8 February 2018 GST/HST Ruling 181264 - GST/HST rebate on regional administrative costs

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.

[Addressee]

Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5

Case Number: 181264
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
GST/HST rebate on regional administrative costs

Thank you for your letter of December 13, 2016, concerning the application of the goods and services tax (GST)/harmonized sales tax (HST) to regional administration costs incurred by w[…](the “Corporation”).

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 the following:

1. […][Information about the Corporation's structure].

2. […].

3. The Corporation is a registered charity within the meaning assigned to that expression by subsection 248(1) of the Income Tax Act, and is a charity for purposes of the ETA.

4. The Corporation has been designated as a hospital authority for purposes of the GST/HST. The Corporation is also a public institution, as defined in subsection 123(1), as it is registered charity that is a hospital authority.

5. […][Information about the Corporation's operations].

6. […][Province A] provides funding for the Corporation’s operations. […]

7. The Corporation incurs costs for regional administration; the costs are for the following:

• Executive office and board of directors
• Public relations
• Ethics
• Risk management
• Patient safety
• Education
• Privacy
• Planning and development
• Health records
• Materials management
• Printing
• Finance
• Human resources
• Payroll
• Information technology
• Plant maintenance

8. Regional administration costs are costs incurred to run all of the activities by the Corporation including the acute care hospitals, […][long term care homes (LTC homes)], and health care centres.

9. […][Information about the Corporation’s rebate claims]

10. The […][LTC homes] operated by the Corporation provide 24 hour nursing and personal care to individuals who can no longer live independently at home. These homes provide the residents with assistance with daily living activities, basic medical supplies, meals, medications, housekeeping and laundry services, as well as activities and recreation.

11. Each resident of a [LTC home] has medical care provided by a physician and/or a nurse practitioner. The [LTC homes] have access by telephone to advice from a physician 24 hours a day. Physicians make regular visits to the homes, weekly to monthly, to see their patients.

12. [LTC home] staff may include nurses, nurse practitioners, physicians, health care aides, occupational therapists, physiotherapists, and speech language pathologists, rehabilitation aides, recreation staff, social workers, mental health resource nurses, spiritual care staff, dieticians, and pharmacists. Not all of the staff may be on site at all of the homes but are available for consultation when the need arises.

13. […][Information about funding].

14. Individuals who apply for admission into a [LTC home] are assessed to determine if they require the level of care for placement into a home and if the individual’s needs can be managed in the [LTC home] environment. To qualify for admission into a [LTC home] an individual must have health care needs where the individual is no longer able to manage independently at home with family support and/or other community services.

15. Care plans are prepared for each resident when they are admitted into a [LTC home]. The care plans are routinely monitored and adjusted as necessary.

16. Residents see their physician as needed when the physician makes regular visits to the [LTC home]; the visits range from weekly to monthly.

17. Care conferences involving physicians, nurses and other health care staff to review the resident’s condition and care needs are held on an annual basis. A care conference can be initiated at any time if there is a change in the care needs of a resident.

18. […][Information about amounts charged to Residents].

19. […]. The provincial government provides funding to the Corporation to provide […] services to the residents of the [LTC homes].

20. […][Information about Provincial Regulation].

21. […][Information about the services provided by the Corporation]

22. […][Other services provided by the Corporation]
23. […]

RULING REQUESTED

You would like to know if [the Corporation] is entitled to claim an 83% rebate on the GST/HST incurred on regional administration costs.

RULING GIVEN

Based on the facts set out above, we rule that, as a hospital authority, the Corporation is entitled to claim an 83% rebate of the GST and federal part of the HST incurred on regional administration costs which can be attributed to activities carried on in the course of operating a public hospital, of operating a qualifying facility for use in making facility supplies or in the course of making facility supplies, ancillary supplies or home medical supplies.

EXPLANATION

An organization that operates a public hospital and that has been designated as a hospital authority may apply for rebates of the GST/HST it pays for which an input tax credit is not available. A hospital authority may apply for an 83% rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities engaged in by the person in the course of operating a public hospital. Additionally, an 83% rebate is also available for the GST or the federal part of the HST incurred in certain activities that are not related to operating a public hospital. That is, a hospital authority is also entitled to apply for an 83% rebate of the GST or federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities engaged in by the person in the course of operating a qualifying facility for use in making facility supplies, or of making facility supplies, ancillary supplies or home medical supplies. The terms “activities of operating a public hospital”, “qualifying facility”, “facility supplies”, “ancillary supplies”, and “home medical supplies” are explained below.

