Please note that the following document, although correct at the time of issue, may not represent the current position of the Canada Revenue Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence du revenu du Canada.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
[Addressee]
Case Number: 139821
Business Number: […]
February 10, 2014
Dear [Client]:
Subject: GST/HST RULING
Tax status of services rendered by a Psychological Associate
Thank you for your fax of [mm/dd/yyyy] concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the services you provide as a Psychological Associate. We apologize for the delay in our response.
The HST applies in the participating provinces at the following rates: 13% in Ontario, New Brunswick and Newfoundland and Labrador, 14% in Prince Edward Island (effective April 1, 2013) and 15% in Nova Scotia. The GST applies in the rest of Canada at the rate of 5%.
Effective April 1, 2013, the 12% HST in British Columbia has been replaced by the 5% GST and a provincial sales tax.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
STATEMENT OF FACTS
We understand from your fax and our telephone conversation with […], the following:
1. You are currently a Psychological Associate and render psychological services to individuals. As required by […] (College), you currently provide these services under the supervision of a Psychologist.
2. Prior to [mm/dd/yyyy], you provided psychotherapy services to individuals and therefore registered for, and charged GST/HST on your psychotherapy services.
3. On [mm/dd/yyyy], you received a certificate of registration from the College authorising supervised practise as a Psychological Associate. Your certificate number is […]. As such, you began providing psychological services as a Psychological Associate.
4. The College regulates the profession of psychology in […][Province A]. Members of the College are regulated professionals […] and are governed by […] (the Act) and its Regulations. […][excerpt from the Act]
5. […][direct quote from Web site]
[…][excerpt from the Act]
6. […][educational requirements of Psychologists and Psychological Associates]
[…][required work experience and examinations written by Psychologists and Psychological Associates]
7. Details regarding the additional year of supervised experience approved by the College is outlined in […]
The Psychological Associate must ensure that the supervision includes training and evaluation in […]
8. Psychological Associates under supervision are generally not permitted to conduct a private practice as their competencies have not been assessed and the risk to the general public is unknown. Where a Psychological Associate has provided services under alternate credentials, any related activities fall within the scope of psychology and must be supervised by the College. Psychological Associates under supervision may provide work in private practice of a member of the College under the following conditions: […]
9. During the period of authorized supervised practice, both the Psychological Associates and his/her supervisors must adhere to all statues, regulations, standards of professional conduct and guidelines adopted by the College.
10. […][details about certification].
RULING REQUESTED
You would like to know whether a supply of services rendered by a Psychological Associate is exempt from GST/HST and if so whether you are eligible to request the cancellation of your GST/HST registration.
RULING GIVEN
Based on the facts set out above, we rule that the services rendered by a Psychological Associate fall within section 7 of Part II of Schedule V and are exempt if the services meet the definition of a qualifying health care supply in section 1.2 of the same Part. This is the case regardless of whether they are completing the period of authorized supervised practice or are practicing autonomously. Where a person is not making taxable supplies in Canada in the course of a commercial activity engaged in by the person in Canada, the person may request to cancel their GST/HST registration.
This ruling is subject to the qualifications in GST/HST Memorandum 1.4, Excise and GST/HST Rulings and Interpretations Service. We are bound by this ruling provided that none of the above issues are currently under audit, objection, or appeal, that no future changes to the ETA, regulations or our interpretative policy affect its validity, and all relevant facts and transactions have been fully disclosed.
EXPLANATION
Generally, most supplies of property and services made in Canada are taxable for GST/HST purposes, unless they are exempt supplies. Part II of Schedule V sets out the health care services that are exempt under the GST/HST. In the case of services rendered by a Psychological Associate, section 7 of Part II of Schedule V is the exempting provision to consider.
Paragraph 7(j) of Part II of Schedule V exempts a supply of a psychological service rendered to an individual by a practitioner of the service.
Section 1 of Part II of Schedule V defines a “practitioner” to mean:
in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery or dietetic services, means a person who
(a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery or dietetics, as the case may be,
(b) where the person is required to be licensed or otherwise certified to practise the profession in the province in which the service is supplied, is so licensed or certified, and
(c) where the person is not required to be licensed or otherwise certified to practise the profession in that province, has the qualifications equivalent to those necessary to be so licensed or otherwise certified in another province.
In addition, section 1.2 of Part II of Schedule V must also be considered. Section 1.2 provides that for the purposes of Part II of Schedule V to the ETA, 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.
