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: 176139r
Business Number: […]
Dear [Client]:
Subject: GST/HST RULING
Supplies of esthetics services and spa treatments by a charity
We are writing regarding our previous ruling issued to you on [mm/dd/yyyy], concerning the tax status of supplies by the […] (the Charity). We have identified that the portion of our previous letter concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the Charity’s supplies of pedicure services was incorrect in light of recent changes to the Excise Tax Act (ETA).
This letter revokes and replaces our original ruling concerning pedicure services, provided in the fourth bullet of the rulings issued to you on [mm/dd/yyyy]. The rulings issued in this letter are effective as of [mm/dd/yyyy]. […] We apologize for any inconvenience this may cause.
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 ETA unless otherwise specified.
STATEMENT OF FACTS
We understand
1. The Charity is a registered charity for income tax purposes. The Charity is also a charity for GST/HST purposes.
2. The Charity is registered for the GST/HST with account number […].
3. The Charity operates […] foot care clinics. […][The clinic] is located in […][City X], Ontario, with several satellite clinics.
4. […][The clinics] offer foot care services rendered by registered nurses who have a foot care specialty certification. These services are also offered to clients in their place of residence, when they are unable to travel to the clinics.
Esthetics services
5. The Charity also offers esthetics services at [the clinic]. According to [the clinic’s] website, […], the Charity provides the following esthetics services:
* Pedicures
- […][Description of services]
* Manicures
- […][Description of services]
* Facial waxing
- […][Description of services]
6. In a telephone conversation of [mm/dd/yyyy], […], the CEO of the Charity, explained that anyone can access the esthetics services and that the funds raised are used to subsidize the medical care provided by the Charity.
7. The Charity is the supplier of the esthetics services. The esthetics services are rendered by a sub-contractor contracted by the Charity. The sub-contractor is a professional esthetician.
Spa treatments
8. The Charity also offers other spa treatments at [the clinic]. According to [the clinic’s] website, the Charity provides the following spa treatments:
* Reflexology: […][Description of services]
* Massage: […][Description of services]
* Reiki: […][Description of services]
9. The Charity is the supplier of the spa treatment services. The spa treatments are rendered by a reflexology/massage/Reiki practitioner subcontracted by the Charity.
10. […].
RULINGS REQUESTED
You would like to know
1. The correct application of the GST/HST to the Charity’s supplies of esthetics services.
2. The correct application of the GST/HST to the Charity’s supplies of reflexology, massage, and Reiki services.
RULINGS GIVEN
Based on the facts set out above, we rule that
1. The Charity’s supplies of the esthetics services of pedicures, manicures, and facial waxing are taxable and therefore subject to the GST/HST.
2. The Charity’s supplies of the reflexology, massage, and Reiki services are exempt from the GST/HST.
EXPLANATION
Most supplies of property and services made by a charity are exempt from the GST/HST under section 1 of Part V.1 of Schedule V, unless the supply is specifically excluded by paragraphs (a) to (p) of that section.
Paragraph 1(p) of Part V.1 of Schedule V was introduced in the 2016 Federal Budget and applies to any supply made after March 22, 2016.
Paragraph 1(p) of Part V.1 of Schedule V excludes from the general exemption for charities a supply of a service rendered to an individual for the purpose of enhancing or otherwise altering the individual's physical appearance and not for medical or reconstructive purposes or a right entitling a person to the service.
Paragraph 1(p) of Part V.1 of Schedule V applies to the Charity’s supplies of the esthetics services, because they are rendered to an individual for the purpose of enhancing the individual's physical appearance – the appearance of the individual’s hands, feet, or face. These services are not rendered for medical or reconstructive purposes. Therefore, the Charity’s supplies of the esthetics services are excluded from the general exemption for charities. As no other exempting provision applies, the Charity’s supplies of the esthetics services of pedicures, manicures, and facial waxing, are taxable.
Paragraph 1(p) of Part V.1 of Schedule V does not apply to the Charity’s supplies of the reflexology, massage, and Reiki services. These services are not rendered to an individual for the purpose of enhancing or otherwise altering the individual’s physical appearance. None of the other exclusions to the general exemption applies. Therefore, the Charity’s supplies of reflexology, massage, and Reiki services are exempt under section 1 of Part V.1 of Schedule V.
For more information on the application of the GST/HST to charities, please refer to Guide RC4082, GST/HST Information for Charities.
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.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-670-7942. 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
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