Therefore, the amount of GST and federal part of the HST that is incurred by the Corporation on regional administration costs that relate to property and services that are consumed, used or supplied by the Corporation in the course of operating a public hospital, of operating a qualifying facility for use in making facility supplies or in the course of making facility supplies, ancillary supplies or home medical supplies is also eligible for the 83% rebate. The Corporation would be required to apportion the GST and federal part of the HST incurred on such regional administration costs between activities that are eligible for the 83% rebate and ones that are not eligible for a rebate at that rate.

Additional Information

The Corporation operates a variety of different facilities and provides a large number of different health care services. Below we have included information on the types of activities in respect of which a hospital authority is eligible to claim an 83% PSB rebate. We have also included more in-depth information on the Corporation’s eligibility for the rebate in respect of its operations of [LTC homes].

Activities of Operating a Public Hospital

A hospital authority may claim an 83% rebate of the GST and the federal part of HST to the extent its purchases and expenses can be related to activities of operating a public hospital. There is no definition of the term “activities of operating a public hospital” in the ETA. The structure of the legislation and the requirement to apportion rebates makes it clear that not everything done by a hospital authority will be in the course of operating a public hospital. The CRA has developed an administrative policy for purposes of administering this rebate.

We consider activities of operating a public hospital to be activities related to the provision of patient care. These are the activities for which a person is designated as a “hospital authority”. For purposes of the rebate, we consider a “patient” to be an individual who receives care and treatment in a public hospital, including diagnostic and/or therapeutic services, and who appears in the hospital’s registry or other official record as a patient. This includes both in-patients who are admitted to a public hospital and allocated an in-patient bed and outpatients who are provided treatment on an ambulatory basis.

In operating the public hospital, the hospital authority will also acquire property and services for its own use in activities related to patient care. Examples are: fund-raising activities for its own use, medical libraries, records keeping, housekeeping services, maintenance services and custodial services, material and facilities management, security services and staffing and human resource activities. These will be eligible for the 83% rebate of the GST and the federal part of the HST based on the extent to which the purchases and expenses are incurred in activities related to patient care.

For more information on activities carried on in the course of operating a public hospital, see GST/HST Policy Statement P-245, Determination of “…activities engaged in by the person in the course of operating a public hospital” for purposes of the 83% public service body rebate for hospital authorities.

As the Corporation operates a number of different facilities it is also important to note that not all facilities that are called hospitals or that are designated to be a hospital by provincial legislation are “public hospitals” for purposes of the GST/HST. For the purposes of the Act, a public hospital is a building, or group of buildings under a common corporate structure operated by the hospital authority to provide medical or surgical treatment for the sick or injured, including acute, chronic or rehabilitative care.

A public hospital encompasses all of the following characteristics:

• The services of medical practitioners, nursing staff and allied health professionals are available at all times to carry out the examination and diagnosis of patients and the provision of medical or surgical treatment and care.
• The services of health care personnel and health care equipment are utilized for the provision of health care services to the general public. This includes accommodation for laboratory, radiological and other diagnostic services, the administration of drugs, the use of operating rooms, case rooms, medical or surgical supplies and equipment.
• In-patient beds and services are provided. Patients are assigned a bed in order to receive diagnostic services, medical treatment and care. In-patient services are also provided in the public hospital to ensure the patient's necessities of life and comfort, these include nursing services on a 24-hour basis, food services and laundry services.
• Operational and capital funding is received from provincial or territorial governments for the provision of publicly insured in-patient and out-patient hospital services.
• The hospital authority operates the public hospital under the laws of a provincial or territorial government respecting hospitals.

To be considered a public hospital for purposes of the rebate, a facility must have health care personnel and health care equipment available to provide health care services to the general public. There must be the administration of drugs, the provision of laboratory, radiological and other diagnostic services, the use of operating rooms, medical or surgical supplies and equipment and physicians, nursing staff and other health care professionals must be present 24 hours a day / 7 days a week. A facility that does not have all these characteristics is not a public hospital for purposes of the ETA.

The hospital authority designation applies to the organization as a whole but that does not mean that all of the facilities operated by the hospital authority are “public hospitals.” Activities undertaken by a hospital authority in respect of a facility that is not a public hospital would not be considered to be activities of operating a public hospital.

