Please note that the following document, although correct at the time of issue, may not represent the current position of the Agency. / Veuillez prendre note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'Agence.
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
XXXXX
XXXXX
XXXXX
Case Number: 96012
XXXXX
April 2, 2008
Subject:
GST/HST RULING
Mobile Specimen Collection and Delivery Services
Dear XXXXX:
Your letter XXXXX addressed XXXXX on the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the mobile specimen collection and delivery services provided by your company, XXXXX, was forwarded to the Excise and GST/HST Rulings Directorate. XXXXX. We apologize for the delay in responding.
All legislative references are to the Excise Tax Act (the ETA) and the regulations thereunder, unless otherwise specified.
Statement of Facts
Our understanding of the facts relating to the supplies in question is as follows:
1. XXXXX
2. XXXXX
3. The supplies in question are specimen collection and delivery services for individuals residing in XXXXX. These individuals are bedridden or housebound and cannot attend their local hospital or a medical clinic to provide the necessary specimens for laboratory diagnostic testing ordered by their physicians.
4. Your annual sales and other revenue reported for XXXXX from specimen collection and delivery services was in excess of $XXXXX.
5. Essentially, we understand that the individual's physician would order a laboratory diagnostic test for the individual. However, the individual is unable to attend a laboratory to provide a specimen and so it has been arranged that you will attend the individual's home to obtain a specimen from the individual and then deliver the specimen, together with the physician's order for the test, to the laboratory facility at the XXXXX.
6. XXXXX invoices the individual the consideration for the specimen collection and delivery service. However, if the individual has private health insurance, the invoice may be issued to the individual's private health insurance company. In other cases, depending on the individual's circumstances, the invoice may be issued to the XXXXX.
7. You also attend the XXXXX where you collect specimens from residents of the reserve and deliver the specimens together with the corresponding physician's order for a laboratory diagnostic test, to the laboratory facility at the XXXXX. The consideration charged for the supply of the specimen collection services that are provided on the reserve are invoiced to the Indian Band.
8. The specimen collection services provided by your company are not covered under a provincial health insurance plan.
9. You do not operate a laboratory, provide diagnostic testing, or evaluate the specimens you collect.
10. You are not a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse.
11. No diagnostic testing of the specimens takes place until the specimens arrive at the laboratory facility at the XXXXX. That is, after the laboratory receives the specimens in its laboratory it supplies the laboratory diagnostic testing of the specimens and sends a report of the test results to the physician that ordered the tests.
12. XXXXX
Ruling Requested
XXXXX. You would like to know whether the specimen collection and delivery services supplied by XXXXX are prescribed services that are exempt under section 10 of Part II of Schedule V. The services that are prescribed for purposes of this section are described in the Healthcare Services GST/HST Regulations (the Regulations). The prescribed services in question are laboratory diagnostic services generally available in a health care facility.
XXXXX
Ruling Given
After careful consideration of the additional information you provided as well as a further review of the exempting provision, we are confirming the GST/HST ruling of XXXXX, that the specimen collection and delivery services supplied by XXXXX are taxable under the ETA pursuant to section 165.
Effective January 1, 2008, the rate of the GST is reduced from 6% to 5% and the rate of the HST from 14% to 13%. The new rates apply to supplies for which the GST/HST is paid on or after January 1, 2008, without having become payable before that date. Specific transitional rules will apply to certain supplies, for example, real property. For more information on the transitional rules for the reduction of the GST/HST rate, please refer to GST/HST Notice 226, Proposed GST/HST Rate Reduction in 2008 on the CRA Web site at www.cra-arc.gc.ca/E/pub/gi/notice226/README.html.
As noted in the GST/HST ruling dated XXXXX and federal government departments pay the HST on taxable supplies made in XXXXX by GST/HST registrants. Accordingly, XXXXX is required to charge the 14% HST on its taxable supplies made before 2008 and 13% for supplies made after XXXXX pays the consideration for these supplies. The only exception to charging the HST is where a supply is made to an Indian Band if certain conditions are met. Please refer to the Explanation below for more information.
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, all goods and services supplied in Canada are taxable for GST/HST purposes. There are exceptions for certain health care services listed in Part II of Schedule V as being exempt from the GST/HST. Accordingly, the tax always applies unless there is a specific exemption for a particular service.
