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.
XXXXX
XXXXX
XXXXX
XXXXX
Excise and GST/HST Rulings Directorate
Place de Ville, Tower A, 15th floor
320 Queen Street
Ottawa ON K1A 0L5
Case Number: 115852
Business Number: XXXXX
Attention: XXXXX
Dear XXXXX:
Subject:
GST/HST RULING
Application of GST/HST to the supply of nursing personnel to health care facilities located in XXXXX
We are writing further to your letter of XXXXX, concerning the application of the Goods and Services Tax (GST)/Harmonized Sales Tax (HST) to the supply of nursing personnel by XXXXX to health care facilities located in XXXXX.
HST applies at the rate of 15% in Nova Scotia, 13% in New Brunswick, Newfoundland and Labrador, and Ontario, and 12% in British Columbia. 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
We understand the facts as follows:
1. XXXXX is registered for GST/HST purposes.
2. XXXXX.
3. XXXXX is in the business of supplying registered nurses (RNs), registered practical nurses (RPNs), and personal support workers (PSWs) to health care facilities in XXXXX, which consist largely of long term care facilities.
4. All RNs and RPNs are licensed by the XXXXX and their duties are limited to the scope of their respective practices.
5. XXXXX enters into a XXXXX (Agreement) with each of its clients (Clients). A representative copy of the Agreement, XXXXX, was included XXXXX.
6. The Agreement and its components XXXXX describe the scope of the services to be provided, the conditions relating to the supply of services, and the fee schedule relating to these services.
7. According to the Agreement, XXXXX is retained to "provide a supply of nursing services to residents/patients" in the Client's facility. The Agreement indicates that these services shall be satisfied by RNs, RPNs, and PSWs.
8. Pursuant to the Agreement, XXXXX and the Client agree to the following conditions with respect to the supply:
XXXXX.
XXXXX.
XXXXX
9. XXXXX.
10. XXXXX:
XXXXX
XXXXX.
11. In addition to the responsibilities described in the Agreement XXXXX you have indicated that the qualifications, job purpose and responsibilities of the RNs are further detailed in the job description Registered Nurse which was submitted as XXXXX. We understand that this particular job description does not form part of, nor is it an attachment to, the Agreement.
12. XXXXX also includes the job description for XXXXX Case Manager XXXXX (CM). The CM is an RN with a minimum of XXXXX years of experience in nursing practice who is employed by XXXXX. The CM's role is to provide support, advice, and assistance to 'on-site' XXXXX personnel from XXXXX premises. The Agreement does not include a reference to the CM nor is there any fee charged to the Client in respect of the CM's services.
13. XXXXX employs approximately XXXXX RNs, other than the CMs. Typically, not more than XXXXX RN is supplied to each Client at a given time; however, this will depend on the coverage requirements at the Client's facility. XXXXX employs approximately XXXXX RPNs.
14. The Agreement does not indicate the specific number or type of personnel to be provided except to say they must be RNs, RPNs, and PSWs. The Client will generally determine its own staffing needs and prepare its own work schedules based, in part, on coverage requirements. Depending on the circumstances, XXXXX personnel may be scheduled in advance, or they may be called upon to fill vacancies in the Client's schedule.
15. XXXXX has a XXXXX policy under which the same RN, RPN, or PSW (as the case may be) is provided to a client to the extent that it is possible. You have indicated that the purpose of this policy is to facilitate the development of the nurse-patient relationship between the personnel rendering the care services and the residents who receive the care.
16. Each resident at the Client's facility has a resident care plan that is based on his or her medical, dietary and other needs. The resident care plan is initially prepared by a physician or an RN and is generally updated by an RN on a quarterly basis or when a resident's needs change. RNs and RPNs supplied by XXXXX may assist in developing or updating a resident's care plan.
17. XXXXX personnel will assist in preparing any forms or reports (e.g., Incident Reports) that fall within the responsibilities of the position they occupy.
18. XXXXX holds an XXXXX Insurance Policy with respect to its supply of personnel that includes a $XXXXX coverage limit.
19. XXXXX.
Ruling Requested
XXXXX.
According to your letter, it is understood by XXXXX that the supply of personnel consisting of PSWs does not fall within the scope of Section 6 of Part II of Schedule V to the ETA. With this in mind, you have asked that our Ruling be limited to the supply of personnel consisting of RNs and RPNs only (which you refer to as "Nursing Service Providers"). Specifically, you would like to know whether the supply of Nursing Service Providers made by XXXXX is a supply of nursing services that is exempt under section 6 of Part II of Schedule V.
Ruling Given
Based on the facts set out above, we rule that the supply of personnel, consisting of RNs, RPNs, and PSWs, made by XXXXX is taxable as it is not an exempt supply of a nursing service described in section 6 of Part II of Schedule V.
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. Exempt supplies are listed in Schedule V. Part II of Schedule V provides that certain health care services are exempt from GST/HST. In order for a supply of property or a service to be exempt from GST/HST under Part II of Schedule V, a specific exempting provision included in Part II must apply to that particular supply.
Application of Section 6 of Part II of Schedule V
Section 6 of Part II of Schedule V was amended, effective February 27, 2008, to provide that a supply of a nursing service rendered to an individual by a registered nurse, a registered nursing assistant, a licensed or registered practical nurse or a registered psychiatric nurse is exempt if the service is rendered within a nurse-patient relationship. As a result of this amendment, a nursing service rendered to an individual within a nurse-patient relationship can be exempt regardless of the location at which the service is rendered.
