] Health Assessments
Thank you for your letter of June 23, 2014, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to supplies of […] Health Assessments made by […] ([…][ACo]).
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 the following:
1. [ACo] is a supplier of […] health services […].
2. [ACo] is registered for the GST/HST […].
3. [ACo] is engaged in the supply of […][various] health care services. […][Certain ACo] services [such as the Assessment] are not covered by any provincial health care program.
4. […]. […][The Assessment] […][includes] physical examinations, diagnostic tests, and lifestyle counselling.
5. […][Lists the test, exams and counselling services included in ACo’s Assessment and the qualifications of the service providers].
6. All of [the Assessment] services are rendered at the time of assessment. The cost of [the Assessment] is […].
7. After the examinations and tests, a personalized report of findings, which includes recommendations for dietary change, exercise regime and further testing, is prepared and the client is provided with a written report.
8. The personalized report is a compilation of the reports from the different service providers. […].
9. The physician that sees the patient does not review the reports from the other service providers as a part of the compilation process.
10. […].
11. [The Assessment] is not covered by any provincial health care program on the basis that such services are not medically necessary.
12. [ACo] makes various supplies of health care services, including [the Assessments], at its facilities.
13. [The Assessment] is done in a separate part of [ACo]’s facilities, apart from where the other services are provided.
14. […].
15. […].
16. […].
RULING REQUESTED
You would like to confirm that [ACo]’s supplies of [the Assessment] are taxable supplies.
RULING GIVEN
Based on the facts set out above, we rule that supplies of [the Assessment] made by [ACo] are taxable (other than zero-rated) supplies and subject to the GST/HST at the applicable rate depending on the place of supply.
EXPLANATION
Generally, most supplies of property and services made in Canada are taxable for GST/HST purposes, unless they are exempt supplies. Exempt supplies are listed in Schedule V. Part II of Schedule V provides that certain health care services are exempt from GST/HST. In order for a supply of property or a service to be exempt from GST/HST under Part II of Schedule V, a specific exempting provision included in Part II must apply to that particular supply.
In addition, if a supply falls within an exemption under Part II of Schedule V, it is necessary to determine if the supply is excluded from the exemption by section 1.1 of Part II of Schedule V because the supply is a cosmetic service supply or by section 1.2 of Part II of Schedule V because the supply is not a qualifying health care supply.
The first step in determining the tax status for […][a supply of the Assessment is] to determine if each of the elements or constituent parts of [the Assessment] is a separate supply or if the supply of [the Assessment] is a single supply of a service of providing an assessment and report. In your letter you state that you believe that, based on the guidelines set out in Policy Statement P-077R2, Single and Multiple Supplies, the supply of [the Assessment] constitutes a single supply of an assessment and health plan.
The facts that the patient pays a single consideration for the supply and that the patient does not have the option to acquire the different elements separately or substitute elements are indicative of a single supply. Therefore, we agree with your conclusion that [the Assessment] is a single supply of an assessment and report rather than multiple supplies consisting of each of the elements of [the Assessment].
After determining that the supply of [the Assessment] is a single supply of a service it is necessary to determine the tax status of the supply. Although certain elements of [the Assessment] may be exempt supplies on their own, we must look at the total supply rather than the individual elements or constituent parts of the supply. The exempting provision that would be relevant to the supply of [the Assessment] would be section 2 of Part II of Schedule V.
Section 2 of Part II of Schedule V exempts a “supply of an institutional health care service made by the operator of a health care facility if the institutional health care service is rendered to a patient or resident of the facility.”
Section 1 of Part II of Schedule V defines the phrase "institutional health care service" for purposes of that Part as meaning any of the following when provided in a health care facility:
a) laboratory, radiological or other diagnostic services;
b) drugs, biologicals or related preparations when administered, or a medical or surgical prosthesis when installed, in the facility in conjunction with the supply of a service included in any of paragraphs (a) and (c) to (g);
c) the use of operating rooms, case rooms or anaesthetic facilities, including necessary equipment or supplies;
d) medical or surgical equipment or supplies
(i) used by the operator of the facility in providing a service included in any of paragraphs (a) to (c) and (e) to (g), or
(ii) supplied to a patient or resident of the facility otherwise than by way of sale;
e) the use of radiotherapy, physiotherapy or occupational therapy facilities;
f) accommodation;
g) meals (other than meals served in a restaurant, cafeteria or similar eating establishment); and
h) services rendered by persons who receive remuneration therefor from the operator of the facility.
