6 July 2020 GST/HST Ruling 123293 - Eligibility for the 83% health care rebate

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: 123293
Business Number: […]

Dear [Client]:

Subject: GST/HST RULING
Eligibility for the 83% health care rebate

Thank you for your letter of [mm/dd/yyyy] concerning […][the eligibility of the Corporation] to claim the 83% public service body rebate (PSB) of the goods and services tax (GST) and the federal part of the harmonized sales tax (HST) as a facility operator under section 259 of the Excise Tax Act in respect of its operation of […](the Facility). We apologize for the delay in our response.

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 from […][your correspondence and our telephone conversations]; and the website […]:

1. The Corporation is a registered charity for income tax purposes, and is also a charity for GST/HST purposes. It has been given a BN[…].

2. The Corporation is not registered for GST/HST.

3. The Corporation has not been designated as a hospital authority by the Minister of National Revenue.

4. The Facility is a [#]bed […] facility for seniors, providing services contracted by […][X]. [X is a third party person.]

5. A range of programs and services is provided to residents at the Facility to meet their health care needs including nursing care, physical, social, dietary and therapeutic recreational programs.

6. Under a contract entered into with the Corporation, [X] provides funding to the Corporation for its provision of residential care to residents at the Facility. Eligibility for funding is for those residents who meet the requirements, including […] (Footnote 1) […].

7. The Facility provides residents with 24-hour nursing care and supervision. Residents are assessed [and must meet the requirements] […] to live at the Facility.

8. […][Description of requirements to live at the Facility]

9. Care is provided to residents by […][workers].

10. Individuals cannot be admitted to the Facility without [meeting all the requirements] […]. All the residents at the Facility are under physician care, either using their own family physician or one that has been found for them through […].

The physicians assist in the setting up of residential care plans to address each resident’s needs including nursing […], diet and […][various types of therapy] if required. The physicians are also involved in the provision of health care services to residents at the facility.

In particular, the physician of each resident is responsible for providing all medical orders specific to that resident and directs all medical interventions.

Examples of medical interventions are:

[…]

The physicians diagnose and assess the residents’ medical needs and prescribe the appropriate care and medication. There are over [#] physicians that cover the [#] residents. A physician’s frequency of visits per week depends on the condition of, and the number of, residents he or she services. A change in condition would bring the physician in. Some are in daily, some are in monthly.

The Corporation has a 24/7 system in place to obtain physician assistance for residents at the facility. Where the chronic care residents at the facility have medical problems that require a high level of health care, a physician is present at, or on-call to attend at, the Facility at all times during the resident’s stay.

11. One physician on staff has the title of Medical Director at the Facility. He is paid as a contractor (not as an employee) and spends about [#] hours per week at the Facility in this role. He reviews each resident's care plan every six months with […][staff]. In addition to time at the Facility visiting his own patients, he also has his own family practice.

12. The Medical Director’s principal responsibility is to oversee the medical care. The Medical Director also act as an emergency backup should a physician not be available. This happens on rare occasions since physicians are supposed to arrange their own backups. The Medical Director also has his own patients who live as residents at the Facility and whom he services apart from his role as Medical Director.

13. The Medical Director’s responsibilities include administrative and clinical duties:

[…]

14. Each resident is assigned a primary nurse who creates the plan of care with input from the physician and others. The Corporation provides 24-hour personal care and nursing assistance to residents at the Facility. Where the chronic care residents at the Facility have medical problems that require a high level of health care, a registered nurse is required to be available at all times to provide treatment and other chronic care.

15. […][Other activities of the Corporation]

16. Residents requiring emergency care are transferred to the local acute care hospital for care that cannot be provided at the Facility. No surgical procedures are provided in the Facility.

17. The Corporation contracts exclusively with a local pharmacy […][for certain supplies].

18. The chronic care residents at the Facility are subject to medical management and receive a range of therapeutic health care services, including registered nursing care for 2.8 hours per day per resident on average.