Nursing services are generally understood to be the provision of care for, and the treatment of the health conditions of, a patient where the care and treatment services are performed by registered or licensed nurses. These are supportive, preventive, therapeutic, palliative and rehabilitative services that are rendered to assist the patient in attaining or maintaining optimal function. We also consider the scope of nursing to include the diagnosis and treatment of health problems, assessment of a patient's nursing needs, and the preparation of nursing care plans for the patient.
A registered or licensed nurse establishes and maintains a nurse-patient relationship by using nursing knowledge and skills to render patient care services involving supportive, therapeutic, palliative and rehabilitative services to assist the patient in attaining or maintaining optimal function, such as treating the health problems of a patient, administering medications and performing other interventions. We interpret the phrase "rendered within a nurse-patient relationship" to mean nursing services that involve personal interaction between a nurse and an individual who is a patient where there is an established or ongoing relationship between the nurse and the patient and the nurse is a direct care provider of the patient.
That said, the issue with respect to XXXXX supply is not whether the activities performed by the RNs and RPNs constitute a nursing service rendered to an individual within a nurse-patient relationship; rather, the issue is whether the supply made by XXXXX pursuant to the Agreement is in fact a supply of nursing services. We note that the legislative amendments to section 6 of Part II of Schedule V do not change the fact that in order for section 6 to apply, the supply in question must ultimately be that of a nursing service.
Supply of nursing service vs. supply of personnel
As a transactional tax, the exemptions in the ETA apply on a 'supply-by-supply' basis. Each supply must be evaluated independently in order to determine whether a particular exemption applies, in this case section 6 of Part II of Schedule V. In considering whether section 6 applies, a distinction must be made between the activities that comprise a particular supply, and the supply itself. In this case, we accept that certain activities performed by the RNs and RPNs may amount to a nursing service rendered to an individual within a nurse-patient relationship; however, this does not necessarily translate to a supply of nursing services by XXXXX to the Client. In other words, the 'end-use' of an RN or RPN by the Client does not define the nature of the supply made by XXXXX to the Client. Whether XXXXX supply of personnel to the Client falls within section 6 is a question of fact requiring an analysis of the terms and conditions of the Agreement, keeping in mind the context in which the supply is made.
Under the Agreement, XXXXX has agreed to provide an undetermined number of qualified personnel to the Client on an 'as-needed' basis. The Agreement describes the nature of the activities to be performed by the various personnel; however, in our view, the Agreement does not result in an obligation on XXXXX part to supply specific nursing services to individuals. Instead, the terms of the Agreement suggest that XXXXX is essentially acting as a placement agency, making the arrangements for RNs, RPNs or PSWs to be assigned to the Client's facility.
Pursuant to provincial legislation, it is the Client who is ultimately responsible for the provision of care services, including nursing services, to individuals who are residents of a facility operated by the Client. XXXXX responsibility, which stems from the Agreement, is limited to the supply of personnel to the Client so that the Client may supplement its own workforce in order to comply with nurse-to-resident coverage and other operational requirements. The Agreement does not include the provision of personnel with a responsibility for the administration or management of an aspect of the Client's care operation nor does it state that XXXXX will be responsible for any particular aspect of the care operation. Although XXXXX personnel may temporarily participate in the rendering of nursing services to individuals, they are subject to the direction and control of the Client and act as inputs to the Client's supply of care services.
The Agreement between XXXXX and the Client does not cover a pre-determined time period nor does it explicitly provide that any specific RN, RPN, or PSW will render services for any appreciable period of time. The nature of this arrangement allows the Client to supplement its own workforce, as necessary, and suggests that the supply is something other than that of nursing services. This is notwithstanding the fact that XXXXX has a XXXXX Policy under which XXXXX will attempt to provide the same personnel to the same facility to the extent possible.
According to the Agreement, the consideration for the supply is based solely on the qualifications of the various personnel provided by XXXXX. A different hourly rate is charged depending on whether it is an RN, RPN, or PSW provided. The consideration is calculated by multiplying the number of hours a particular type of personnel has worked by the hourly rate applicable to that type of personnel. This method of calculating the consideration for the supply (i.e., an hourly rate based on the qualifications of the personnel) does not suggest a 'fee for nursing services', but rather it is indicative of a supply of personnel or human resources.
We note that the current version of the Agreement, XXXXX uses the term "nursing services" to describe the services (where the term "services" also encompasses personnel) to be provided by XXXXX. XXXXX:
"XXXXX."
In our view, the contractual arrangement between XXXXX and the Client remains the same. Our position that the Agreement, when looked at in its entirety, does not effectively provide for a supply of nursing services as contemplated by Section 6 of Part II of Schedule V, is notwithstanding the updates to the terminology used in the Agreement.
Finally, it is worth noting that XXXXX is in the business of providing health care personnel and describes itself as "XXXXX". The nature of XXXXX business provides a context that is consistent with the position that the supply made by XXXXX pursuant to the Agreement is that of personnel or human resources.
XXXXX.
If you require clarification with respect to any of the issues discussed in this letter, please call me directly at 613-954-4289. 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,
Brian Olsen, CGA
Municipalities and Health Care Services Unit
Public Service Bodies and Governments Division
Excise and GST/HST Rulings Directora
UNCLASSIFIED
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