PSB Rebate for Health Care Services

In response to changes in the delivery of health care services the ETA was amended to extend the 83% PSB rebate of the GST and the federal part of the HST to non-profit health care institutions that provide health care services similar to those traditionally performed in public hospitals. Activities such as medical care provided to individuals in their homes as well as certain support activities provided to public hospitals and to certain health care facilities may also be eligible for the 83% rebate of the GST and the federal part of the HST.

The 83% rebate of the GST and the federal part of the HST for hospital authorities was extended for activities engaged in by a hospital authority in the course of operating a “qualifying facility” for use in making facility supplies, or in the course of making “facility supplies”, “ancillary supplies”, or “home medical supplies.”

This means that a hospital authority is also be entitled to claim a 83% rebate of the GST and the federal part of the HST in respect of activities engaged in the course of operating a qualifying facility for use in making facility supplies or in the course of making facility supplies, ancillary supplies and home medical supplies in addition to its activities of operating a public hospital. The Corporation is entitled to claim an 83% rebate of the GST and federal part of the HST in respect of regional administrative costs related to these activities.

The terms “qualifying facility”, “facility supply”, “ancillary supply”, and “home medical supply” are all defined in the ETA. Below we will discuss the meaning of each of the terms.

Operating a qualifying facility for use in making facility supplies

A hospital authority is entitled to apply for an 83% rebate of the GST or federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities engaged in by the person in the course of operating a qualifying facility for use in making facility supplies.

In order to determine the Corporation’s entitlement to a rebate in respect of these activities it is necessary to identify which of the facilities that the Corporation operates are qualifying facilities. The definition of “qualifying facility” in subsection 259(2.1) sets out three criteria that must be met for a facility, or part of a facility, to be a qualifying facility. Meeting these criteria establishes that a facility or part of a facility, other than a public hospital, will be considered a qualifying facility for a fiscal year, or any part of a fiscal year, of the operator of the facility or part.

A facility or part of a facility will be considered a "qualifying facility" if:

(a) supplies of services that are ordinarily rendered during that fiscal year or part to the public at the facility or part would be facility supplies if the references in the definition "facility supply" in subsection 259(1) to "public hospital or qualifying facility" were references to the facility or part;

(b) an amount, other than a nominal amount, is paid or payable to the operator as qualifying funding in respect of the facility or part for the fiscal year or part; and

(c) an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services applies to the facility or part during that fiscal year or part.

Therefore, for a facility to be a "qualifying facility", facility supplies must be rendered at the facility, the operator of the facility must receive qualifying funding, and there must be a federal or provincial accreditation, licence or authorization for the provision of health care services at the facility.

The first element of the definition of “qualifying facility” is that supplies of services ordinarily rendered at the facility must be facility supplies. Subsection 259(1) defines the term "facility supply" to mean an exempt supply (other than a prescribed supply) of property or a service in respect of which:

(a) the property is made available, or the service is rendered, to an individual at a public hospital or qualifying facility as part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative health care, which process

i. is undertaken in whole or in part at the public hospital or qualifying facility,
ii. is reasonably expected to take place under the active direction or supervision, or with the active involvement, of

(A) a physician acting in the course of the practise of medicine,

(B) a midwife acting in the course of the practise of midwifery,

(C) if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner acting in the course of the practise of a nurse practitioner, or

(D) a prescribed person acting in prescribed circumstances, and

iii. in the case of chronic care that requires the individual to stay overnight at the public hospital or qualifying facility, requires or is reasonably expected to require that

(A) a registered nurse be at the public hospital or qualifying facility at all times when the individual is at the public hospital or qualifying facility,

(B) a physician or, if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner, be at, or be on-call to attend at, the public hospital or qualifying facility at all times when the individual is at the public hospital or qualifying facility,

(C) throughout the process, the individual be subject to medical management and receive a range of therapeutic health care services that includes registered nursing care, and

(D) it not be the case that all or substantially all of each calendar day or part during which the individual stays at the public hospital or qualifying facility is time during which the individual does not receive therapeutic health care services referred to in clause (C), and

(b) if the supplier does not operate the public hospital or qualifying facility, an amount, other than a nominal amount, is paid or payable as medical funding to the supplier.

