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
July 14, 2009
Case Number: 96454
Subject:
GST/HST RULING
Consulting Services Supplied by a Polysomnographic Technologist
Dear XXXXX:
This letter is in reply to your XXXXX and XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the consulting services supplied by your client, XXXXX, under contract to the XXXXX located at the XXXXX. It is also further to our letter of XXXXX (case number XXXXX) on this matter. We apologize for the delay in our response.
You advised that XXXXX is a polysomnographic technologist who works as an independent consultant. Your request concerns the interpretation of section 10 of Part II of Schedule V to the Excise Tax Act (the ETA). We understand that you would like us to review the letter of XXXXX, in which it is stated that the supply of polysomnographic services by a registered polysomnographic technologist to a health care facility would not fall within the scope of section 10 of Part II of Schedule V and that since no other exemptions apply, this supply is taxable.
After careful consideration of the additional information you provided, we are confirming the statements in our letter of XXXXX that polysomnographic services supplied to a health care facility do not fall within section 10 of Part II of Schedule V. In addition, as requested we are providing you with this GST/HST ruling.
HST applies at the rate of 13% in the participating provinces of Nova Scotia, New Brunswick and Newfoundland and Labrador. GST applies at the rate of 5% in the remaining provinces and territories.
All legislative references are to the Excise Tax Act (ETA) unless otherwise specified.
Statement of Facts
You included the following documents with your request:
• XXXXX,
XXXXX.
• XXXXX.
On the basis of your letter, the above-noted documents and our research, we understand the facts as follows:
1. XXXXX has the status of an independent consultant associated with the XXXXX.
2. XXXXX is a polysomnographic technologist (sleep study technologist) who is certified as a sleep specialist in XXXXX.
3. XXXXX is not a "medical practitioner" as that term is defined in the ETA as he is not entitled under the laws of a province in Canada to practise the profession of medicine.
4. In Canada, a person may obtain a Registered Polysomnographic Technician Certificate from various colleges. Polysomnography program graduates assist in the diagnosis and treatment of disorders of sleep and daytime alertness that include narcolepsy, sleep apnoea, insomnia and many others. The program prepares the graduate to operate a variety of sophisticated electronic monitoring devices that record brain activity (EEG), muscle and eye movement, respiration, blood oxygen and other physiological events (reference: XXXXX).
5. The XXXXX is a hospital outpatient department of the XXXXX.
6. Staff at the XXXXX includes physicians, nurses and other health care professionals. Various services are available at this site through several clinics and centres, which include the services at the XXXXX supplies these services through its employees and independent contractors.
7. XXXXX.
8. The principal activities of XXXXX include the management of sleep disorders, such as:
• Sleep apnoea and other pulmonary sleep disorders;
• Narcolepsy;
• Psychological and psychiatric sleep disorders;
• Neurological sleep disorders;
• Disorders of the circadian rhythm; and
• Parasomnias.
9. Staff at the XXXXX includes certified sleep specialists and physicians trained in other complementary specialties such as psychiatry, neurology, and internal medicine-respirology. XXXXX
10. Polysomnography (PSG) is a testing procedure used to detect a variety of sleep disorders. The PSG tests are done on the order of a physician. It is the collective process consisting of several steps that involve attended monitoring and overnight recording of physiological data during sleep, including sleep-related respiratory disturbances, for the purpose of identifying and assisting in the treatment of sleep and wake disorders. The PSG tests include the quantification of the recorded data (scoring), verification of the technical quality and scoring, preliminary interpretation and reporting on the findings and require the involvement of a number of professionals. It includes a technologist applying a variety of electrodes to the individual's body:
• Head - to measure brain waves to monitor the phases of sleep.
• Face - to monitor breathing, snoring and eye movements.
• Chest - to monitor breathing and heart rhythm.
• Arms and legs - to record abnormal movement during sleep.
• Finger - to monitor and record blood oxygen levels.
11. After applying the electrodes, the technologist will calibrate the equipment and observe the individual during sleep. All information, including video and audio, is recorded and the technologist notes all abnormal observations and keeps detailed records of the individual's actions during sleep. The technologist then scores the data, abnormalities are marked, and the information is provided to the individual's physician for interpretation and diagnosis.
12. XXXXX duties involve the analysis, interpretation and reporting on the PSG tests performed in the XXXXX. XXXXX, XXXXX performs duties of data verification, preliminary interpretation and reporting on PSG tests, and occasional scoring of the most complex sleep studies.