In order for a supply to be exempt pursuant to section 2 of Part II of Schedule V it must be a supply of an “institutional health care service”, the supply must be made by the operator of a health care facility, and the supply must also be rendered to a patient or resident of the facility. The definition of “institutional health care service” in section 1 of the same Part also has the condition that the supply must be provided in a health care facility. Therefore, in order to determine if a supply of [the Assessment] made by [ACo] is an exempt supply of an institutional health care service it must be determined if the supply is provided in a health care facility and if [ACo] is the operator of a health care facility.
A “health care facility” is defined in section 1 of Part II of Schedule V to be:
a) a facility, or a part thereof, operated for the purpose of providing medical or hospital care, including acute, rehabilitative or chronic care,
b) a hospital or institution primarily for individuals with a mental health disability, or
c) a facility, or a part thereof, operated for the purpose of providing residents of the facility who have limited physical or mental capacity for self-supervision and self-care with
i. nursing and personal care under the direction or supervision of qualified medical and nursing care staff or other personal and supervisory care (other than domestic services of an ordinary household nature) according to the individual requirements of the residents,
ii. assistance with the activities of daily living and social, recreational and other related services to meet the psycho-social needs of the residents, and
iii. meals and accommodation.
The most relevant part of the definition is paragraph (a). Therefore, in order to be a health care facility, a facility or a part thereof needs to be operated for the purpose of providing medical care or hospital care, which includes acute, rehabilitative or chronic care. The facilities, or parts thereof, operated by [ACo] for the provision of [Assessments] are not recognized as hospitals and would therefore only be a health care facility if they were operated for the purpose of providing medical care.
We understand that [ACo] also provides […] services at its facilities. These other services are conducted in different parts of the facilities than the part where [the Assessments] are conducted. The definition of “health care facility” in section 1 of Part II of Schedule V refers to a facility or part thereof; as [the Assessments] […][are] conducted in a separate part of [ACo]’s facilities we only need to consider the activities in that part […] to determine if that part is a health care facility.
The part of the facility used to supply [Assessments] is not used to make any other supplies, therefore, to determine if that part of the facility is operated for the purpose of providing medical care it must be determined if [the Assessment] is medical care. The CRA considers medical care to mean all types of services provided by physicians acting in the course of the practice of medicine and includes examining or interviewing patients of the facility whether or not for the purpose of treating the patients. In addition, medical care includes a review of the patients' medical records. Medical care also encompasses other services related to, or in support of, the medical care that is provided in the health care facility. Examples of services related to or in support of medical care are nursing services rendered under the active direction of a physician and laboratory, radiological and other diagnostic services rendered under the order of a physician, where these services are also provided in the health care facility.
The Tax Court of Canada (Footnote 1) and the CRA (Footnote 2) have discussed the meaning of medical care in the context of independent medical examinations. In these cases the examination by a physician or the review of a patient’s medical records by a physician were considered to be medical care for purposes of the definition of “health care facility.” The review of a patient’s medical records would also include a physician reviewing an assessment of a patient completed by another health care professional. The circumstances of these supplies can be differentiated from the supply of [the Assessment] in that the purpose for these supplies is the examination by the physician or the review of a report by the physician. […] [The Assessment] supplied by [ACo], […] is a multi-disciplinary assessment conducted by a number of different service providers including […]. Although there may be an element of medical care among the [the Assessment’s] elements or constituent parts […], [the Assessment] is not a supply of medical care [rather] it is a composite supply of a multi-disciplinary assessment and report. Based on the facts, the services that are rendered by the non-physician providers are not related to or in support of the services rendered by the physicians. The services rendered by each of the providers (including the physician) are independent of one another and compiled into the final report given to the patient. […][Therefore the CRA considers] that the parts of [ACo’s] facilities that [ACo] uses exclusively for supplying [the Assessments] are not operated for the purpose of providing medical care.
As a result, those parts of the facilities are not health care facilities as defined in section 1 of
Part II of Schedule V. The definition of “institutional health care service” in section 1 of Part II of Schedule V requires that the supply be provided in a health care facility. A supply of [the Assessment] is not provided in a health care facility and […][is therefore not] an institutional health care service. As the supply is not an institutional health care service the supply of [the Assessment] would not be exempt pursuant to section 2 of Part II of Schedule V.
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 613-954-4395. 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 Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 Riverfront Medical Evaluations Ltd. V. The Queen
2 GST/HST Policy Statement P-248, The application of the GST/HST to the supply of an independent medical examination (“IME”) and to other independent assessments
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