Section 10 of Part II of Schedule V exempts a supply of a prescribed health care service when made on the order of a medical practitioner (physician or dentist) or a practitioner (optometrist, chiropractor, physiotherapist, chiropodist, podiatrist, osteopath, audiologist, speech-language pathologist, occupational therapist, psychologist, dietitian, or midwife).
On February 26, 2008, the Minister of Finance announced a proposed amendment to specify that section 10 of Part II of Schedule V applies to prescribed diagnostic services rendered to an individual and to expand this section to include prescribed diagnostic services that are ordered by registered nurses where the order is made within a nurse-patient relationship. This proposed amendment applies to supplies made after February 26, 2008.
A prescribed health care service is described in the Regulations as follows:
Prescribed Health Care Services
2. For the purposes of section 10 of Part II of Schedule V to the Excise Tax Act, the following services, other than services related to the provision of a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes, are prescribed:
(a) laboratory, radiological or other diagnostic services generally available in a health care facility; and
(b) the administration of drugs, biologicals or related preparations in conjunction with the provision of services included in paragraph (a).
The exemption in section 10 of Part II of Schedule V is limited to the services described in the Regulations. The phrase "laboratory, radiological or other diagnostic services generally available in a health care facility" in the Regulations is held to mean a test, study or investigative and analytical procedure, together with the report of findings, used to assist in the determination of a disease that are of the type generally available in a health care facility (a hospital). These services are laboratory diagnostic services such as in vitro diagnostic testing, serological testing, urinalysis, and microscopic analysis; radiology diagnostic services such as X-ray; other diagnostic imaging services such as CT scanning, magnetic resonance imaging, mammography and ultrasound; and diagnostic services such as fluoroscopy, echocardiography, electrocardiography, and electromyography.
The facts pertaining to the activities of XXXXX are determinative that the collection and delivery of specimen samples is a separate supply that is distinct from any service provided by a laboratory. This supply flows from an independent arrangement made with physicians to accommodate individuals who are unable to attend a laboratory facility to provide a specimen for the laboratory diagnostic test ordered by their physician. Further, that you deliver the specimens to a laboratory does not confer the status of "laboratory" to XXXXX such that it would be viewed as making a supply of a laboratory service.
It is the CRA's view that phlebotomists and laboratory technologists who operate as independent agents to collect and deliver specimens to laboratories do not supply any laboratory, radiological or other diagnostic services. Their activities consist only of obtaining samples of specimens and transporting them to licensed diagnostic facilities that supply the diagnostic services. Collection and transportation services carried out by phlebotomists and laboratory technologists operating as independent agents are taxable supplies and the consideration they charge for their services is subject to the GST/HST.
As noted, if a service related to the health care of an individual does not qualify as an exempt supply under Schedule V to the ETA, the supply of the service is taxable. A taxable supply of a service made in Canada by a registrant to an Indian individual is only relieved of tax where the service is performed totally on a reserve for the Indian individual who is on the reserve at the time the service is performed. As your specimen collection and delivery service does not take place entirely on a reserve, the HST would apply at the applicable rate of 14% or 13%.
However, where an Indian band or band-empowered entity acquires your service for an individual and you invoice the Indian band or a band-empowered entity, the supply is relieved of tax where your service is acquired for band management activities, as long as the conditions of Technical Information Bulletin B-039R3 - GST Administrative Policy - Application of GST/HST to Indians are met. Band management activities are those activities carried out by Indian bands and band-empowered entities related to their normal administration, programs, and services that are designed and/or delivered for the benefit, well-being, or assistance of band members. If an Indian band or band-empowered entity acquires the service and provides certification to you attesting that the acquisition of your service is being made for band management activities, the supply is relieved of HST.
As requested, we are addressing your arguments set out in points 7, 8, and 9 of your letter dated XXXXX
Point 7
XXXXX
As noted above, the exemption in section 10 of Part II of Schedule V is limited to the health care services prescribed in the Regulations. This interpretation is confirmed by the French version of the ETA. The only services that are currently prescribed for purposes of this section are laboratory, radiological or other diagnostic services generally available in a health care facility. Whether it can be argued that specimen collection is itself a health care service, it is not a service identified in the Regulations prescribing health care services and therefore not an exempt supply under section 10 of Part II of Schedule V.
