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: 170748
Dear [Client]:
Subject: GST/HST INTERPRETATION
Application of GST/HST to services rendered by a psychologist
Thank you for your fax of June 3, 2015, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services rendered by […][the Psychologist], a registered psychologist.
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
Your daughter is involved in […]. It is understood that she receives treatment from […][the Psychologist] to cope with the mental stress of sustaining […][an injury] and for confidence building for upcoming competitions. [The Psychologist] is a psychologist licenced by the […][regulatory body for] the profession of psychology in […][Province A]. […], the invoices issued by [the Psychologist] indicate that your daughter is receiving “counselling services”. […].
INTERPRETATION REQUESTED
You would like to know whether the [counselling] services your daughter received from [the Psychologist] in relation to her […][injury] and upcoming competitions are exempt from GST/HST.
INTERPRETATION GIVEN
Generally, most supplies of property and services made in Canada are subject to GST/HST, unless they are specifically exempt under Schedule V. Paragraph 7(j) of Part II of Schedule V exempts the supply of a psychological service rendered to an individual by a practitioner of psychological services.
Section 1 of Part II of Schedule V defines a “practitioner” in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery, dietetic, acupuncture or naturopathic services, means a person who
(a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery, dietetics, acupuncture or naturopathy as a naturopathic doctor, as the case may be,
(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.
For purposes of paragraph 7(j) of Part II of Schedule V, […] is the regulatory body for the profession of psychology in [Province A]. Accordingly, a member [in good standing] of […][the Province A regulatory body for the profession of psychology] meets the definition of a "practitioner" of psychological services provided in [Province A].
Therefore, a supply of a psychological service may be exempt from GST/HST where the service is rendered to an individual by a person who practises the profession of psychology and has the appropriate license or certification in [Province A] to practise that profession and the service is provided within the scope of practice for the profession of psychology.
[The Psychologist] is a licensed psychologist and therefore a practitioner for GST/HST purposes. Where the counselling services he renders to your daughter fall within the scope of practice for the profession of psychology, the services will be a psychological service rendered to an individual by a practitioner of psychological services and meet the requirement of the exemption in paragraph 7(j) of Part II of Schedule V.
In addition, if a supply of psychological services falls within an exemption under paragraph 7(j) of Part II of Schedule V, it is necessary to determine if the supply is excluded from the exemption because the supply is a cosmetic service supply or because the supply is not a qualifying health care supply pursuant to sections 1.1 and 1.2 of Part II of Schedule V.
Sections 1.1 and 1.2 of Part II of Schedule V
A supply that is a cosmetic service supply or a supply in respect of a cosmetic service supply, that is not made for medical or reconstructive purposes is deemed under section 1.1 of Part II of Schedule V not to be included in Part II of Schedule V (Footnote 1) and is therefore not exempt under section 7 of Part II of Schedule V. A cosmetic service supply is defined in section 1 of Part II of Schedule V to mean “a supply of property or a service that is made for cosmetic purposes and not for medical or reconstructive purposes.”
In addition, section 1.2 provides that for the purposes of Part II of Schedule V, other than sections 9 and 11 to 14 (Footnote 2) , a supply that is not a “qualifying health care supply” is deemed not to be included in Part II of that Schedule. Generally, supplies deemed not to be included in Part II of Schedule V would be taxable at the applicable rate of GST/HST.
The expression “qualifying health care supply” has been added to section 1 of Part II of Schedule V and is defined 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.”
For each supply of property or a service, the onus is on the supplier to determine the purpose for which the supply is made. In circumstances where a supply is made for more than one purpose, the supply will be a qualifying health care supply if one of the purposes for which the supply is made meets a purpose included in paragraph (a) to (e) of the definition of qualifying health care supply.
In addition, in determining the purpose of the supply a distinction must be made between why the supply was made and the benefits resulting from the supply. For example, an assessment of an individual performed by a physician and completion of a disability certificate as required by an insurance company would be taxable. Although the insured individual may receive medical or rehabilitation benefits from the insurance policy in the event of an injury or disability, the purpose of the assessment and certificate is to assist the insurance company, in part, in determining whether the individual is eligible for benefits under an insurance policy.
Based on the above, it is our view that counselling services rendered by a licensed psychologist for the purpose of assisting an individual in overcoming mental stress associated with sustaining an injury would be a qualifying health care supply pursuant to paragraph (d) of the definition of that term in section 1 of Part II of Schedule V. For example, this could include counselling services to assist an individual in mentally preparing for an upcoming competition following an injury, illness, disorder or disability sustained by the individual.
However, counselling services rendered by a licensed psychologist solely for the purpose of confidence building as mental preparation for an upcoming competition that was not associated with an underlying injury, illness, disorder or disability would not generally be a qualifying health care supply. For example, this would include performance enhancement services such as motivational inspiration. In this case, the purpose of the service is to improve performance and increase motivation. Although an individual may benefit from an increase in self-confidence resulting from obtaining the service, the purpose of the service is improved performance.
For more information, refer to GST/HST Notice No. 286, Draft GST/HST Policy Statement, Qualifying Health Care Supplies and the Application of Section 1.2 of Part II of Schedule V to the Excise Tax Act to the Supply of Medical Examinations, Reports and Certificates.
Therefore, where a psychological service rendered to an individual by a licensed psychologist is a qualifying health care supply and not a cosmetic service supply, the supply of that service is exempt from GST/HST pursuant to paragraph 7(j) 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 interpretation(s) given in this letter, including any additional information, is not a ruling and does not bind the Canada Revenue Agency (CRA) with respect to a particular situation. Future changes to the ETA, regulations, or the CRA’s interpretative policy could affect the interpretation(s) 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 613 954 7952. 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,
Alison Jones
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1 Section 1.1 is not applicable to section 9 of Part II of Schedule V.
2 Section 9 of Part II of Schedule V exempts supplies of properties and services covered by a provincial health insurance plan, section 11 exempts supplies of food and beverages to a health care facility, section 13 exempts supplies of subsidized home care services and section 14 exempts supplies of various training services. Please see those sections for the conditions placed on the supply in order for it to be exempt.
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