Westcoast – Tax Court of Canada finds that an employer was not entitled to ITCs for the GST/HST on reimbursed employee health care services
Westcoast reimbursed (through Manulife as its agent) employees who had incurred various health care services – including some which were GST/HST-taxable, namely, acupuncture, massage therapy, naturopathy and homeopathy services. Sommerfeldt J found that the employees were the recipients of these taxable services notwithstanding that there generally was no written contract with the care provider and in some instances, the health care provider was paid directly by Westcoast (through Manulife). Accordingly, it was necessary for Westcoast to be deemed by ETA s. 175 to have itself acquired these services in order to potentially claim an input tax credit for the associated GST/HST.
In this regard, s. 175(1)(b) relevantly required that the employees have consumed or used the services “in relation to activities of [Westcoast]”. In finding that this test was not satisfied, so that there were no ITCs, Sommerfeldt J stated:
I have difficulty in comprehending how an employee of Westcoast could be said, while receiving acupuncture, massage therapy, naturopathy or homeopathy services, to be consuming or using the particular service in the course of his or her employment activities, as distinct from an activity that was personal in nature.