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: 155280R2
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Services provided for children in care of province.
In a letter dated [mm/dd/yyyy], […][a representative of your firm] requested that we reconsider a ruling in our August 15, 2016, letter Case Number 155280R, which stated that your client’s supply of services to […][Company A] under a Referral and Evaluation of Services [form] […][(R&E 2)] effective from [mm/dd/yyyy] to [mm/dd/yyyy] was 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 the submissions in our review.
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
1. Your client is a self-employed sub-contractor engaged by [Company A], which is based in […], Alberta.
2. Your client is registered for GST/HST purposes with account number […].
3. Your client has worked with children for […][many] years. Your client has aboriginal training, diversity training, suicide intervention, and first-aid training. Your client has 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 client’s training has been children with Fetal Alcohol Spectrum Disorder.
4. Your client is 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 a letter from your client 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 (manual), available on the Alberta Human Services website (Footnote 1) , 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 manual.
8. Chapter 9 of the 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 R&E form to purchase services for a child. Under the heading “Policy”, subsection 9.5.3 of the manual states,
“A [R&E] is used for any external assessment or provision of services to the child and family.”
9. Under the heading “Purpose”, subsection 9.5.3 of, the manual states,
“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.”
10. Under the heading “Review of Services” subsection 9.5.3 of the manual states,
“Review services at three month intervals in conjunction with the service plan. Complete a new R&E if the objective or terms of the services have changed or an extension is required.”
11. Your client has 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 2]
This R&E is in respect of [level three supervised visitation] services to be provided for two children, […][age 14 and under].
[…]
12. You have provided us with a document that you referred to as a Scope of Services or Statement of Work. […]. On the subject of Level Three Supervised Visitation it states the following (in part):
[…]
Level Three Supervised Visitation is the final tier in the access levels.
[…]
During Level Three Supported Visitation, [Company A] will observe the family and document interaction and behavior, while using the time spent with the family to provide coaching, role modeling and ways to improve familial relationships, parenting skills, etc. […]
13. In reference to our letter of August 15, 2016, the letter sent to us by [a representative of your firm] on [mm/dd/yyyy] stated,
“It is our view that fact #9 is not complete with respect to the objectives of the R&E contract from [mm/dd/yyyy] to [mm/dd/yyyy] (the “Contract”). This Contract should qualify as an exempt supply under section 1 of Part IV of Schedule V to the Excise Tax Act (“ETA”).
We are of the view that what is missing from the objectives for the Contract are the following:
i. To provide basic supervision to the children during visits and ensure the parent(s) are appropriate at all times
ii. To safely transport the […] children from their foster home to the parent’s home, and back;”
14. You have stated that there is no new R&E effective from [mm/dd/yyyy] to [mm/dd/yyyy] that indicates that the objective or terms of the services has changed.
15. 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. Your client supplied the services described in the R&E above to [Company A].
16. Your client has provided us with a document titled […] dated [mm/dd/yyyy]. This document was signed by your client 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.”
17. Your client has provided services in all four areas for which [Company A] is accredited. Your client has provided us with a document titled “Position Descriptions and Wages” that describes the four types of work that your client 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).
18. In a phone conversation between […] of the Canada Revenue Agency (CRA) and your client on [mm/dd/yyyy], your client explained that the specific services he provides to [Company A] are determined on an ad hoc basis depending on the services required by the Child & Family Services Authority. When your client receives an R&E he provides the specific services requested and submits timesheets on a monthly basis detailing the number of hours worked and kilometres driven.
RULING REQUESTED
We have been asked to review the Ruling Given #2 in our August 15, 2016, letter which states,
“The supply of services described in [R&E 2] is taxable as no exempting provision applies; …”
RULING GIVEN
Based on the facts set out above, we confirm our ruling that the supply of services described in [R&E 2] is taxable as no exempting provision applies.
EXPLANATION
According to subsection 9.5.3 of the Enhancement Policy Manual that contains policies and procedures that direct casework staff when delivering services under the Child, Youth and Family Enhancement Act and that all casework staff are expected to comply with, any change to the objective of the services, or the terms of services, for a given R&E should result in a new R&E being completed.
The additional information provided has not been reflected in a new R&E effective from [mm/dd/yyyy] to [mm/dd/yyyy]. For that reason, we consider the [R&E 2] used as a basis for fact # 9 in our letter for Case Number 155280R dated August 15, 2016, to continue to be an accurate reflection of the objectives of the supply of services in question.
Therefore, the supply of services described in [R&E 2] is not an exempt supply of child care services. [R&E 2] was in respect of “level three visit supervision”. Even though the service involved children and families and it was argued that an objective of the R&E was to, “provide basic supervision to the children during visits and ensure the parent(s) are appropriate at all times”, 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, attending case conferences and communicating with other professionals involved. As no exempting provision applies, the supply of services described in [R&E 2] is taxable.
In accordance with the qualifications and guidelines set out in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service, the CRA is bound by the ruling given in this letter provided that: none of the issues discussed in the ruling 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 613-670-7940. 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,
Carol Gaudet
Manager
Charities and Non-Profit Organizations Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
FOOTNOTES
1. At the time of this letter the humanservices.alberta.ca website has the following information:
“Human Services is now called Community and Social Services and a new department Children’s Services was created. Content on this former Human Services website will be moving to Alberta.ca."
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