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: 184847
Dear [Client]:
Subject: GST/HST RULING
Application of GST/HST to services rendered by a social worker
Thank you for your fax of May 18, 2017, concerning the application of the goods and services tax/harmonized sales tax (GST/HST) to social work services you render to clients in Manitoba. This letter is a follow-up letter to the letter of [mm/dd/yyyy], (Case Number […][A]) issued by the Canada Revenue Agency. Case Number [A] outlines the GST/HST treatment applicable to services you render to clients in […][Province X] as a social worker registered with the […][Province X Regulatory Body] ([…][College X]).
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
Based on your letter of May 18, 2017, and from Case Number [A], we understand the following:
1. You are a social worker licensed by [College X]. You are a sole proprietor operating under the name of […][the Business] […]. You are currently registered for GST/HST.
2. You are also a member of the […] (License No. […]), and have professional liability and content insurance through […].
3. Through your social work practice, you provide counselling sessions and other services that fall within the scope of practice for a social worker registered with [College X] to individuals, couples, and families. The social work services (the Services) you perform are […].
[…][Description of the Services]. However, you do not prepare reports for other persons (e.g. an insurance company), offer consulting services, or supply educational services as part of [the Business].
[…].
Your clientele is comprised of members of […] ([…][the Organization]) residing in [Province X]. […] of [the Organization] refer clients to you on an as-needed basis. Depending on your client’s needs, you may invoice the client directly or you may invoice [the Organization] for all or for a portion of the Services rendered.
[…].
4. You have been asked to provide your Services to clients in Manitoba. This would entail you travelling to Manitoba approximately [#] times per year. In addition, you may also conduct video chat or Skype sessions from [Province X] with […] members [of the Organization] residing in Manitoba. As above, you may invoice the client directly or you may invoice the [Organization] in Manitoba for all or for a portion of the Services rendered. No additional fee will be charged for Services rendered via Skype or other video conferencing technology.
5. Section 2 of The Social Work Profession Regulation 256/2014 (the Social Work Regulation) made under Manitoba’s Social Work Profession Act (C.C.S.M. c. S169) requires the registrar to maintain three categories of memberships for social workers: practising, temporary and non-practising.
Section 8 of the Social Work Regulation outlines the requirements and the registration process for temporary registration for social workers who are registered as practicing social workers in another jurisdiction who wish to temporarily practice in Manitoba or with clients from Manitoba. Specifically, paragraph 8(a) of the Social Work Regulation requires the applicant to establish that he or she is registered as a practising social worker in good standing in another jurisdiction in Canada or elsewhere.
6. You are not registered with the Manitoba College of Social Workers (the Manitoba College).
7. The Manitoba College of Social Workers By-Law No. 1, Article 5-1(e) (the By-law) permits temporary social workers in good standing to practice as a registered social worker in accordance with the regulations, by-laws and administrative policies of the college and use the initials R.S.W. or (RSW) after their names.
8. The “Temporary Social Worker” Policy (the Policy) issued by the Manitoba College indicates that temporary designation (membership) may be granted for a period of time not exceeding 90 days per registration year. A temporary membership may be renewed by the registrar once for an additional consecutive period not exceeding 90 days within the registration year.
The second paragraph of the Policy specifically states that:
A social worker in good standing with a social work regulatory body from another jurisdiction is permitted to work in Manitoba without registering with the Manitoba College of Social Workers (MCSW) for a period not exceeding a total of 5 days within one registration year.
9. A conversation with a representative from the Manitoba College on [mm/dd/yyyy], confirmed that a social worker in good standing with a social work regulatory body from another province may practise in Manitoba or work with clients from Manitoba for 5 days or less within one registration year without requesting permission or notifying the Manitoba College of their intent to practice.
The representative from the Manitoba College also confirmed that practising social work in Manitoba includes the provision of virtual and electronic social work services. Therefore, when calculating the number of days a social worker practises in Manitoba or works with a client from Manitoba, the social worker must include any days where electronic social work services were provided.
