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
XXXXX
Case Number: 106745
Business Number: XXXXX
Attention: XXXXX
March 12, 2009
Subject:
GST/HST RULING
Services provided by XXXXX
Dear XXXXX:
Thank you for your letter of XXXXX concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to independent medical examination services and independent medical assessment services XXXXX. In your letter you inquired if legislative changes would have an effect on the tax status of the above-mentioned services for which we provided a ruling on XXXXX.
All legislative references are to the Excise Tax Act (ETA) and the regulations thereunder, unless otherwise specified.
The advice given to you is based on the assumption that independent medical examination ("IME") services and independent assessment services ("IA") have the same meanings as those described in GST/HST Policy Statement P-248, The Application of the GST/HST to the Supply of an Independent Medical Examination ("IME") and to Other Independent Assessments ("P-248"). To be consistent with the terms used in P-248, the reference to an IMA (independent medical assessment) in the appendices is referenced as an IA service for the purposes of this letter. It is also assumed that Medical Practitioner and Practitioner in each of the detailed descriptions reviewed meet the definitions of "medical practitioner" and "practitioner" in section 1 of Part II of Schedule V to the ETA.
Statement of Facts
We understand that:
1. In a letter dated XXXXX, XXXXX requested a ruling of the GST/HST status of independent medical examination and independent medical assessment services.
2. On XXXXX, CRA issued a ruling confirming the tax status of the supplies as described in scenarios in Appendices I to VI of the original letter. The ruling was based on the ETA and P-248.
3. The Budget dated February 26, 2008 included proposed changes to sections 5 and 7 of Part II of Schedule V to the ETA. These proposed amendments were passed into law on June 18, 2008 and apply to supplies made after February 26, 2008.
4. XXXXX operates an XXXXX that offers independent medical examinations and other independent assessments to its client base, the majority of which are insurance companies.
5. XXXXX is a GST/HST registrant. It currently charges GST on the supply of its IME and IA services to its clients. Some clients are refusing to pay the GST charged by XXXXX for the provision of its services. XXXXX, as described in your letter dated XXXXX and our letter of XXXXX, provide a detailed description of the services, the types of professionals involved, as well as the place where the services are rendered.
6. The variety of services are subcontracted and performed by either a Medical Practitioner (MD) or by a Practitioner. The evaluation or assessment services can be rendered at the XXXXX facilities, at the offices of the MD or Practitioner, and at a patient's home.
7. All of the facts remain the same from the original letter requesting a ruling. The ruling given in our letter of XXXXX is as follows:
XXXXX
We rule that the supply of the IME service by a MD to XXXXX is exempt pursuant to section 5 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
XXXXX
We rule that the supply of the IME service by a MD to XXXXX is exempt pursuant to section 5 of Part II of Schedule V. The supply of the service by XXXXX to its customer is exempt pursuant to section 2 of Part II of Schedule V.
XXXXX
We rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
XXXXX
We rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
XXXXX
We rule that the supply of the IA service by a Practitioner to XXXXX is exempt pursuant to section 7 of Part II of Schedule V. The supply of the service by XXXXX to its customer is taxable as no exempting provisions within Schedule V apply.
XXXXX
We rule that the supply of the service by XXXXX to its customer is taxable in the case of XXXXX, XXXXX, XXXXX and XXXXX as no exempting provisions within Schedule V apply.
As noted above, the supply of the service by XXXXX to its customer is exempt in the case of XXXXX pursuant to section 2 of Part II of Schedule V.
Ruling Requested
You would like to know if there are any changes to the tax status of the services provided by XXXXX as described in XXXXX to XXXXX as a result of the changes to sections 5 and 7 of Part II of Schedule V to the ETA which received Royal Assent on June 18, 2008.
Ruling Given
Based on the facts as described in your letter of XXXXX, we rule that the legislative changes to sections 5 and 7 of Part II of Schedule V will not change the tax status of services as described in the ruling letter dated XXXXX.
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
On June 18, 2008 section 5 of Part II of Schedule V was amended to:
"A supply of a consultative, diagnostic, treatment or other health care service (other than a surgical or dental service that is performed for cosmetic purposes and not for medical or reconstructive purposes) that is rendered by a medical practitioner to an individual."
Section 5 was amended to exempt the supply of those services if they are rendered by a Medical Practitioner, regardless of whether they are supplied through a corporation or directly by the Medical Practitioner.
Section 7 was amended to:
"A supply of any of the following services if the service is rendered to an individual by a practitioner of the service:
(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; and
(k) midwifery services."
Section 7 was amended to exempt the supply of those services if rendered to an individual by a practitioner of the services and to remove the requirement that the services be supplied by the practitioner. As a result, the exemption will apply if the services are rendered by a practitioner, regardless of whether they are supplied through a corporation or directly by the practitioner.
The amendments apply to supplies made after February 26, 2008.
The GST/HST is a multi-stage tax and each transaction is a separate supply. This means that when XXXXX subcontracts with a Medical Practitioner or a Practitioner the service supplied to XXXXX is a separate supply from XXXXX supply to its client. It is important to note that if the independent contractor's supply to XXXXX is exempt; this exemption does not flow through to XXXXX supply. The tax status of XXXXX supply to its client is determined independently of the contractor's supply to XXXXX because for purposes of the GST/HST, XXXXX supply to its client is a distinct supply from the independent contractor's supply to XXXXX.
In our letter to you dated XXXXX the supply of an IME service by a Medical Practitioner to XXXXX was ruled to be an exempt supply pursuant to section 5. The supply of an IA service by a Practitioner to XXXXX was ruled to be exempt pursuant to section 7. Based on the scenarios as described in XXXXX the legislative amendments to these sections would not extend the exemptions to the supply made by XXXXX to its clients.
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,
Arthur Blommesteijn
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
UNCLASSIFIED
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