13. XXXXX activities include monitoring brain waves, eye movements, muscle activity, multiple breathing variables, and blood oxygen levels during sleep. He then generates, scores, analyzes and interprets the data pertaining to the patient's sleep condition. He is present throughout the diagnosis and provides support services to the treatment of sleep related problems, including helping patients to use devices for the treatment of breathing problems during sleep and assisting them to develop optimal sleep habits. The only part of the testing that is not performed by XXXXX is the mechanical preparation of the patient for diagnosis, which is the positioning of the patient and securing the electrodes.
14. Fees for polysomnography diagnostic services are charged XXXXX.
15. XXXXX duties are elements of the PSG tests provided at the XXXXX and he is remunerated XXXXX for his consulting services. XXXXX.
16. XXXXX:
XXXXX:
1. XXXXX.
2. XXXXX.
3. XXXXX.
17. XXXXX
18. XXXXX.
19. XXXXX:
XXXXX:
* XXXXX
20. XXXXX
21. XXXXX.
22. XXXXX.
23. XXXXX:
XXXXX (iFootnote 1) XXXXX (iiFootnote 2) XXXXX:
a. XXXXX; or
b. XXXXX.
XXXXX (iiiFootnote 3) XXXXX.
XXXXX XXXXX.
24. XXXXX XXXXX:
(i) XXXXX.
(ii) XXXXX.
(iii) XXXXX.
(iv) XXXXX (ivFootnote 4)
(v) XXXXX.
25. XXXXX.
26. XXXXX:
(i) XXXXX.
(ii) XXXXX.
(iii) XXXXX.
(iv) XXXXX.
(v) XXXXX.
(vi) XXXXX.
(vii) XXXXX.
27. XXXXX:
(i) XXXXX; and
(ii) XXXXX.
XXXXX:
(iii) XXXXX;
(iv) XXXXX; and
(v) XXXXX.
Ruling Requested
You are asking whether the consulting services supplied by XXXXX to the XXXXX as an independent contractor of analysis, interpretation and reporting on PSG tests performed at the XXXXX are exempt supplies under section 10 of Part II of Schedule V.
Ruling Given
Based on the facts set out above, we rule that the consulting services supplied by XXXXX to the XXXXX as an independent contractor consisting of analysis, interpretation and reporting on PSG tests performed at the XXXXX are taxable supplies under the ETA pursuant to section 165. Accordingly, as these supplies are made in the XXXXX the GST is collectible on the value of the consideration for these supplies at the rate of 5%.
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
You advised that XXXXX is an independent consultant to the XXXXX. As an independent consultant XXXXX is a supplier for GST/HST purposes. Under a transactional tax system such as the GST/HST, XXXXX consulting services constitute a separate supply made to the XXXXX that is distinct from any supply made by the XXXXX.
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. If a service is not included in the list of exemptions in Schedule V, then the supply of the service is taxable and the result is that the value of the consideration charged for the supply is subject to the GST/HST at the rate of 5% or 13%. vFootnote 5 As explained below, the consulting services supplied by XXXXX are not included in the list of exemptions in Schedule V.
Section 10 of Part II of Schedule V exempts the supply of a prescribed diagnostic, treatment or other health care service rendered to an individual if made on the order of a medical practitioner, practitioner, or on the order of a registered nurse authorized under the laws of a province to order such a service if the order is made within a nurse-patient relationship. For purposes of this section, a prescribed health care service is described in the Health Care Services (GST/HST) Regulations to include a laboratory, radiological or other diagnostic services generally available in a health care facility and the administration of drugs, biologicals or related preparations provided in conjunction with these services.
XXXXX consulting services performed at the XXXXX on the XXXXX patients, or on the patients of the physicians, are acquired by the XXXXX for use, consumption or supply in the course of the XXXXX providing PSG tests. The facts are determinative that XXXXX consulting services supplied to the XXXXX are not separate diagnostic services but are a component of an institutional health care service viFootnote 6 rendered to a patient of the XXXXX that is operated by the XXXXX.
The XXXXX is the person who supplies the PSG tests that are rendered to the patients of the XXXXX. The constituent elements of these tests are the premises, equipment, supplies and personnel remunerated by the XXXXX for the technical and professional components. The technical component of the PSG test may involve a technician or technologist applying electrodes to the patient's body, continuous technician attendance during the study period, monitoring the patient, preparing and providing records of the test results, scoring the data, and preparing and transmitting an interpretative report of the PSG test to a physician. The professional component of the PSG test includes clinical supervision by a physician and the interpretation by a physician of the results of the test.