Where facility supplies are ordinarily rendered in a facility, that facility would meet the requirements of paragraph (a) of the definition of “qualifying facility”.

Paragraph (b) of the definition of "qualifying facility" in subsection 259(2.1) outlines the second condition the claimant must meet in regards to the facility. Paragraph (b) requires that an amount, other than a nominal amount, be paid or payable to the operator of the facility as "qualifying funding" in respect of the facility or part.

Subsection 259(1) defines "qualifying funding" of the operator of a facility for all or part of a fiscal year of the operator to mean "a readily ascertainable amount of money (including a forgivable loan but not including any other loan or a refund, remission or rebate of, or credit in respect of, taxes, duties or fees imposed under any statute) that is paid or payable to the operator in respect of the delivery of health care services to the public for the purpose of financially assisting in operating the facility during the fiscal year or part, as consideration for an exempt supply of making the facility available for use in making facility supplies at the facility during the fiscal year or part or as consideration for facility supplies of property that are made available, or services that are rendered, at the facility during the fiscal year or part and is paid or payable by

(a) a government, or

(b) a person that is a charity, a public institution or a qualifying non-profit organization

(i) one of the purposes of which is organizing or coordinating the delivery of health care services to the public, and

(ii) in respect of which it is reasonable to expect that a government will be the primary source of funding for the activities of the person that are in respect of the delivery of health care services to the public during the fiscal year of the person in which the supply is made.

[Province A] provides funding […]. The funding from the government is for the purpose of assisting the Corporation in its responsibilities for the delivery and administration of health services. The funding from the province is qualifying funding as defined in subsection 259(1).

Paragraph (c) of the definition of "qualifying facility" in subsection 259(2.1) outlines the third condition that the claimant must meet. Paragraph (c) requires the facility to have an accreditation, licence or other authorization that is recognized or provided for under a law of Canada or a province in respect of facilities for the provision of health care services.

[…]. The Corporation has received accreditation from […] which is a health accreditation body that has been approved by the minister. Where the Corporation has obtained the accreditation required by the minister in respect of a facility that facility would meet the requirements of paragraph (c) of the definition of “qualifying facility”.

[…]. The definition of “qualifying facility” references a facility or part of a facility which means that if only part of a facility meets the conditions in the definition of “qualifying facility” it is that part of the facility that is a qualifying facility and not the whole facility. Therefore, where the Corporation is using a building for multiple programs it will be necessary to look at each of the programs to determine if that part of the facility is a qualifying facility.

The definition of "qualifying facility" in subsection 259(2.1) is to be applied on a facility-by-facility basis. Each facility operated by the Corporation should be evaluated independently from other facilities to determine if that facility, or part of that facility, is a qualifying facility. The Corporation, as a hospital authority, would be entitled to claim an 83% rebate of the GST or federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities engaged in by the Corporation in the course of operating a qualifying facility for use in making facility supplies.

Facility supplies

In addition to the rebate for activities in respect of operating a qualifying facility for use in making facility supplies, the Corporation, as a hospital authority, is also entitled to apply for an 83% rebate of the GST or federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities engaged in by the Corporation in the course of making facility supplies.

Paragraph (a), subparagraphs (a)(i) and (a)(ii), and clause (a)(ii)(A) of the definition of “facility supply” require that the exempt supply of property be made available, or the exempt supply of a service be rendered, at a public hospital or qualifying facility and be part of a medically necessary process of health care for an individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative care. This process must be undertaken in whole or in part at the public hospital or qualifying facility and reasonably be expected to take place under the active direction or supervision, or with the active involvement, of a physician acting in the course of practise of medicine (or in certain circumstances, a midwife, a nurse practitioner or a prescribed person in prescribed circumstances).

In circumstances where chronic care requires the individual to stay overnight at the public hospital or qualifying facility, the definition of “facility supply” in subsection 259(1) provides that the process must require, or reasonably be expected to require, the additional elements referred to in clauses (a)(iii)(A) to (D) of the definition of “facility supply”. That is, a registered nurse must be at the public hospital or qualifying facility at all times when the individual is there; a physician or, if a physician is not readily accessible in the geographic area in which the process takes place, a nurse practitioner, must be at, or be on-call to attend at, the public hospital or qualifying facility at all times when the individual is there; the individual must be subject to medical management and receive a range of therapeutic health care services that includes registered nursing care; and it must not be the case that all or substantially all of each calendar day or part during which the individual stays at the public hospital or qualifying facility is time during which the individual does not receive therapeutic health care services.