The Manitoba College uses the NASW, ASWB, CSWE & CSWA Standards for Technology in Social Work Practice (Footnote 1) (the Standards) to help guide their members in their practice. The Standards define the term “electronic social work services” to mean the use of computers, mobile phones, video technology, and other means of communication and information, acquisition, transmission, and storage used on the Internet and with other technology to (a) provide information to the public; (b) deliver services to clients; (c) gather, manage, and store information about clients; and (d) educate, supervise, and train social workers.
RULING REQUESTED
You would like to know whether the services you render to clients in Manitoba are exempt from GST/HST under section 7.2 of Part II of Schedule V.
RULING GIVEN
Based on the facts set out above, assuming the requirements in paragraph 7(a) of Part II of Schedule V are met, sections 1.1 and 1.2 of Part II of Schedule V do not apply, and the supplies of social work services are made in Manitoba, we rule the following:
(a) Where you practise the profession of social work in Manitoba or with clients from Manitoba for 5 days or less per registration year, supplies of Services you render are exempt from GST/HST pursuant to subparagraph 7.2(b)(i) of Part II of Schedule V;
(b) Where you practise the profession of social work in Manitoba or with clients from Manitoba for more than 5 days per registration year, supplies of Services you render are exempt from GST/HST under subparagraph 7.2(b)(i) of Part II of Schedule V if you are granted temporary membership from the Manitoba College and the Services are rendered in the period during which the membership applies; and
(c) If you practise the profession of social work in Manitoba or with clients from Manitoba without a temporary membership granted from the Manitoba College, any supply of Services you render in the practice of the profession of social work that exceed the 5 day limit referred to in paragraph (a) are subject to GST/HST.
EXPLANATION
Generally, all supplies of goods and services made in Canada are taxable unless an exemption from the GST/HST applies. Taxable supplies are supplies made in the course of a commercial activity and may be taxable at the rate of 0% (zero-rated supplies), 5%, 13%, or 15% on the value of the consideration for the supply depending on the province in which the supply is made. Zero-rated supplies are included in Schedule VI. Exempt supplies are not subject to the GST/HST and are included in Schedule V.
Section 7.2 of Part II of Schedule V exempts certain supplies of services rendered in the practice of the profession of social work. In particular, section 7.2 states:
A supply of a service rendered in the practice of the profession of social work where
(a) the service is rendered to an individual within a professional-client relationship between the particular individual who renders the service and the individual and is provided for the prevention, assessment or remediation of, or to assist the individual in coping with, a physical, emotional, behavioural or mental disorder or disability of the individual or of another individual to whom the individual is related or to whom the individual provides care or supervision otherwise than in a professional capacity; and
(b) either
(i) if the particular individual is required to be licensed or otherwise certified to practise the profession of social work in the province in which the service is supplied, the particular individual is so licensed or certified, or
(ii) if the particular individual is not required to be licensed or otherwise certified to practise that profession in that province, the particular individual has the qualifications equivalent to those necessary to be licensed or certified to practise that profession in a province in which such a requirement exists.
In addition to meeting all of the requirements in section 7.2 of Part II of Schedule V, as described above, to be exempt from GST/HST, the supply of services rendered in the practice of the profession of social work cannot be a cosmetic service supply and must be a qualifying health care supply pursuant to sections 1.1 and 1.2 of Part II of Schedule V, respectively.
Case Number [A] concluded that the services you render to clients in [Province X] as a registered social worker are exempt from GST/HST under section 7.2 of Part II of Schedule V and are not excluded from the exemption by sections 1.1 and 1.2 of Part II of Schedule V. Therefore, no further explanation relating to the services you provide in [Province X] will be provided in this letter.
For purposes of your question of May 18, 2017, regarding [the Services] you will provide in Manitoba or to clients from Manitoba, it is assumed that the requirements in paragraph 7.2(a) of Part II of Schedule V are met and sections 1.1 and 1.2 of Part II of Schedule V do not apply. Therefore, the focus of this letter will be on whether or not you meet the requirements in paragraphs 7.2(b) of Part II of Schedule V.
Province in which the social work services are supplied
Before determining whether the supplies of [the Services] you will render in Manitoba or to clients from Manitoba are subject to the GST/HST, the wording in paragraph 7.2(b) of Part II of Schedule V requires us to first determine the province in which [the Services] will be supplied (i.e., [Province X] or Manitoba).