19. To provide this care, the Corporation purchased […][equipment].

20. The Corporation receives funding as a […][qualifier] from […][a provincial government] […]. The [funding] […] [paid by X to the Corporation] for the fiscal year end [mm/dd/yyyy] […] [was] $[…].

[Licensing]

[…]. [X] has issued a licence to the Corporation for the Facility to provide health care services.

RULING REQUESTED

You would like to know whether the Corporation is entitled to claim the 83% PSB rebate of the GST and the federal part of the HST as a facility operator.

RULING GIVEN

Based on the facts set out above, we rule that the Corporation is a facility operator making facility supplies at a qualifying facility, that is the Facility.

As such, the Corporation is eligible to claim an 83% PSB rebate of the GST and the federal part of the HST for non-creditable tax charged (Footnote 2) in respect of property or services to the extent that the property or services are for consumption, use or supply in activities engaged in by the Corporation in the course of operating the Facility for use in making facility supplies, or in the course of making facility supplies.

EXPLANATION

To be eligible for an 83% PSB rebate of the GST and the federal part of the HST paid or payable on its purchases and expenses related to the making of facility supplies, the person must be a “hospital authority”, a “facility operator” or an “external supplier”.

Hospital Authority

A “hospital authority” is defined in subsection 123(1) as “an organization that operates a public hospital and that is designated by the Minister of National Revenue as a hospital authority” for GST/HST purposes.

The Corporation does not operate a public hospital and is not designated as a hospital authority, and as such it is not a “hospital authority”.

Therefore, to determine whether there is eligibility for the 83% PSB rebate, it is necessary to determine whether the Corporation is a “facility operator” or an “external supplier”.

Facility Operator

A “facility operator” is defined in subsection 259(1) as meaning “a charity, a public institution or a qualifying non-profit organization (other than a hospital authority), that operates a qualifying facility”.

As the Corporation is a charity, it meets the first requirement of this definition. In order to meet the second requirement, the Corporation must operate a qualifying facility.

Subsection 259(2.1) sets out three criteria that must be met for a facility, or part of a facility, other than a public hospital, to be 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 of “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.

The requirements contained in (a) to (c) above must be met in order for a particular facility to be a “qualifying facility” for purposes of section 259. A discussion of these requirements follows.

Facility Supply

Subsection 259(1) defines the term “facility supply” as “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.”

A “physician” is defined in subsection 259(1) as “a person who is entitled under the laws of a province to practise the profession of medicine”.

The definition of “facility supply” is to be applied on a supply-by-supply basis. To be a “facility supply”, the property made available or the service rendered to an individual at the public hospital or qualifying facility must be an exempt supply (other than a prescribed supply). Exempt supplies are listed in Schedule V to the ETA.

Section 1 of Part V.1 of Schedule V exempts supplies of property or a service made by a charity unless specifically excluded under paragraphs (a) to (p) of that section. As the Corporation is a charity, the supplies it makes to the residents would generally be exempt under section 1 of Part V.1 of Schedule V.

Section 2 of Part II of Schedule V exempts a supply of an institutional health care service made by the operator of a health care facility if the institutional health care service is rendered to a patient or resident of the facility. The terms “institutional health care service” and “health care facility” are defined in section 1 of Part II of Schedule V.

Of note, if a supply is of an institutional health care service that falls within section 2 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 (Footnote 3) .

Based on the information provided, the supplies by the Corporation would generally fall within the exemption in section 2 of Part II of Schedule V for the supply by an operator of a health care facility of an institutional health care service rendered to patients of that facility, or under section 1 of Part V.1 of Schedule V, the general exemption for property or services supplied by charities.

Paragraph (a) of the definition of “facility supply” requires that the exempt property be made available or the exempt service be rendered to an individual at the public hospital or qualifying facility. Therefore, only the exempt property made available or exempt services rendered by the Corporation to patients at its facility would meet this requirement.

The combination of paragraph (a), subparagraphs (a)(i) and (a)(ii), and clause (a)(ii)(A) of the definition of “facility supply” further requires 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.