Facility supplies for purposes of this rebate means that, as in the case of hospitals, physicians are actively involved in the medically necessary process of health care for the individual, e.g., diagnosing and treating an injury, illness or disability; performing surgery, providing treatment, and actively monitoring the individual's condition. The medical condition and level of care required of individuals must be such that it calls for active physician involvement to respond to their health care needs. Examples of facilities where such care is rendered are cancer clinics, day surgery clinics, and community health centres that render primary care services to the public.

It is necessary for the Corporation to determine which of its supplies are facility supplies. The Corporation would be entitled to claim an 83% PSB rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities which can be attributed to activities carried on in the course of making facility supplies.

Facility Supplies and [LTC homes]

The decision of the Tax Court of Canada in Elim Housing Society v The Queen (2013-148(GST)G) addressed the question as to whether Elim Housing Society (Elim) was a facility operator operating a qualifying facility. In this decision, the judge made the determination that Elim was entitled to claim the 83% PSB rebate as a facility operator operating a qualifying facility based on the presence of the following elements which indicated Elim to be making facility supplies:

• all of the residents of Elim’s facility had conditions that required “complex care” as that term was defined in a policy manual of the B.C. Ministry of Health Services;
• the residents were extremely dependent on care either by reason of mental or physical impairment, or both;
• residents were under the care of a physician, who was either associated with the facility or had a pre-existing relationship with the resident;
• a tailored care plan was created for each resident, documented and implemented:

• detailed records were kept on the implementation of the care plans,
• medication reviews were required every six months, and
• inter-disciplinary meetings were held annually;

• physicians visited residents frequently (e.g., roughly on a bi-weekly basis);
• physicians were at, or on-call to attend, the facility at all times;
• physicians provided substantial medical care (e.g., addressed medical concerns, participated in medication reviews, attended interdisciplinary meetings);
• registered nurses were at the facility at all times, and nurses were in regular communication with physicians for prescription or advice;
• the facility received funding for 2.8 hours of care per resident per day (the calculation was based on scheduled staffing hours); and
• the care provided was of a different type than ordinary assistance with activities of daily living that a more robust individual might require.

[…]

[…]. In order to claim an 83% rebate for […] operations […] [the LTC homes] would have to be qualifying facilities and the Corporation would have to be making facility supplies in these homes.

As stated above a facility must meet the three conditions in order to be a qualifying facility as defined in subsection 259(2.1). The funding that the Corporation receives from the province would be qualifying funding as it is funding from a government to financially assist the Corporation for the delivery of health care services to the public. All of the [LTC homes] operated by the Corporation are licensed and regulated by […][a provincial regulatory body]. Therefore, the [LTC homes] have met the second and third conditions of the definition and would need to provide facility supplies in the homes in order for the homes to be qualifying facilities.

An assessment is done for each individual who applies for admission to a [LTC home] operated by the Corporation. This assessment determines if the individual requires the level of care required for placement into a [LTC home] and if the individual’s needs can be managed in the [LTC home] environment. In order to be admitted into a [LTC home] an individual must no longer be able to manage independently at home with family support and/or other community services such as home care.

A care plan is prepared for each resident admitted to a [LTC home]. The care plan is routinely monitored and adjusted as necessary. Every resident has medical care provided by a physician and/or a nurse practitioner. Residents will see their physician as needed when the physician makes his/her regular visits to the [LTC home]. The visits range from weekly to monthly. Care conferences involving physicians, nurses and other health care staff to review the resident’s condition and care needs are held on an annual basis but may be initiated at any time if the needs of the resident change.

Registered nurses are at the [LTC homes] at all times. Physicians are on-call to attend the [LTC homes] at all times. In addition, [LTC homes] are also able to get advice over the phone from a physician 24 hours a day 365 days a year. A licensed pharmacist is available for consultation and is involved in regular resident medication reviews. Residents of [LTC homes] receive nursing care, physiotherapy, occupational therapy, and assistance with the activities of daily living and medication. [LTC homes] receive funding for 3.6 hours of nursing and other care services each day for each resident.