Point 8:
XXXXX
The interpretation of the ETA and its regulations is made in accordance with recognized rules that are applied to the interpretation of statutes. When two or more terms are linked by "and" or "or", the associated words rule provides that the common feature among the terms is relied on to limit the scope of the terms. The common feature between the terms laboratory, radiological and diagnostic services enumerated in the Regulations is "diagnostic". The phrase "other diagnostic service" characterizes the words "laboratory" and "radiology" such that these are diagnostic services in the Regulations.
Generally speaking, the word "other" is used to mean "akin to" and following an enumeration of particular items, "other" is read as "other such like" and includes only others of the like kind and character of the particular items. The words used in the Regulations are read not in isolation but rather through their connection with each other. The defining feature of the enumerated terms is diagnostic and the phrase is read as laboratory, radiology or other such like diagnostic services typically provided in a hospital. Accordingly, a laboratory service encompassed by the Regulations is held to mean a laboratory diagnostic service; i.e., the laboratory analysis of any blood, tissue, or body fluid by any process or method in a laboratory facility.
Point 9:
XXXXX
A laboratory is understood as being a room or building equipped for diagnostic services, which may include the collection and handling of specimens in addition to the analysis of specimens and the reports of the analysis to provide information to physicians to assist them in the diagnosis of their patients. It is recognized that the collection of specimens may be a component of a laboratory diagnostic service when a laboratory performs the service together with the testing. However, the collection of specimens can also be a stand-alone supply that is not a laboratory service. It is the CRA's view that when supplied separately by another person specimen collection services are not themselves laboratory diagnostic services.
The specimen collection and delivery service supplied by XXXXX is a stand-alone supply of a phlebotomy procedure. Its activities are wholly performed in private residences separate from a laboratory service. XXXXX is not a "laboratory", it does not operate a laboratory, nor does it perform any laboratory service on the specimens it collects. Its services are made in isolation of any laboratory procedure performed by you and no procedure for diagnosis takes place until the specimens arrive at a laboratory facility. Accordingly, the specimen collection services supplied by XXXXX are not laboratory services.
Other Information
We would also like to address the question raised in Point 6 of your letter of whether a health care service can have a different tax status on the basis of who provides it. You would like to know why a fee charged for nursing services rendered by a registered nurse is not subject to the GST/HST, e.g., when a registered nurse collects blood from patients, whereas your fee for collecting blood is taxable. It is your view that your services should have the same exempt status as when registered nurses render these services.
Briefly, the tax policy of Parliament limits the exemptions in the ETA to certain health care services and this policy is reflected in the exempting provisions of Part II of Schedule V pursuant to which a health care service can have a different tax status depending on whether certain conditions are met. The tax policy flows from the provincial health insurance coverage of health care services and the provincial regulation of health care professions. It is Parliament's policy to look to the provinces and territories, given their major role in the regulation of their respective health care systems, when determining which health care services should be exempt. The application of an exemption may be dependent on the identity of the supplier or it may be limited to situations where the service is publicly funded under a provincial health insurance plan.
Further, the application of an exemption may be restricted to particular health care professions. For instance, section 6 of Part II of Schedule V exempts a supply of a nursing service, but only when a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse renders the service. The specimen collection services supplied by XXXXX cannot fall within the exempting provision for nursing services because a registered nurse or other nurse professional does not render these services.
The CRA is responsible for administering the ETA and its regulations as passed by Parliament. The CRA cannot change the legislation that governs the application and collection of the GST/HST. The wording of the exempting provisions in Part II of Schedule V does not allow an interpretation that would include therein services supplied by XXXXX. An amendment to the ETA would be required to treat the supplies of specimen collection and delivery services made by XXXXX as exempt.
Determinations of exempt supplies and legislative and regulatory amendments are a matter of tax policy, which falls within the responsibility of the Department of Finance. Since the issues you raised are tax policy issues, we understand that a copy of your letter has been forwarded to The Honourable James M. Flaherty, Minister of Finance, for consideration.
If you require clarification with respect to any of the issues discussed in this letter, please do not hesitate to contact me at 613-941-3268. Should you have additional questions on the interpretation and application of the GST/HST, please contact the XXXXX GST/HST Rulings Centre at 1-800-959-8287.
Yours truly,
Chantal Desrosiers, Manager
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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