A taxable (other than zero-rated) supply made in Canada is subject to GST at the rate of 5% if it is made in a non-participating province, and is subject to HST at the applicable harmonized rate if it is made in a participating province.
Pursuant to paragraph 142(1)(g), a supply of a service is deemed to be made in Canada if the service is, or is to be, performed in whole or in part in Canada. Because the [the Services] you will provide will be performed in whole or in part in Canada, the supply of that service is deemed to be made in Canada for GST/HST purposes.
Whether a supply made in Canada is made in a participating province or non-participating province is determined by section 144.1 and Schedule IX, and where applicable, the New Harmonized Value-added Tax System Regulations (the Regulations). Section 144.1 provides that a supply is deemed to be made in a province if it is made in Canada and is, under the rules set out in Schedule IX, made in the province. Further, under section 144.1, a supply made in Canada that is not made in any participating province is deemed to be made in a non-participating province.
Pursuant to section 3 of Part IX of Schedule IX, a supply of property or a service is made in a province if the supply is prescribed to be made in the province.
Generally, pursuant to subsection 13(1) of the Regulations, a supply of a service is made in a province if in the ordinary course of its business the supplier obtains an address in the province that is:
a) if the supplier obtains only one address that is a home or business address in Canada of the recipient, the home or business address in Canada obtained by the supplier,
b) if the supplier obtains more than one such address, the home or business address in Canada of the recipient that is most closely connected with the supply, or
c) in any other case, the address in Canada of the recipient that is most closely connected with the supply.
Based on the above, where in the ordinary course of your business you obtain an address in Canada of the recipient (Footnote 2) (e.g., the individual client or [the Organization]), the service will be supplied in the province in which the address is located. For example, if you obtain a home or business address from a client or from [the Organization] in Manitoba, the supply of the service will be made in Manitoba.
The place of supply must be identified for each supply of [the Services] you make. Once the place of supply has been determined for each supply of social work service you make, paragraph 7.2(b) of Part II of Schedule V can be applied to determine whether the supply is exempt or subject to GST/HST.
For information regarding the place of supply rules, please refer to GST/HST Technical Information Bulletin B-103, Harmonized Sales Tax – Place of supply rules for determining whether a supply is made in a province.
Tax status of supplies
Where a supply of [the Services] is rendered in the practice of the profession of social work and the supply is made in Manitoba, the tax treatment of the supply depends on how many days you practise the profession of social work in Manitoba or with clients from Manitoba.
Based on the Social Work Regulation, Policy and By-law, if you practise the profession of social work in Manitoba or with clients from Manitoba between 1-5 days within a registration period, you are not required to be a member of the Manitoba College to practise the profession of social work in Manitoba. In this case, as you are already licensed by the [Province X] College to practise the profession of social work subparagraph 7.2(b)(i) of Part II of Schedule V applies and exempts from GST/HST supplies of [the Services] you render while practising the profession of social work in Manitoba or with clients from Manitoba between 1 and 5 days within a registration period.
In contrast, if you practise the profession of social work in Manitoba or with clients from Manitoba for more than 5 days within a registration period, the Manitoba College requires you to apply for temporary membership. If you are granted temporary membership from the Manitoba College or if your temporary membership is renewed, subparagraph 7.2(b)(i) of Part II of Schedule V also applies to exempt supplies of [the Services] you render in Manitoba while the temporary membership applies.
If you are not granted temporary membership (or practise for more than the 90 day limit per registration year or 180 day if the temporary membership is renewed), any supplies of [the Services] you render in Manitoba that exceed either the 5-day or the 90 (180) day limits will not meet the requirements in paragraph 7.2(b) of Part II of Schedule V and will be subject to GST/HST at the rate of 5% since the supply is being made in Manitoba.
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 613-670-7934. 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 NASW means National Association of Social Workers; ASWB means Association of Social Work Boards; CSWE means Council on Social Work Education; and CSWA means Clinical Social Work Association.
2 Subsection 123(1) defines the term “recipient” to generally mean the person who is legally liable to pay the consideration for the supply.
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