The expression “qualifying health care supply” has been added to section 1 of Part II of Schedule V to the ETA and is defined 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.”
Please note that paragraph (d) of the definition of qualifying health care supply includes supplies made for the purpose of assisting an individual (other than financially) in coping with an injury, illness, disorder or disability. This would include services provided directly to the individual to cope with the limitations or effects of an injury. It would not include evaluations and reports done for the purpose of helping an insurer determine the type or amount of benefits that the individual is entitled to receive. It would also not include services supplied for financial purposes such as a medical evaluation or assessment performed for the purpose of determining the value of injuries for a settlement of a claim for damages.
Application of section 7 and 1.2 of Part II of Schedule V
Section 7
The College is the regulatory body for the profession of psychology in [Province A]. Accordingly, a member of the College in good standing meets the definition of a “practitioner” for psychological services provided in [Province A] for purposes of section 7 of Part II of Schedule V. There is no distinction made in […][the Act and its Regulations] between a Psychologist and a Psychological Associate with respect to scope of practice or with respect to authorized acts. A Psychological Associate is authorized to perform the same psychological services as a Psychologist and is subject to the same regulations as a Psychologist.
As a Psychological Associate is authorized to perform the same services and must adhere to the same statutes, regulations, standards of professional conduct and guidelines adopted by the College as a Psychologist it is our view that a Psychological Associate is a “practitioner” as defined in section 1 of Part II of Schedule V. Therefore, where the requirements in section 1.2 of Part II of Schedule V are met the services rendered by a Psychological Associate are exempt under section 7 of that Part II of Schedule V. This would be the case regardless of whether practising under supervision or practicing autonomously.
The term “psychological services” is not defined in the ETA. The Canada Revenue Agency (CRA) considers that only health care-related services rendered by a practitioner to an individual where these services maintain physical and mental health and protection against disease, or that diagnoses or treats an injury, illness, or disability of an individual are exempt. Other professional services provided by specified professionals (e.g., witness fees for court appearance) may not be considered to be exempt health care services. Accordingly, not all services provided by a Psychological Associate may be exempt as health care services and each service must be evaluated separately on a question-of-fact basis to determine whether the service is taxable or exempt.
ADDITIONAL INFORMATION
Cancellation of GST/HST registration
Generally, under section 240 every person who makes a taxable supply in Canada in the course of a commercial activity engaged in by the person in Canada is required to be registered for GST/HST purposes. The definition of the term “commercial activity” in subsection 123(1) includes the making of taxable supplies in the course of a business but specifically excludes the making of an exempt supply. Therefore, where a person is making exempt supplies a person is not engaged in a commercial activity and is not required or permitted to be registered for GST/HST.
Under subsection 242(1) the Minister may cancel a person's GST/HST registration provided the Minister is satisfied that the registrant is not required to be registered for GST/HST purposes. An application to request the cancellation of a GST/HST registration number can be made by a person using form RC145, Request to Close Business Number (BN) Accounts. Alternatively, a person may request the cancellation of their GST/HST registration by contacting our Business Enquiries line at 1-800-959-5525. The following information must be supplied to the CRA:
* the reason for the cancellation request,
* the effective dates of registration and cancellation,
* a statement that all commercial activity has ceased or that the person is a small supplier, and
* the signature of the registrant or an authorized person or, when cancelling by telephone, confirmation that the person is authorized.
Further information on closing your GST/HST account can be found in GST/HST Memorandum 2.7, Cancellation of Registration published on the CRA’s website at www.cra-arc.gc.ca.
Capital and non-capital property held at the time of deregistration
When a person ceases to be a GST/HST registrant, different rules apply to deem the sale of capital and non-capital property held by the person immediately before ceasing to be a registrant. These rules also deem the collection of GST/HST equal to the basic tax content of the capital property and the fair market value of non-capital property which must be accounted for on the last GST/HST return as a registrant. For more information, please refer to CRA’s RC4022, General Information for GST/HST Registrants.
The foregoing comments represent our general views with respect to the subject matter of your request. These comments are not rulings and, in accordance with the guidelines set out in GST/HST Memorandum 1.4, do not bind the CRA with respect to a particular situation. Future changes to the ETA, regulations, or our interpretative policy could affect this interpretation.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-7952. Should you have additional questions on the interpretation and application of the 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
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