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: 160154
April 3, 2014
Dear [Client]:
Subject: GST/HST INTERPRETATION
PROPOSED LAW/REGULATION [to Acupuncture Services]
Thank you for your letter of February 19, 2014, concerning the proposed amendments announced in the 2014 Federal Budget and introduced in Bill C-31 Economic Action Plan 2014 Act, No. 1 (Bill C-31) regarding the application of the Good and Services Tax (GST) / Harmonized Sales Tax (HST) to acupuncture services.
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 and 15% in Nova Scotia. 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.
INTERPRETATION REQUESTED
You would like confirmation of the following:
a) If the proposed amendments announced in Bill C-31 are not enacted, service providers are responsible for charging and remitting GST/HST on taxable supplies of acupuncture services made after February 11, 2014.
b) If the proposed amendments announced in Bill C-31 are enacted, a person may seek a GST/HST rebate from the Canada Revenue Agency (CRA) for tax paid in error on exempt supplies of acupuncture services made after February 11, 2014.
INTERPRETATION GIVEN
General Information
Historically, services rendered by an acupuncturist were generally subject to GST/HST. However, Bill C-31 proposes to expand the list of health care practitioners for GST/HST purposes to include an acupuncturist. As a result, when certain conditions are met, the GST/HST exemption would apply to acupuncture services rendered to an individual. The changes to the exemption are proposed and would apply to supplies of acupuncture services made after February 11, 2014.
Generally, most supplies of property and services made in Canada are subject to GST/HST, unless they are specifically exempt under Schedule V. Part II of Schedule V sets out the health care services that are exempt from GST/HST.
Section 7 of Part II of Schedule V provides an exemption for a supply of any of the services listed below if the service is rendered to an individual by a practitioner of the service. The proposed amendments to the legislation are highlighted.
(a) optometric services;
(b) chiropractic services;
(c) physiotherapy services;
(d) chiropodic services;
(e) podiatric services;
(f) osteopathic services;
(g) audiological services;
(h) speech-language pathology services;
(i) occupational therapy services;
(j) psychological services;
(k) midwifery services;
(l) naturopathic services; and [highlighted]
(m) acupuncture services. [highlighted]
Section 1 of Part II of Schedule V defines the term “practitioner” to mean (proposed amendments to the legislation are once again highlighted):
in respect of a supply of optometric, chiropractic, physiotherapy, chiropodic, podiatric, osteopathic, audiological, speech-language pathology, occupational therapy, psychological, midwifery, dietetic, acupuncture or naturopathic services, means a person who
a) practises the profession of optometry, chiropractic, physiotherapy, chiropody, podiatry, osteopathy, audiology, speech-language pathology, occupational therapy, psychology, midwifery, dietetics, acupuncture or naturopathy as a naturopathic doctor, 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.
Based on the proposed amendments, only supplies of acupuncture services made after February 11, 2014 that are rendered to an individual by a practitioner of the service would be exempt from GST/HST. To be a practitioner of an acupuncture service under the ETA a person must practice the profession of acupuncture and, if the person practices in a province in which the person is required to be licensed or certified, the person is licensed by a provincial organization responsible for the regulation of the profession as recognized by provincial legislation (e.g., a member of the College of Traditional Chinese Medicine Practitioners and Acupuncturists of Ontario).
If the person practices in a province in which licensing or certification is not required, then the person must have qualifications equivalent to those necessary to be licensed or certified in another province to be a practitioner under the ETA.
Please note, acupuncture services rendered by a person who is not a practitioner under the ETA will not be exempt from GST/HST under the amended version of section 7 of Part II of Schedule V.
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 (Footnote 1), 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.”
Your question
a) If the proposed amendments announced in Bill C-31 are not enacted, service providers are responsible for charging and remitting GST/HST on taxable supplies of acupuncture services made after February 11, 2014.
Our response
If the proposed amendments announced in Bill C-31 do not receive Royal Assent, a supply of an acupuncture service made after February 11, 2014 would remain taxable. Therefore, the supplier would be required to account for the GST/HST paid or payable on the consideration for supplies of acupuncture services made after February 11, 2014, unless he or she is a small supplier (Footnote 2).
Your question
b) If the proposed amendments announced in Bill C-31 are enacted, a person may seek a GST/HST rebate from the CRA for tax paid in error on exempt supplies of acupuncture services made after February 11, 2014.
Our response
If the proposed amendments announced in Bill C-31 receive Royal Assent, a supply of an acupuncture service made after February 11, 2014 that is rendered to an individual by a practitioner of the service will be exempt from GST/HST. Therefore, a practitioner of acupuncture, as outlined above, who is a GST/HST registrant (Footnote 3) and who has charged GST/HST on exempt supplies of acupuncture services made after February 11, 2014 may refund or credit the GST/HST to the purchaser. A supplier who refunds or credits the amounts collected as GST/HST must do so within two years after the day the amount was charged or collected and must provide the purchaser with a credit note containing prescribed information. Alternatively, purchasers who have paid an amount as GST/HST on a supply of exempt acupuncture services may claim a rebate of the tax paid using Form GST189, General Application for Rebate of the GST/HST. The time limit to apply for this rebate is two years after the day the purchaser paid the amount.
For more information, refer to GST/HST Memorandum 12.2, Refund, Adjustment, or Credit of the GST/HST under Section 232 of the Excise Tax Act and Guide RC4033, Application for GST/HST Rebates available on the CRA website at www.cra-arc.gc.ca.
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 on the proposed amendment(s) to the ETA, including any additional information, is not a ruling and does not bind the CRA with respect to a particular situation. Future changes to these proposed amendments, if enacted, or to 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 613-954-7952. 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
1 Section 9 of Part II of Schedule V exempts supplies of properties and services covered by provincial health insurance plans, section 11 exempts supplies of food and beverages to a health care facility, section 13 exempts supplies of subsidized home care services and section 14 exempts supplies of various training services. Please see those sections for the conditions placed on the supply in order for it to be exempt.
2 In general, under section 148, a small supplier is a person whose total revenue from taxable supplies (other than supplies of financial services, sales of capital property and goodwill attributable to the sale of a business) in the previous four consecutive calendar quarters, or in a particular calendar quarter, and those of associated persons, does not exceed $30,000.
3 Subsection 123(1) defines a GST/HST registrant to mean a person who is registered, or is required to be registered for GST/HST.
Email this Content