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 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.

After comparing the services and the care provided by the Corporation at the Facility to its residents to the elements described in Elim, we are of the view that facility supplies are provided at the Facility by the Corporation.

To the extent that the health care services provided at the Facility are exempt supplies that are part of a medically necessary process of health care for the individual for purposes described in paragraph (a) of the definition of “facility supply” and are rendered at the Facility under the active direction or supervision, or with the active involvement, of a physician, they will meet the requirements of subparagraphs (a)(i) and (a)(ii) of the definition and will, therefore, constitute facility supplies.

If the Corporation engages in any activities or programs for which there is no expectation of active physician direction or supervision, or active physician involvement, being undertaken, then supplies of services provided within such activities or programs would not fall within the definition of “facility supply”, and thus such activities or programs would not be eligible for the 83% PSB rebate under this particular provision. As noted below, the Corporation may still be entitled to a 50% PSB rebate of the GST and the federal part of the HST for charities in relation to such supplies of services.

As mentioned above, subsection 259(2.1) sets out three criteria that must be met in order for a facility or part of a facility to be considered a qualifying facility for all or part of a fiscal year. The first criterion that must be met, under paragraph 259(2.1)(a), is that the exempt supplies made at the qualifying facility must be facility supplies. The exempt supplies that are facility supplies made by the Corporation would meet this first criterion.

Qualifying Funding

The second criterion that must be met under paragraph 259(2.1)(b) for a facility to be a “qualifying facility” is that 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.

Subsection 259(2.1) [sic, subsection 259(1)] defines “qualifying funding” of the operator of a facility for all or part of a fiscal year of the operator as meaning

“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.”

[…][Qualifying funding information]

The Corporation is a charity that operates the Facility […]. Under the agreement entered into with the Corporation, [X] provides funding to the Corporation for its provision of […][services] to residents at the Facility. As [X] provides funding to the Corporation for the purposes […][of providing health care services], the funding provided by [X] to the Corporation meets the second criteria under paragraph 259(2.1)(b) and constitutes “qualifying funding”.

Accreditation, licence or other authorization

The third criterion that must be met under paragraph 259(2.1)(c) for a facility, or part of a facility, other than a public hospital, to be a qualifying facility for a fiscal year, or any part of a fiscal year of the operator of the facility, or part, is that 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.

[…][Description of licensing process]. As the licence issued by [X] to the Corporation for the Facility is recognized or provided for under a law of a province in respect of facilities for the provision of health care services, the third criterion that must be met under paragraph 259(2.1)(c) for a facility to be a qualifying facility is satisfied.

Overall summary

To summarize, the Facility meets all of the requirements of paragraphs (a) to (c) of the definition of “qualifying facility” in subsection 259(2.1) and, as a result, the Corporation is a facility operator for purposes of section 259. Accordingly, the Corporation is entitled to an 83% PSB rebate of the GST and the federal part of the HST paid or payable on eligible purchases and expenses to the extent that it intended to consume, use or supply the property or service in the course of activities engaged in by the Corporation in the course of operating the Facility for use in making facility supplies, or of making facility supplies (Footnote 4) .

As discussed above, the definition of “facility supply” requires that an exempt supply made to an individual at a qualifying facility be part of a medically necessary process of health care that is reasonably expected to take place under the active direction or supervision, or with the active involvement, of a physician. As such, not necessarily all supplies made by the Corporation constitute facility supplies. The determination of whether a particular supply is a facility supply is to be made on a case-by-case basis.

For supplies that the Corporation makes which are not facility supplies, the 83% PSB rebate may also be available if the supplies are “ancillary supplies” or “home medical supplies”.

ADDITIONAL INFORMATION

As there is no indication that the Corporation is involved in the provision of ancillary supplies or home medical supplies, we offer the following information for your reference.

Ancillary supplies

Subsection 259(1) defines an “ancillary supply” to mean

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

Subsection 259(1) defines “medical funding” of a supplier in respect of a supply to be

“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 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.”