In the course of supplying the PSG tests the XXXXX or the physicians at the XXXXX delegate certain of the technical activities to XXXXX for which he is remunerated by the XXXXX. All the activities that comprise the PSG tests are carried out and concluded at the XXXXX that the supplier - the XXXXX - has established for this purpose where all the necessary human and technical resources are located to make the supply. XXXXX does not supply PSG tests independently of the XXXXX.
Each individual element of the PSG test is not a separate PSG test (i.e., a diagnostic service). The PSG test supplied by the XXXXX is the aggregate of all of these elements, including the activities performed for the XXXXX by XXXXX or by another technologist. We note that the opinion you provided also expresses this finding. That is, the ETA exempts a supply made by the operator of a health care facility of an institutional health care service, which could include a diagnostic service such as a PSG test as well as the services of persons who are remunerated by the operator rendered to a patient of its facility where the service is provided in its facility. The XXXXX remunerates XXXXX for his consulting services that are part of the technical component of the PSG test supplied by the XXXXX. We concur with the opinion that it would be artificial to segregate XXXXX consulting services from the supply made by the XXXXX and that XXXXX consulting services are elements of the supply of the PSG test made by the XXXXX that is rendered to patients of the XXXXX.
We also note XXXXX activities are performed under the direction and supervision of a physician at the XXXXX and his activities form part of the XXXXX services that the XXXXX provides to its patients. The physician and the XXXXX also assume any risk associated with the work performed by XXXXX. XXXXX. These factors indicate that XXXXX consulting services are not diagnostic services. Therefore, section 10 of Part II of Schedule V does not apply to XXXXX supplies of consulting services made to the XXXXX.
We considered XXXXX status as a polysomnographic technologist. However, there is no exempting provision in the ETA for services supplied by a polysomnographic technologist whether the person holds a Registered Polysomnographic Technician Certificate issued by a college in Canada or is otherwise recognized by a law or regulatory body of a health care profession in Canada as a registered polysomnographic technician or technologist.
We also considered whether the XXXXX payments made to the XXXXX for the PSG tests would impact the tax status of XXXXX supplies. As you are aware, section 9 of Part II of Schedule V exempts a supply if and to the extent that the consideration for the supply is payable by a government under a provincial health insurance plan such as XXXXX.
We understand that under XXXXX, the liability to pay the consideration for services related to the PSG tests is only to the XXXXX. Thus the XXXXX is the direct beneficial recipient of the XXXXX payments. XXXXX liability to the XXXXX and the relationship between the XXXXX and XXXXX indicate that the consideration for XXXXX supplies is not payable or reimbursed under XXXXX. Rather, the amounts payable to XXXXX are made under the terms of a separate agreement with the XXXXX. The fact that under this separate agreement the XXXXX has decided to calculate the remuneration it pays XXXXX based on a percentage of the fees it charges XXXXX for its supplies of PSG tests rendered in the XXXXX is not determinative that XXXXX receives payment from XXXXX for his services. In conclusion, as XXXXX is remunerated for his services by the XXXXX, his services are not exempt supplies under section 9 of Part II of Schedule V.
In summary, XXXXX consulting services are subsumed into the supply of the PSG test made by the XXXXX. This finding is further supported by the fact that the PSG test rendered to a patient at the XXXXX for which the XXXXX charges the fee to XXXXX includes the activities performed by XXXXX. The facts are determinative that each constituent element collectively forms the supply of the PSG test rendered to a patient of the XXXXX that is made by the XXXXX, where each constituent element is directly related to each other and has no use without the other. As such, XXXXX activities cannot be sensibly or realistically separated from the remaining constituent elements of this supply and characterized as a separate supply of a PSG test or other diagnostic service made to the XXXXX.
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 made by XXXXX as exempt.
Should you have additional questions on the interpretation and application of GST/HST, you may contact the Ontario GST/HST Rulings Centre at 1-800-959-8287.
Yours truly,
Susan Eastman
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directorate
i 1. XXXXX.
XXXXX
ii 2. XXXXX.
XXXXX
iii 3. XXXXX.
XXXXX
iv 4. XXXXX
v 5. The current case does not involve zero-rated supplies listed in Schedule VI to the ETA.
vi 6. We understand that PSG tests are diagnostic services. "Health care facility" is defined in section 1 of Part II of Schedule V and this definition includes, in part, a facility operated to provide hospital care. "Institutional health care service" is also defined in this section and it includes, in part, laboratory, radiological or other diagnostic services provided in a health care facility, medical or surgical equipment and supplies used by the operator of the facility to provide these diagnostic services that are supplied to a patient otherwise then by way of sale, as well as services provided in the facility that are rendered by persons who receive remuneration therefor from the operator of the facility.
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