After comparing the services and the care provided at the [LTC homes] to their residents to the elements described in Elim, we are of the view that facility supplies are provided at the [LTC homes] operated by the Corporation. Therefore, the Corporation is entitled to claim an 83% rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses, including the portion of regional administration costs, for consumption, use or supply in activities which can be attributed to activities carried on in the course of operating the [LTC homes] for use in making facility supplies or of making facility supplies.

Ancillary Supply

As a hospital authority, the Corporation is also entitled to claim an 83% rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in the making of ancillary supplies.

An ancillary supply is defined in subsection 259(1) to mean:

a) an exempt supply of organizing or coordinating the making of facility supplies or home medical supplies for which an amount (other than a nominal amount) is payable to the supplier as medical funding, or

b) the portion of an exempt supply (other than a facility supply, a home medical supply or a prescribed supply) of a property or service (other than a financial service) that represents the extent to which the property or service is or is reasonably expected to be used or consumed for making a facility supply and for which portion, an amount (other than a nominal amount) is paid or payable to the supplier as medical funding.

For a particular supply to be an ancillary supply, the supply must be an exempt supply that is described in paragraph (a) or (b) of the definition, and an amount must be paid or payable to the supplier as “medical funding”.

Paragraph (b) of the definition of “ancillary supply” provides, in part, that an ancillary supply means the portion of the exempt supply of property or service that represents the extent of the property or service that is, or reasonably expected to be, consumed or used for making a facility supply. Therefore, for an exempt supply (or a portion of an exempt supply) of property or service to qualify as an ancillary supply, the property or service must be consumed or used for making a supply that is a “facility supply”, as that term is defined.

Home Medical Supply

The Corporation is also entitled to claim an 83% rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in the making of home medical supplies.

Generally, a home medical supply is defined in subsection 259(1) to mean an exempt supply of a property or service that is:

• made as part of a medically necessary process of health care for an individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative care where a physician (acting in the course of the practise of medicine) has identified or confirmed that it is appropriate for the process to take place at the individual’s place of residence or lodging (other than a public hospital or qualifying facility),
• the property is made available, or the service is rendered, to the individual at the individual’s place of residence or lodging (other than a public hospital or a qualifying facility), on the authorization of a person who is responsible for coordinating the process and under circumstances in which it is reasonable to expect that the person will carry out that responsibility in consultation with, or with ongoing reference to instructions for the process given by, a physician acting in the course of the practise of medicine,
• all or substantially all of which is of property or a service other than meals, accommodation, domestic services of an ordinary household nature, assistance with activities of daily living and social, recreational and other related services to meet the psycho-social needs of the individual, and
• an amount (other than a nominal amount) is paid or payable as medical funding to the supplier.

As noted above, the definition of home medical supply provides that the property and/or services must be part of a medically necessary process of health care for the individual for the purpose of maintaining health, preventing disease, diagnosing or treating an injury, illness or disability or providing palliative health in consultation with, or pursuant to instructions given by, a physician.

The definition also provides that all or substantially all of the supply must be something other than meals, accommodation, domestic services of an ordinary household nature, assistance with activities of daily living and social, recreational and other related services to meet the psycho-social needs of the individual.

For purposes of the ETA, we interpret the phrase “all or substantially all” to mean 90% or more. Therefore, looking at the totality of the supply of property and/or services that are provided to an individual in his or her home, if 10% or more of that supply includes meals and homemaker or personal support services, those services will disqualify the supply from being a home medical supply. Homemaker and personal support services involve domestic services of an ordinary household nature and assistance with activities of daily living; these services are excluded from the definition of home medical supply.

[…]

As a hospital authority, the Corporation would be entitled to claim an 83% PSB rebate of the GST or the federal part of the HST paid or payable on eligible purchases and expenses for consumption, use or supply in activities which can be attributed to activities carried on in the course of making home medical supplies.

Medical Funding

The term “Medical funding” is defined in subsection 259(1) and is used in the definitions of “ancillary supply”, “facility supply” and “home medical supply”. Medical funding of a supplier in respect of a supply means an amount of money (including a forgivable loan but not including any other loan or a refund, remission or rebate of, or credit in respect of, taxes, duties or fees imposed under any statute) that is paid or payable to the supplier in respect of health care services for the purpose of financially assisting the supplier in making the supply or as consideration for the supply by

(a) a government, or

(b) a person that is a charity, a public institution or a qualifying non-profit organization

(i) one of the purposes of which is organizing or coordinating the delivery of health care services to the public, and

(ii) in respect of which it is reasonable to expect that a government will be the primary source of funding for the activities of the person in respect of the delivery of health care services to the public during the fiscal year of the person in which the supply is made.