Home medical supply

Subsection 259(1) defines a “home medical supply” to mean

“an exempt supply (other than a facility supply or a prescribed supply) of property or a service

(a) that is made

(i) 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 health care, and

(ii) after a physician acting in the course of the practise of medicine, or a prescribed person acting in prescribed circumstances, 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 a qualifying facility),

(b) in respect of which 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, or a prescribed person acting in prescribed circumstances,

(c) 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 the activities of daily living and social, recreational and other related services to meet the psycho-social needs of the individual, and

(d) in respect of which an amount, other than a nominal amount, is paid or payable as medical funding to the supplier.”

Calculation of the PSB rebate

Section 259 of the ETA provide that the PSB rebate is calculated and claimed on a claim period by claim period basis. The claim periods of a GST/HST registrant are the same as the reporting periods for its GST/HST returns (i.e., annually, quarterly or monthly). A PSB that is not a GST/HST registrant has two claim periods per fiscal year – the first six months and the last six months of its fiscal year.

A PSB claims its rebate on a property-by-property or service-by-service basis. It is the intended consumption, use or supply of a particular property or service at the relevant time that determines the PSB rebate entitlement for the non-creditable GST or HST paid on that property or service, not the overall activities of the PSB. Generally, the relevant time will be the time the supply was made to, or the property was imported or brought into […][the province] by the Corporation.

The Corporation’s entitlement to an 83% PSB rebate may be limited and require apportionment where the tax paid or payable is for activities that do not qualify for the rebate, unless subsection 259(14) applies.

Subsection 259(14) provides that:

“For the purposes of this section, if a person incurs all or substantially all of the tax that is included in determining the amount of the non-creditable tax charged in respect of property or a service for a claim period of the person acting in the person's capacity as a hospital authority, a facility operator or an external supplier, the person is deemed to have incurred all of the tax that is included in determining that amount in the course of fulfilling the person's responsibilities as a hospital authority, a facility operator or an external supplier, as the case may be.”

The CRA defines “all or substantially all” to mean 90% or more. Generally, subsection 259(14) means that where the Corporation incurs 90% or more of the GST/HST paid or payable on a property or a service acquired in its capacity as a facility operator (e.g., for use in making facility supplies), all of that GST/HST is deemed to have been incurred in that capacity. As such, the Corporation could claim a PSB rebate for that property or service at the rate of 83% for the GST and the federal part of the HST. For example, if the Corporation incurs GST on its utilities, and the Corporation determines it incurs 93% of the GST in its activities as a facility operator for making facility supplies, the Corporation may claim 100% of the GST it pays on the utilities using the 83% PSB rebate rate.

Please note that the wording of subsection 259(14) requires an allocation to be performed for each property or service identified in the claim period.

Rebate for purchases that do not qualify for 83% rebate

As a charity for purposes of the GST/HST, the Corporation is eligible to claim a 50% PSB rebate of the GST, and the federal part of the HST, paid or payable on eligible purchases and expenses intended for consumption, use or supply in activities engaged in by the Corporation otherwise than in the course of operating the Facility for use in making facility supplies, or in the course of making facility supplies, ancillary supplies and home medical supplies.

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, 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 GST/HST 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.

For more information on the calculation of the rebate, please refer to the same GST/HST Guide RC4034, GST/HST Public Service Bodies' Rebate.

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 306-517-0416. 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,

John Ware
Health Care Sectors Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate

FOOTNOTES

1 […]

2 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.

3 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 generally deemed under section 1.1 of Part II of Schedule V not to be included in Part II of Schedule V and is therefore not exempt under section 2 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, 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, unless they are exempted pursuant to another provision.

The expression "qualifying health care 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 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 more information on the expression “qualifying health care supply”, please refer to GST/HST Notice 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.

4 As the Corporation is a facility operator, it is not an external supplier, since the definition of “external supplier” in subsection 259(1) excludes a facility operator.