The Corporation receives the majority of its funding from [Province A]. […]. This funding meets the definition of “medical funding” described above.

Apportionment

As required by subsection 259(4.1), the Corporation will be required to apportion its rebate claims between its inputs that are for consumption, use or supply in its activities carried on in the course of operating a public hospital, of operating a qualifying facility for use in making facility supplies or of making facility supplies, ancillary supplies or home medical supplies, and its other activities.

[…], the 83% PSB rebate rate may not apply to all of […][the Corporation’s] purchases and expenses. Pursuant to subsection 259(14), where all or substantially all of the non-creditable tax charged (Footnote 1) for a claim period is tax incurred in its capacity as a hospital authority, the Corporation will be entitled to claim an 83% PSB rebate on all of the non-creditable tax charged for that claim period. In other words, if 90% or more of the non-creditable tax charged for a claim period is tax incurred in activities engaged in by the Corporation in the course of operating a public hospital, operating a qualifying facility for use in making facility supplies, or of making facility supplies or home medical supplies, then the Corporation will be entitled to claim an 83% PSB rebate on all of the non-creditable tax charged for that claim period. If less than 90% of non-creditable tax charged in a claim period is for these purposes, then the Corporation is entitled to claim an 83% PSB rebate to the extent the non-creditable tax charged is for activities engaged in by the Corporation in the course of operating a qualifying facility for use in making facility supplies, or of making of facility supplies or home medical supplies.

The Corporation, as a public institution, is generally entitled to claim a 50% rebate of the GST or federal part of the HST paid on purchases and expenses incurred in activities other than those listed above. Therefore, the Corporation will have to identity the property and services used or consumed in each its activities and then apply the applicable rebate rates.

PSB rebates from previous periods

The Corporation may find that it has GST/HST that was paid or payable but has not been claimed in a rebate or that it has claimed rebates in respect of certain activities at an incorrect rate. The requirements for claiming such additional rebate amounts are not the same and are described in detail below.

Where a person has made an application for a PSB rebate for a particular claim period and later discovers additional GST/HST that was paid or payable in that claim period but was not claimed, subsection 259(6.1) may apply. Where certain conditions are met, new subsection 259(6.1) allows a PSB to claim a rebate in respect of property or a service for a particular claim period in a rebate application for a subsequent claim period ending after September 8, 2017. If a PSB has not claimed a rebate in respect of property or a service for a particular claim period, new subsection 259(6.1) allows the rebate to be carried forward where the following four conditions are met:

• The PSB did not claim the rebate in the application for any other claim period;
• The application for the subsequent claim period is filed within two years after

• if the person is a registrant, the day on or before which the person is required to file its GST/HST return for the particular claim period, and
• if the person is not a registrant, the day that is three months after the last day of the particular claim period;

• The PSB did not change the claimant type under which it was eligible to claim PSB rebates at any time from the beginning of the claim period in which the GST/HST was paid or payable to the end of the subsequent claim period; and
• The applicable rebate factor(s) did not change at any time from the beginning of the claim period in which the GST/HST was paid or payable to the end of the subsequent claim period.

Subsection 259(6.1) does not apply in situations where a person has claimed a PSB rebate in respect of a property or service and later finds out that it was eligible to claim the rebate at a higher rate. If the Corporation has already claimed a PSB rebate for a claim period and subsequently discovers that the rebate was not claimed at the proper rate, the Corporation must adjust the previously filed rebate application to claim a PSB rebate at the higher rate. The Corporation cannot include the additional rebate amount in the PSB rebate application for a different claim period. For more information on how to adjust a previously filed rebate claim, see "How do you make changes to a rebate application you already filed?" in Guide RC4034, GST/HST Public Service Bodies' Rebate. A reassessment or additional assessment of a rebate claim shall not normally be made more than four years after the day the application for the rebate was filed.

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 613-670-7932. 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 Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

FOOTNOTES

1 In general terms, "non-creditable tax charged" means the GST/HST paid or payable on property or services for which the Corporation cannot claim an input tax credit, rebate, refund or remission other than a PSB rebate.